Director Journal – May/June 2021

Director Journal

A P U B LI CATI O N O F TH E I N STITUTE O F C O R PO R ATE D I R ECTO R S

THE HYBRID OFFICE Now that remote work is a thing, how can employers strike a balance?

MAY/JUNE 2021

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CONTENTS

Director Journal Editorial EDITOR Simon Avery ART DIRECTOR Lionel Bebbington CONTRIBUTORS Jeff Buckstein, Virginia Galt, Barrie McKenna, Gordon Pitts, Bob Ramsay, Serge Rivest, Barbara Smith, Prasanthi Vasanthakumar, Colin Way, Heather Wilson

Executive Lead Matthew Fortier Vice-president, policy and public affairs

Institute of Corporate Directors Rahul Bhardwaj - President and CEO Patricia Fletcher - Vice-president, education Ken Gibson - Chief administrative officer Jan Daly Mollenhauer - Vice-president, sales, marketing and membership Kathryn Wakefield - Vice-president, chapter relations

Finally Content Eric Schneider - President Abi Slone - Creative director Dana Francoz - Advertising sales dana.francoz@finallycontent.com 416-726-2853

COVER PHOTOGRAPHY BY UNSPLASH

Building trust and confidence in Canadian organizations is imperative. At the Institute of Corporate Directors (ICD), we believe that this starts with the right leadership and good governance. Directors must lead by being informed, prepared, ethical, connected, courageous and engaged with the world. In the pages that follow, you will find thoughtful and provocative articles that explore these essential leadership qualities.

Bâtir la confiance envers les organisations canadiennes est primordial. À l’Institut des administrateurs de sociétés (IAS), nous croyons que cela commence par un bon leadership et une bonne gouvernance. Les administrateurs doivent gouverner en étant informés, préparés, intègres, connectés, courageux et ouverts sur le monde.

Dans les pages qui suivent, vous trouverez des articles réfléchis et provocateurs qui explorent ces qualités de leadership essentielles.

Departments Editor’s note The road ahead

CEO insights

Rahul Bhardwaj on rebuilding trust and restoring confidence

Dispatches

Bumble’s billions, vaccine heists, a well-rehearsed Royal message, boosting productivity through gaming, and a very hot Clubhouse

Issues

Covid-19 alert

Directors’ dilemma

Heather Wilson on virtual recruiting

Directors on the move

Recent board appointments across the country

Policy perspective

Matthew Fortier on the growing role of business in public policy

Parting shot Close quarters

ISSN 2371-5634 (Print) www.icd.ca ISSN 2371-5650 (Online) The ICD welcomes a diversity of opinion for inclusion in Director Journal. The contents of this publication do not necessarily reflect the opinions of the ICD, its partners, its sponsors, or its advertisers. Readers are encouraged to consider seeking professional advice and other views.

To request reprints of articles, please contact info@icd.ca

11 12 43 49 50

Features ICD Fellow’s profile

14

Cover story

22

The economy

32 38 44

Harold Kvisle says public policy and board discipline have big roles to play in ensuring the success of the Western energy patch

With remote work here to stay, the post-pandemic office will require more flexible policies

Boards are beginning to confront the rising risk of inflation 2701 – 250 Yonge Street, Toronto, Ontario M5B 2L7 T: 416-593-7741 F: 416-593-0636 E: info@icd.ca

04 05 06

International relations

Strong corporate governance can improve global trust

Recommended reading

LSE director Minouche Shafik on rethinking the social contract

ICD.CA | 3

EDITOR’S NOTE

The road ahead Businesses are ready to look beyond the pandemic EARLY IN MAY, Wall Street began alerting DÉBUT MAI, WALL STREET a prévenu workers that it would soon be time for them ses employés qu’il serait bientôt temps to return to the office. It’s a startling developde retourner au bureau. Il s’agit d’une ment considering that, less than a year ago, évolution frappante, compte tenu qu’il y Covid-19 was ravaging New York City, leaving a moins d’un an la Covid-19 ravageait la intensive care units and morgues overflowing. ville de New York, laissant débordés les U.S. investment bankers are among the keenservices de soins intensifs et les morgues. est of capitalists, but there’s little doubt that busiLes banquiers d’investissement fignesses throughout the United States and Canada urent parmi les capitalistes les plus arare also preparing for the next phase of the pandents, mais il y a peu de doutes que les demic. Some offices may be opening up again to entreprises américaines et canadiennes 50 per cent capacity as early as the summer. se préparent aussi à la prochaine phase It’s hard to see ourselves too far down that de la pandémie. Certains bureaux pourroad at the moment, with most Canadians raient rouvrir leurs portes à 50 pour cent still enduring some form of stay-at-home orde leur capacité aussi tôt qu’à l’été. ders or travel restrictions, and some provincial Il est difficile de nous projeter trop loin Simon Avery hospital systems on the edge of rationing care. dans l’avenir en ce moment, alors que la Editor But with the rollout of vaccines accelerating, plupart des Canadiens subissent toujours savery@icd.ca there’s cause for restrained optimism and a du confinement ou des restrictions de need to begin planning for a post-Covid world. voyage et que les systèmes hospitaliers de Our cover story examines some of the key certaines provinces sont sur le point de rationner les soins. Mais le déploiement issues employers must weigh as they contemde la vaccination qui s’accélère inspire un plate bringing workers back into the office. optimisme modéré et un besoin de planifier l’après-Covid.

These include balancing the advantages of off-site and in-person arNotre article principal examine certains enjeux que les employrangements, and creating a new culture that supports flexible work eurs doivent soupeser au moment où ils envisagent le retour de and well-being. The process will demand not only planning, but also leurs employés au bureau.

Parmi ces enjeux figurent l’équilibrage consultation and experimentation. “The genie is out of the bottle on des avantages du travail à distance et de la présence au bureau ainremote work, and getting the office buzz back won’t be a simple matter si que la création d’une nouvelle culture qui supporte la flexibilité of reopening the doors and calling everyone in,” Virginia Galt writes. du travail et le bien-être.

Ce processus exigera non seulement de Barrie McKenna, meanwhile, explains why we may be on the la planification, mais aussi de la consultation et de l’expérimentaverge of a new period of inflation – an emerging risk for boards of tion. « Le génie du travail à distance est sorti de la bouteille et pour organizations across all sectors to consider carefully. We may find retrouver l’effervescence du bureau, il ne suffira pas de rouvrir les ourselves living in a changed economy after the pandemic, he writes, portes et d’inviter les gens à rentrer », écrit Virginia Galt. one defined by inflation that is challenging for businesses to manage.

Barrie McKenna, entre-temps, explique pourquoi nous pourrions In our profile of Hal Kvisle, one of four Fellows to be inducted by être au bord d’une nouvelle période d’inflation – un risque émergent que the Institute of Corporate Directors this year, we hear from a strong les conseils d’organisations doivent envisager soigneusement. Après la Western voice who sees Alberta and its energy fields at the heart of pandémie, nous pourrions nous trouver dans une nouvelle économie Canada’s economy for decades to come. définie par une inflation difficile à gérer pour les entreprises.

Some of our other stories address post-pandemic approaches to inD’autres articles évoquent des approches post-pandémiques aux reternational relations, public policy and the social contract. As varied as lations internationales, aux politiques publiques et au contrat social. Des the voices are in this issue, they all point to a more optimistic future voix variées, donc, mais qui parlent toutes de l’avenir avec optimisme. DJ than we have been allowing ourselves to consider for a long time. DJ

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CEO INSIGHTS

Rebuilding trust

ILLUSTRATIONS BY AARON MCCONOMY

Boards have a critical role to play in restoring confidence in leadership IT’S NO EXAGGERATION to say that society’s IL N’EST PAS EXAGÉRÉ de dire que la gestion handling of Covid-19 and the death and sufde la Covid-19, les décès et les souffrances fering it has brought have laid bare the fisqu’elle a entraînés ont révélé les fissures et les sures and inequities that exist in our society. inégalités qui existent dans notre société.

In North America and Europe, the effects En Amérique du Nord et en Europe, les of the pandemic have caused an erosion effets de la pandémie ont causé une érosion of trust – something that was already on de la confiance – déjà précaire avant que la shaky ground before the crisis struck. crise frappe.

Now, with the third wave upon us and Alors que nous affrontons une troisième vaccines arriving, we can’t just expect trust vague et que les vaccins arrivent, nous ne to re-emerge with herd immunity. Instead, pouvons pas espérer que la confiance revireinstilling confidence will require time enne avec l’immunité collective. Le retour and a collective effort from the ground up. de la confiance exigera du temps et un efAt the board level, it’s imperative that fort collectif à partir de la base. directors consider their leadership requireIl y aura des attentes envers les entreprisRahul Bhardwaj ments in a new light. It is no longer suffies au sortir de la pandémie. Chacun voudra LL.B, ICD.D cient, for instance, to focus just on your orvoir du leadership de qualité.

President and CEO, ganization’s financial performance.

Beaucoup d’entreprises ont joué un rôle The Institute of Corporate Directors There are expectations on businesses important durant la crise de la Covid-19 et coming out of the pandemic. Everyone montré la voie à un moment sans précéfrom shareholders to regulators is going dent. Parce qu’elles ont réussi à le faire, les to want to see good leadership. It’s not gens se tourneront vers elles pour qu’elles enough for boards to feel secure just beexercent un leadership. Le message des Cacause their organization is sitting on a pile of cash. nadiens aux entreprises est simple : « Montrez-nous que nous pouMany corporations have stepped up during the Covid-19 crisis and vons vous faire confiance. » helped lead in unprecedented times, and because they have proven C’est un bon moment pour les administrateurs de prendre une successful, individuals will be looking to them for leadership. Canadipause et de se demander ce qu’ils peuvent faire pour renforcer ans’ message to business is a simple one: “Show us we can trust you.” la confiance de leurs parties prenantes. Tous les conseils doivent It’s a good time for directors to pause and ask themselves what entamer ce parcours si nous devons faire avancer les choses. Authey can do to help reinforce trust with stakeholders – from emtrement, nous assisterons à une érosion accrue de la confiance au ployees and customers to supply chain partners and social activists.

Canada et à une reprise inéquitable.

All boards need to be on this journey if we are going to move the Comment bâtir et maintenir la confiance fait partie des quesdial. Otherwise, we will see further erosion of trust in Canada and tions clés qui seront évoquées cette année lors du congrès national an unequitable recovery. de l’Institut des administrateurs de sociétés, qui aura lieu en ligne How to build and maintain trust is among the key topics to be le 3 juin. Des administrateurs de haut niveau et des experts de la tackled this year at the Institute of Corporate Directors’ national gouvernance discuteront de la manière dont les conseils devraient conference, which will be held online on June 3. Top directors and adapter leur surveillance de la culture, des stratégies et des risques governance experts will discuss how boards should be adapting en ces temps mouvants, en tenant compte de l’amélioration de leur their oversight of culture, strategy and risk in these challenging performance globale. times with an eye to enhancing overall performance.

Joignez-vous à nous à cette occasion toute indiquée pour explorPlease join us for this timely opportunity to explore new ideas and er de nouvelles idées et initiatives qui auront un rôle essentiel à initiatives that have a critical role to play in the country’s recovery. DJ jouer dans la reprise économique. DJ

ICD.CA | 5

COMPILED BY Prasanthi Vasanthakumar

Dispatches A digest for diligent directors

BUMBLE’S BILLIONS Despite many obstacles, Bumble hasn’t stumbled.

$1.3-billion Net worth of founder Whitney Wolfe Herd

76%

Jump in Bumble shares on the first day of trading.

$14-billion Bumble’s valuation

8.4%

Venture-backed firms led by a female CEO that filed for IPOs between 2016 and 2020.

13%

Venture capital dollars in the first nine months of 2020 that went to female-founded companies

18%

Proportion of women on the average board at the time of their IPOs, from 2010 to 2018 Sources: The Washington Post, Reuters; figures in U.S. dollars

FOR LOVE AND MONEY AFTER BUMBLE SHARES made their stock market debut in February, founder and CEO Whitney Wolfe Herd became the world’s youngest self-made female billionaire. Known for letting women make the first move, the dating app creates a more comfortable way to find love online. “We are rewriting the script on gender norms by building a platform that is designed to be safe and empowering for women,” Herd wrote in the company’s initial public offering filing.

With a female chair and seven women on its 11-person board – a rare occurrence at corporations – Bumble is also empowering women in the boardroom.

But Herd’s success itself is a rarity. Preconceived notions make it

6 | DIRECTOR JOURNAL

harder for women to secure venture capital funding, Jena McGregor notes in The Washington Post. According to research by Laura Huang of Harvard Business School, women are less likely to be viewed as late-stage, high-growth leaders than men. Female founders tend to get quizzed about early-stage minutiae like break-even points, while male entrepreneurs can wax poetic about their vision.

With a woman at the helm of a female-centric product, Bumble’s success is promising. Moves to increase start-up board diversity by big players such as Goldman Sachs and Nasdaq could further change the game, bringing more women to the table.

What’s not to love about that?

NEWS

PHOTOGRAPHY BY CHRISTINA WOCINTECHCHAT/UNSPLASH (LEFT), SPENCER DAVIS/UNSPLASH (TOP RIGHT), ICONS BY THE NOUN PROJECT

PRECIOUS CARGO Thieves looking to steal Covid-19 vaccines have their work cut out for them. With “kill switches” on trucks, panic buttons, undercover security and tracking technology, shipping vaccines is a clandestine operation worthy of James Bond. For freight haulers, this is risky business: The Transported Asset Protection Association tells Thomas Buckley at Bloomberg that vaccine shipments present the “biggest security challenge in a generation.”

In December, Interpol predicted a dramatic rise in vaccine heists and vandalism. By March, coronavirus vaccines, including some of questionable origin, were already selling on the dark Web for US$200 a dose.

Shipping companies are prepared. One expert at transporting sensitive cargo such as cash and fine art is subjecting its drivers to enhanced background checks and training before entrusting them with Covid-19 vaccines. Other security measures include unmarked trucks, remotely operated digital locks, window and door alarms, and wireless sensors that signal changes in temperature, light and location. In some cases, shipments are being tailed by armed escorts to deter crooks who may try to blast open the back doors and steal the cargo while the truck is speeding down the highway – a signature move of Eastern European gangs.

As billions of Covid-19 doses continue to roll into countries, security will be tight. Even 007 would be impressed.

COVID CRIMES There’s a good reason to be on high alert. Thieves have stolen all sorts of items for which the pandemic has created increased demand.

Created by Luis Prado from the Noun Project

Created by Brand Mania from the Noun Project

Created by Popular from the Noun Project

Created by Anzhelika from the Noun Project

6 million

$1-million

200

130,000

Respiratory masks lifted from an aviation facility in Kenya

Value of medical gloves pillaged from a container in Florida

Respirators stolen on their way to Colombia

Toilet rolls pilfered from trailers in Britain

Source: Bloomberg

ICD.CA | 7

CALL OF DUTY

IN OUR VIRTUAL WORKPLACES, VIDEO GAMES MIGHT BE THE BEST NEW TEAM-BUILDING EXERCISE. ACCORDING TO THE GLOBE AND MAIL’S REPORT ON BUSINESS, COLLEAGUES WHO PLAYED VIDEO GAMES TOGETHER FOR 45 MINUTES REPORTED A 20-PER-CENT INCREASE IN PRODUCTIVITY. ARE YOU READY TO LEVEL UP? ROYAL LESSONS Harry and Meghan’s jaw-dropping interview with Oprah offers a lesson in smart public relations, Amy George writes in Inc. No matter whether you side with the palace or the Duke and Duchess of Sussex, or care not one whit about transatlantic royal rows, the tell-all exemplifies the importance of a well-rehearsed message. Businesses in crisis would be smart to take notes.

But the late Prince Philip felt differently. He reportedly told his biographer that the interview was “madness,” and was worried about the couple’s self-preoccupation.

“Remember that the attention comes because of the position you are privileged to hold, not because of who you are,” Philip’s biographer Gyles Brandreth said he was fond of saying.

For Jeff Haden of Inc., the lesson is clear: People in positions of authority, whether they are world leaders, CEOs, kings or queens, have a responsibility to serve their people, not themselves. As the boss, your job is to listen, understand and empathize with the challenges of the people you lead, Haden says. What you don’t have is carte blanche to talk about your personal problems.

Harry and Meghan may not have had a fairy-tale ending. But their story has important lessons for us all.

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NEWS

PHOTOGRAPHY BY IGOR KARIMOV/UNSPLASH (TOP LEFT), ISTOCK (BOTTOM LEFT), ISTOCK (TOP RIGHT), ERIN KWON/UNSPLASH (RIGHT)

MEN BEHAVING BADLY

THIS PAST WINTER, two men named Rod received the proverbial pink slip.

Rod Baker was CEO of Great Canadian Gaming Co. when he allegedly jumped the Covid-19 vaccine queue in remote Yukon.

Around the same time, Rod Phillips, then Finance Minister of Ontario, did a notso-honourable thing by jetting off to St. Barts, while politicians across the country lectured Canadians to stay home. Both men joined a notorious club of people who used to be in high places until word of their misdeeds got out.

Managing sticky leadership controversies with political or reputational consequences is becoming an important part of corporate governance, reporter Christine Dobby writes in the Toronto Star.

According to Sarah Kaplan, a University of Toronto professor, boards in Canada are getting quicker to dole out consequences.

Not doing so could lead consumers and employees to look elsewhere.

However, Ed Waitzer, a former chair of the Ontario Securities Commission, cautions against rushing to judgment.

“It encourages people to keep their heads down and I’m not sure that’s great,” he tells Dobby.

Not all Rods make costly mistakes, and Karens can behave badly too. But today, the average Joe is less forgiving.

WELCOME TO CLUBHOUSE Is social audio the new social media? Clubhouse is taking 2021 by storm, drawing celebrities, a US$1-billion valuation, and plenty of copycats. The audio-only social media app offers unconstrained conversations that are a cross between a call-in radio show and professional conference, Brody Ford writes in Bloomberg. Users enter “rooms” based on interests and participate in live chats, with moderators deciding who gets the microphone.

Because of its invitation-only status, not everyone can join the club. Nonetheless, the app is enjoying epic levels of engagement. In March, it hit nearly 13 million downloads, according to Forbes and App Annie.

Why is Clubhouse so hot? With star participants such as Elon Musk, Oprah Winfrey and Drake, the app offers more intimate and interactive access to public figures and thought leaders than traditional social media platforms.

But timing is everything. Amid FaceTime and virtual meeting fatigue, users are finding a reprieve in audio-only chit-chat – which is why there are now more than 30 social audio startups. A happy medium between pandemic doom-scrolling on Twitter and staring at faces on Zoom, Clubhouse relieves lockdown loneliness by going back to the basics of human connection: conversation, but without all the noise.

JOIN THE PARTY With its number of users growing exponentially, Clubhouse is the place to be.

USERS DATE

1,500

May 2020

600,000

December 2020

2 million

January 2021

10 million

February 2021

Source: Backlinko

ICD.CA | 9

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ISSUES

BY Simon Avery

Covid-19 alert

ILLUSTRATION BY FRANCESCOCH/ISTOCK

Executive compensation is falling out of step with societal expectations

HERE’S A TOUCHY SUBJECT for board members: rising executive compensation during a global pandemic. Why is it happening, is it wrong and what might be the repercussions?

Take-home pay for leaders of public companies has increased over the past year — even as many approved huge layoffs and presided over financial losses — because the stock market has defied common wisdom. Prices have soared during months of restrictions, lockdowns, suffering and deaths caused by Covid-19. In turn, executive compensation packages, lined with generous incentive plans comprising stock options and share awards, are bulging. The story is particularly evident in the United States.

“CEO Pay Remains Stratospheric, Even at Companies Battered by Pandemic,” hollered The New York Times at the end of April. Reporter David Gelles highlighted the inequity of huge paydays on the heels of massive losses and layoffs at numerous major companies. These included Boeing CEO David Calhoun’s US$21.1-million compensation next to the company’s US$12-billion annual loss and plans to layoff 30,000. And Hilton CEO Chris Nassetta’s US$55.9-million package in the aftermath of a US$720-million annual loss.

The trend is at odds with another that occurred a year earlier in both the United States and Canada. In the spring of 2020, many businesses announced that their senior executives would take pay cuts as a gesture of solidarity with the millions of their fellow citizens suffering from the effects of the pandemic. Boeing, for instance, said that Calhoun had voluntarily given up most of his US$1.4-million cash salary.

The payout valuations may not be so large in Canada, but the same principle has been at play. Quoting research from the governance software firm Diligent Corp., The Globe and Mail reported that despite scores of company announcements last year about executives taking salary cuts, only about 1 per cent of total executive pay was waived. Columnist David Milstead spotlighted some major Canadian companies that touted temporary cuts to executive salaries only to more than compensate for the rollbacks with greater share-based compensation.

Board members rarely have to answer publicly for the unfairness of the situation. Public relations departments pick up that duty, using words like “essential,” “exceptional” and “vital” to describe the skills of their top executives. (More exceptional than when they were hired? More vital than a year earlier?)

Directors who believe this argument resonates well with the rest of society likely don’t expect any repercussions over the increasing-

ly divided fortunes of business leaders and workers. But that is the minority view. Across North America and Europe, Covid-19 has made people more aware and less tolerant of inequality. Politicians — now well aware of the populist fallout from the 2008-2009 economic crisis — are pumping billions, even trillions, of dollars into new job creation and social programs. In the process, they have discovered that it’s no longer politically dangerous to talk about running larger deficits and levying higher taxes on corporations and the wealthy.

In the next year, perhaps the economy really will deliver 5 per cent growth as forecasted, lifting the fortunes of the majority and quietening the voices for social change, but members of every compensation committee should be paying close attention and considering the bigger picture. DJ

Some companies that touted temporary cuts to executive salaries have more than compensated for the rollbacks with greater share-based compensation.

SIMON AVERY is the editor of Director Journal and a freelance business writer.

ICD.CA | 11

The dilemma How do we successfully recruit a new board member virtually?

Heather Wilson ICD’s Director of Research Services

AT THE BEGINNING OF THE PANDEMIC, the prospect of recruiting a new director without ever having met in person seemed unthinkable, says Lisa Talbot, who leads the employment practice at business law firm Torys LLP. In the past, it was common for nominating committees to meet candidates face-to-face, in both formal and informal settings, to assess their skills, personality and fit with the existing board. Although using virtual tools for recruitment may seem awkward and inadequate to the task of conducting a thorough evaluation of prospective candidates, there are ways to adjust your recruitment strategies to find the right person for your board.

Before the interview, communicate to prospective board members what the meeting will entail, who will be involved, and what electronic platform will be used, so that candidates can be prepared. By communicating expectations up front, potential board members may be more at ease and able to present their best selves. Equally important, even as the board is evaluating candidates, prospective directors are also assessing the organization. Being well-prepared and considerate

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will make serving on the board more attractive to preferred board candidates.

Brent Norton, a medical doctor and director who has both been recruited to a board during the pandemic and has recruited new board members, acknowledges the challenges of the current environment.

He says it is especially important for prospective directors to do some research before a board interview to gain insight about the board and determine whether or not it would be a good fit. Norton recommends using your network to find individuals with institutional knowledge who can provide straightforward feedback about the organization and its board.

Talbot says that nominating committees and boards have adapted well to virtual recruiting. In fact, “there is even a growing recognition that it has advantages,” she says. “Scheduling is less complicated, the process can be expedited, and a broader group of directors can be involved without the necessity of travel.”

Norton suggests that virtual screenings may continue to be used after the pandemic for efficiency, especially for initial inter-

views, while in-person interviews may be used for second meetings with a short list of candidates.

On the recruiting side, Norton notes that the first question of the nominating committee is often, “Does anyone know this person?” Although this question was certainly asked before the pandemic, a pre-existing relationship has become more important as a screening tool in the absence of opportunities to get to know candidates in person.

Even after the pandemic, many boards may continue to do at least some of their work online, so virtual interviews can help assess whether or not prospective directors are able to use online platforms and interact effectively with their fellow board members. Remote interviews may also allow nominating committees to cast a wider net and assess the capabilities of a larger pool of candidates efficiently.

“Not everything has changed because of the pandemic,” notes Sheldon Mahabir, who leads the Institute of Corporate Directors’ board opportunities practice. Boards should still be carefully examining the composition of their boards, identifying the skills they need to fulfill their strategy, and searching for directors who meet those criteria. On the other hand, directors looking for board positions should try to match their particular experience and expertise to those boards that would most benefit from their unique skills.

“Assess where you can add the most value and focus your attention there,” says Mahabir.

The pandemic has forced organizations to adopt new ways of doing their work, including recruiting directors. In the future, boards should examine which virtual practices worked well and incorporate them into their director recruitment tool kit. DJ

ILLUSTRATION BY AARON MCCONOMY

Q.

DIRECTORS’ DILEMMA

DIRECTOR LENS • Tell board candidates about the expectations, virtual platform and structure of the interview, so they can prepare effectively.

AU DÉBUT DE LA PANDÉMIE, il semblait impensable de recruter un nouvel administrateur sans même l’avoir rencontré en personne, explique Lisa Talbot, qui dirige la pratique d’emploi au cabinet juridique Torys LLP. Par le passé, il était commun pour les comités de nomination de rencontrer les candidats, à la fois dans des cadres formels et informels, afin d’évaluer leurs compétences, leur personnalité et leur compatibilité avec le conseil existant. Même si le recours à des outils de recrutement virtuels peut sembler étrange et inadéquat pour mener une évaluation rigoureuse de candidats potentiels, il existe des façons d’ajuster les stratégies afin de trouver la bonne personne pour votre conseil.

Avant l’entrevue, communiquez aux candidats la nature de la rencontre, l’identité des personnes impliquées et la plateforme électronique utilisée, afin qu’ils soient bien préparés. Les administrateurs potentiels sont ainsi susceptibles d’être plus à l’aise et mieux en mesure de se présenter sous leur meilleur jour. Ce qui est également important, c’est que pendant que le conseil évalue les candidats, ceux-ci évaluent aussi l’organisation. En étant bien préparé et prévenant, le conseil se rendra plus attrayant aux yeux des candidats.

Brent Norton, un médecin et administrateur qui a été recruté au sein d’un conseil durant la pandémie et a lui-même recruté de nouveaux administrateurs, reconnaît que l’environnement actuel pose des défis.

Il soutient qu’il est particulièrement important pour les candidats de faire quelques recherches avant une entrevue afin de mieux connaître le conseil et de déterminer si le poste leur convient. M. Norton recommande aux gens de recourir à leurs réseaux pour trouver des personnes dotées de connaissances institutionnelles qui peuvent leur fournir des renseignements clairs sur l’organisation et son conseil.

Mme Talbot affirme que les comités de nomination et les conseils se sont bien adaptés au recrutement virtuel. En fait, « il y

a même une reconnaissance croissante qu’il offre des avantages, dit-elle. La planification est moins compliquée, le processus peut être accéléré et un groupe élargi d’administrateurs peut être impliqué sans avoir à se déplacer. » M. Norton suggère que les filtrages virtuels pourraient continuer d’être utilisés après la pandémie pour des raisons d’efficacité, en particulier pour les premières entrevues, alors qu’on pourrait recourir aux entrevues en personne pour les deuxièmes rencontres avec des candidats présélectionnés.

En ce qui concerne le recrutement, M. Norton souligne que la première question posée par le comité de nomination est souvent : « Quelqu’un connaît-il cette personne? » Même si cette question était sûrement posée avant la pandémie, une relation préexistante est devenue plus importante comme outil de filtrage en l’absence d’occasions de connaître un candidat en personne.

Même après la pandémie, beaucoup de conseils pourraient continuer d’effectuer au moins une partie de leur travail en ligne. Les entrevues virtuelles peuvent aider à évaluer si les candidats sont en mesure d’utiliser les plateformes en ligne et d’interagir efficacement avec leurs collègues éventuels. « Tout n’a pas changé en raison de la pandémie », explique Sheldon Mahabir, qui dirige la pratique de ressources pour les conseils à l’Institut des administrateurs de sociétés. Les conseils devraient toujours continuer d’examiner soigneusement leur composition, déterminer les compétences dont ils ont besoin et rechercher des administrateurs qui répondent à ces critères. Par ailleurs, les administrateurs à la recherche d’un poste devraient tenter d’apparier leur expérience et leur expertise aux conseils les plus susceptibles de profiter de leurs compétences uniques. À l’avenir, les conseils devraient examiner quelles pratiques virtuelles fonctionnent bien et les intégrer à leurs outils de recrutement. DJ

• Recruiting directors virtually has some advantages in terms of scheduling, efficiency and limiting the necessity of travel, especially for initial interviews.

• Personal networks have become even more important, both as a mechanism for candidates to glean inside knowledge about boards but also for allowing board members to vouch for candidates based on a pre-existing relationship.

• Avisez les candidats au conseil de vos attentes, de la plate-forme virtuelle utilisée et de la structure de l’entrevue, afin qu’ils puissent se préparer efficacement.

• Le recrutement virtuel d’administrateurs présente des avantages en matière de planification, d’efficacité et de réduction des déplacements.

• Les réseaux personnels sont devenus plus importants comme mécanisme d’acquisition de connaissances sur les conseils pour les candidats, mais aussi pour permettre aux membres du conseil d’attester de la qualité de certains candidats qu’ils connaissent.

Presented in partnership with Torys LLP The ICD Directors Register is Canada’s national databank of leaders available for board service. We can connect you to directors with the right skills for your board vacancy.

Contact: smahabir@icd.ca for details.

Send your comments or ideas to: Heather Wilson Director of Research Services boardinfo@icd.ca Every issue, we will feature a question from readers or one from ICD’s complimentary research service, ICD BoardInfo icd.ca/boardinfo

ICD.CA | 13

PHOTOGRAPHS BY Colin Way

WESTERN CHAMPION Fresh from another transformative business deal, oil and gas veteran HAL KVISLE talks to author Gordon Pitts about the secret to achieving long-term corporate success in the energy patch today and the critical role that boards must play in the process Tout juste après avoir conclu un autre contrat d’affaires marquant, le vétéran de l’industrie pétrolière et gazière HAL KVISLE discute avec Gordon Pitts du secret de la réussite à long terme dans le secteur de l’énergie et du rôle essentiel que les conseils doivent jouer dans le processus.

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Veteran energy executive and 2021 ICD Fellow Hal Kvisle says Canada has the opportunity to develop two 'trillion-dollar' assets — the Montney natural gas zone and the oil sands — but the challenge is to get Ottawa to recognize the potential.

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OVER HIS LONG CAREER in energy boardrooms, Hal Kvisle has delivered a master class in how to be a director in a volatile, controversial and economically significant industry.

He has kept a clear-eyed perspective through wickedly gyrating market cycles. Now, with his sector seemingly under fire from all directions, he vehemently rejects the view that fossil fuel production is a declining industry.

“I think it is hilarious,” he says, mocking the idea that oil and gas are locked in a death spiral. Indeed, Western Canada’s energy fields offer “the greatest opportunity I have seen in my career” – if public policy makers in Ottawa would only recognize it.

“We are losing the battle everywhere except at the gas pumps,” he says, outlining the paradox of an industry facing healthy and growing consumer demand and a low public image outside hydrocarbon-industry centres.

Indeed, Kvisle’s views swim against powerful currents. These include anti-fossil-fuel policies emanating from the White House, aggressive green messaging from big institutional investors, and a recent report from Toronto-Dominion Bank warning that the majority of oil and gas jobs will disappear by 2050.

But he has seen all this before in his 45 years as a manager and director for pipeline and oil and gas companies. Fossil fuels are always being written off as a sunset industry and yet they keep coming back, he says.

Now he sees consumption rebounding from the depths of the pandemic and, based on industry analysis, predicts demand growth for at least two decades, before levelling off.

“It is laughable to see people say we will phase out fossil fuels by 2030, and people going around making these net-zero [emission] pledges without really understanding what they are saying.”

As a corporate director, Kvisle is a fervent advocate for an industry, a region, and a way of life that, at times, viewed from his Calgary home, seems little understood by Eastern Canadians. This passion, combined with thoughtful board leadership, underpins his induction as a 2021 Fellow of the Institute of Corporate Directors.

The trillion-dollar club He lays out the contradiction that defines his industry: “It appears society wants to buy our products but they don’t want to buy our products,” he says, outlining the dilemma for energy directors and executives in deciding how to invest their capital – and where.

He sees the broader issue as: How does Canada hold together when the eastern half doesn’t want to see investment in the opportunities that exist, while “the western half finds it economically irresistible?”

Not surprisingly, Kvisle believes the most important aptitude for directors today is an antenna alert to public policy direction. “That means not just the flavour of the month but, with some foresight, identifying real hurdles companies will run into – and how policy might change five or 10 years from now.”

This is not some superannuated old-timer speaking from the sidelines. At 68, Kvisle is still highly engaged, coming off an $8.1-billion merger of ARC Resources Ltd., where he has been chair, and Seven Generations Energy Ltd., creating the biggest player in the rich

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AU COURS DE SA LONGUE CARRIÈRE DANS les conseils d’administration d’entreprises énergétiques, Hal Kvisle a offert une classe de maître sur le rôle d’un administrateur dans une industrie instable, controversée et d’une grande importance économique.

Tout au long de cycles impitoyablement fluctuants, il a su conserver une perspective claire. Aujourd’hui, alors que son secteur essuie un feu nourri provenant de toutes les directions, il rejette vigoureusement l’opinion selon laquelle la production de combustibles fossiles est en déclin. « Je pense que c’est ridicule », dit-il en se moquant de l’idée que le pétrole et le gaz sont engagés dans une spirale fatale. En effet, l’Ouest canadien offre « la meilleure occasion d’affaires que j’aie vue dans ma carrière » - si seulement les décideurs politiques à Ottawa voulaient le reconnaître. « Nous sommes en train de perdre la bataille partout, sauf à la pompe à essence », affirme-t-il, soulignant le paradoxe d’une industrie faisant face à une demande saine et croissante de la part des consommateurs et à une mauvaise image hors des centres de l’industrie des hydrocarbures.

Bien sûr, le point de vue de M. Kvisle se mesure à des contre-courants puissants. Parmi ceux-ci, on compte les politiques anti-combustibles fossiles de la Maison Blanche, les messages verts pressants de gros investisseurs institutionnels et un récent rapport de la banque Toronto-Dominion qui prédit que la majorité des emplois dans le domaine pétrolier et gazier auront disparu en 2050.

Mais il a tout vu cela au cours de ses 45 ans comme dirigeant et administrateur d’entreprises pétrolières et gazières. Les combustibles fossiles ont toujours été considérés comme en déclin et pourtant ils reviennent toujours en force, soutient-il.

Aujourd’hui, il voit la consommation rebondir depuis les profondeurs de la pandémie et, se fondant sur une analyse de l’industrie, il prédit une croissance de la demande pendant au moins deux décennies avant qu’elle se stabilise. « Il est ridicule d’entendre les gens dire qu’on va cesser progressivement de recourir aux combustibles fossiles d’ici 2030 et tous ces autres qui prennent des engagements d’émissions à somme nulle

The prospect for oil and gas jobs depends more on the future direction of public policy than on industry fundamentals, says Hal Kvisle, chair of ARC Resources and Finning International.

Montney natural gas zone straddling the Alberta-British Columbia border.

As ARC’s chair, Kvisle played an unusually active role in negotiations, which, beyond financial considerations, involved decisions around the management team to run the merged company. He will remain chair of the continuing company, to be known as ARC Resources.

The Montney play, with its abundant gas reserves, constitutes a big part of Kvisle’s “greatest opportunity” scenario. It is one of Canada’s two trillion-dollar assets, he argues – the other one being the oil sands.

These assets carry the potential for Canada to play in the same production leagues as Russia and Saudi Arabia.

But this aspiration is blunted by a lack of access to markets, which Kvisle, a former pipeline company CEO, blames on what he sees as the confusion of federal energy and pipeline policies. Indeed, he argues the prospect for oil and gas jobs depends more on the future direction of public policy than on industry fundamentals.

sans vraiment savoir de quoi ils parlent », souligne-t-il.

Comme administrateur de sociétés, M. Kvisle est le fervent promoteur d’une industrie, d’une région et d’un mode de vie qui par moments – vu de sa résidence de Calgary – semblent peu compris des Canadiens de l’Est. Cette passion, alliée à un leadership réfléchi au sein de conseils d’administration, explique son intronisation à titre de Fellow 2021 de l’Institut des administrateurs de sociétés.

Le club du milliard Il expose la contradiction qui définit son industrie. « On dirait que la société veut acheter nos produits, mais qu’elle ne veut pas acheter nos produits », dit-il, expliquant le dilemme que doivent résoudre les administrateurs et dirigeants d’entreprises énergétiques pour décider comment – et où – investir leur capital.

Selon lui, l’enjeu plus large est le suivant : comment le Canada peut-il rester uni quand sa moitié Est ne veut pas voir d’investissement dans les occasions d’affaires qui existent alors que « sa moitié Ouest les trouve économiquement irrésistibles? » Il n’y a pas à s’en étonner : M. Kvisle croit que l’aptitude la plus importante pour les administrateurs d’aujourd’hui est une antenne alerte pour connaître la direction des politiques publiques. « Cela veut dire non pas seulement la saveur du mois, mais aussi de savoir cerner les véritables obstacles que rencontreront les entreprises – et comment ces politiques pourraient changer dans les cinq ou dix prochaines années. »

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‘TO CONTROL OUR POWERFUL IMPULSE TO SPEND MORE, WHEN PRICES ARE RISING, IS AS TOUGH AS PICKING A CEO.’ « IL EST PLUS DIFFICILE DE CONTRÔLER NOS PUISSANTES IMPULSIONS À DÉPENSER DAVANTAGE, LORSQUE LES PRIX SONT EN HAUSSE, QUE DE CHOISIR UN CHEF DE LA DIRECTION » A capital idea Then there are large institutional investors who threaten to disinvest from fossil fuels, led by the CEO of BlackRock, the investment management firm that is the largest global stock investor. “The Larry Finks, the BlackRocks, want you to do this or that, and that’s fine – they are entitled to their opinion,” Kvisle says.

The institutions do control immense capital, and yet the energy companies he is involved with don’t need this money, he insists.

They can generate the capital they need internally, and “that is the long-term secret to success in the business.” The big oil companies have led the way, showing how the industry can be run.

But that means boards and senior managers must pay rigorous attention to capital and operating costs, driving decisions on where a company invests its funds. They must also ensure that their environmental, social and governance (ESG) practices are robust. Their ESG scorecards can be a competitive advantage for Canadian firms against other regions in the sharp-elbowed global energy market.

“You need to pay attention to ESG and you need to be very good at all three [areas].”

At the same time, “the whole notion that Canadian energy companies are laggards on the ESG front is a myth propagated by those concerned about the [immensity] of our hydrocarbon resources.”

The myth-makers are led by the environmental movement, which he believes is fundamentally mistaken in its approach.

So much of the emphasis of climate activists focuses on suppressing supply. “That doesn’t work when demand for hydrocarbons remains strong.” Any substantive progress on limiting emissions depends on curbing consumption, Kvisle says.

He actually supports the notion of a carbon tax as a tool to suppress demand, if deployed skillfully. But it is a balancing act. He worries that the federal carbon tax, at its prescribed levels, will hurt the broader economy in global competitiveness. And it dis-

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À 68 ans, M. Kvisle demeure profondément engagé, au lendemain d’une fusion de 8,1 milliards de dollars entre ARC Resources Ltd. – dont il a été président du conseil – et Seven Generations Energy Ltd., créant ainsi le plus gros joueur dans la riche zone de gaz naturel Montney, qui chevauche la frontière entre l’Alberta et la Colombie-Britannique. À titre de président du conseil d’ARC, il a joué un rôle exceptionnellement actif dans les négociations qui, au-delà des considérations financières, impliquaient des décisions touchant l’équipe de direction de l’entreprise fusionnée. Il demeurera président du conseil de la nouvelle entreprise, qui sera connue sous le nom d’ARC Resources.

Avec ses abondantes réserves de gaz, la formation Montney représente un élément important du scénario de « plus importante occasion d’affaires » de M. Kvisle.

C’est l’un des actifs de deux billions de dollars du Canada, soutient-il, l’autre étant les sables bitumineux. Ces actifs portent le potentiel du Canada de jouer dans les mêmes ligues de production que la Russie et l’Arabie Saoudite.

Mais cette aspiration est émoussée par le manque d’accès aux marchés que M. Kvisle – ancien chef de la direction d’une entreprise de pipeline – attribue aux politiques confuses du gouvernement fédéral en matière d’énergie et de pipeline.

Une idée capitale Puis il y a de gros investisseurs institutionnels qui menacent de désinvestir dans les combustibles fossiles, au premier rang desquels se trouve le chef de la direction de BlackRock, le plus grand investisseur boursier au monde.

Ces institutions contrôlent un immense capital et pourtant, les entreprises énergétiques dans lesquelles il est impliqué n’ont pas besoin d’argent, assure M. Kvisle.

Elles peuvent générer à l’interne le capital dont elles ont besoin et c’est là « le secret de la réussite à long terme en affaires ».

Mais cela signifie que les conseils et équipes de hautes directions doivent porter une attention rigoureuse aux coûts en capital et aux coûts d’exploitation. Ils doivent s’assurer que leurs pratiques sociales, de

courages switching from coal-fired power generation to natural gas with its much lower emissions.

Controlling impulses Given all this complexity, directors today need to bring much more to the table than energy-industry smarts. If you are looking for gas in the Montney, Kvisle says, you might assume you need another industry veteran when deciding where to drill the next well.

But that is management’s decision, he points out. The board should be thinking about whether you should be in the Montney at all or, say, in North Dakota, given Canada’s access-to-market challenges. That means the board might add, perhaps, a bank CEO with a big-picture view, instead of one more engineer.

As for the mix of directors, the straighttalking Kvisle says: “I’m fully supportive of the diversity agenda, but not just token

gouvernance et environnementales (ESG) sont robustes. Leur dossier ESG peut être un avantage concurrentiel pour les entreprises canadiennes par rapport aux autres régions dans un marché énergétique mondial où on joue beaucoup du coude.

En même temps, « l’idée que les entreprises énergétiques canadiennes se traînent les pieds en matière d’ESG est un mythe propagé par ceux qui s’inquiètent de l’immensité de nos ressources en hydrocarbures. » Les fabricants de mythes sont menés par le mouvement environnementaliste, dont M. Kvisle croit que l’approche est fondamentalement erronée.

Une part tellement importante du discours des activistes du climat porte sur la suppression des approvisionnements. « Ça ne peut pas marcher alors que la demande en hydrocarbures demeure solide. » Tout progrès dans la limitation des émissions dépendra de la capacité de réduire la consommation, affirme M. Kvisle.

Il soutient l’idée d’une taxe sur le carbone comme outil de réduction de la demande, à condition qu’elle soit déployée de façon habile.

Il s’inquiète de ce que la taxe fédérale sur le carbone, aux niveaux prescrits, nuise à la compétitivité du pays à l’échelle mondiale.

Contrôler ses impulsions Compte tenu de toute cette complexité, les administrateurs doivent amener à la table du conseil plus que des spécialistes de l’industrie.

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diversity: What kind of diversity will improve decision-making when the chips are down?”

As an engineer and CEO at pipeline giant TransCanada Corp. (now TC Energy), Kvisle loved rolling up his sleeves on operational issues, but a director has to approach the job differently. “The role of the board is not to pump ideas down on management, but to make astute decisions on whether or not to support what management is proposing.”

If, over and over, the board cannot support what is brought to the table, the next decision is changing leadership. That means constant emphasis on grooming succession inside the organization. “I consider it a real failure if a company goes outside to hire a CEO.” Despite the unique aspects of today’s markets, some governance challenges remain eternal in oil and gas. Capital investment is always at its peak just ahead of the next price collapse. “We do it to ourselves. We overdrill in response to high prices; we have a lot of cash flow; we put every single dollar back in the ground.”

The resulting oversupply triggers a market implosion, and the industry does it repeatedly.

A board needs to be diligent in monitoring the leadership team’s capital management. “To control our powerful impulse to spend more, when prices are rising, is as tough as picking a CEO.” That, of course, is the opposite of the challenge now, when the industry is still working through one of its downturns. Canadian oil and gas will come back, Kvisle maintains – how quickly depends on politics. At the end of the day, he predicts, the energy sector will prosper. “We sit on two multitrillion-dollar assets here in Western Canada and they will be developed over time. Alberta will continue to have the strongest economy in Canada for decades to come.” DJ GORDON PITTS is a Toronto journalist whose latest book, Unicorn in the Woods: How East Coast Geeks and Dreamers Are Changing the Game, was published this fall by Goose Lane Editions.

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'The role of the board is not to pump ideas down on management, but to make astute decisions on whether or not to support what management is proposing,' Hal Kvisle says.

Si on recherche du gaz naturel dans la formation Montney, dit M. Kvisle, on peut présumer qu’on aura besoin d’un vétéran d’une autre industrie quand viendra le moment de décider où sera creusé le prochain puits.

Le conseil devrait déterminer si l’organisation doit s’installer à Montney ou, disons, au Dakota du Nord, compte tenu des défis d’accès aux marchés qui se posent au Canada. Cela signifie que le conseil pourrait peut-être amener à la table un dirigeant d’une banque doté d’une vision globale plutôt qu’un autre ingénieur.

Comme ingénieur et chef de la direction du géant TransCanada Corp. (aujourd’hui TC Energy), Hal Kvisle adorait se mêler des enjeux opérationnels, mais un administrateur doit avoir une approche différente. « Le rôle du conseil n’est pas d’alimenter la direction en idées, mais de prendre des décisions judicieuses en appuyant ou non ce que la direction propose. » Malgré les aspects uniques des marchés actuels, les défis de la gouvernance demeurent récurrents dans l’industrie pétrolière et gazière. L’investissement en capital est toujours à un sommet juste avant le prochain effondrement des prix. « Nous sommes les artisans de notre malheur. Nous forons à l’excès parce que les prix sont élevés; nous avons beaucoup de liquidités; nous retournons chaque dollar dans la terre. » L’offre excédentaire qui en résulte provoque une implosion du marché. C’est ce que fait l’industrie à répétition. « Il est plus difficile de contrôler nos puissantes impulsions à dépenser davantage, lorsque les prix sont en hausse, que de choisir un chef de la direction », explique M. Kvisle.

Le pétrole et le gaz canadiens reviendront, soutient-il. À quel rythme? Cela dépendra de la politique. Mais au bout du compte, prédit-il, le secteur énergétique va prospérer. « L’Alberta continuera de compter sur la plus forte économie au Canada pendant encore des décennies. » DJ GORDON PITTS est un journaliste d’affaires dont le dernier ouvrage, Unicorn in the Woods : How East Coast Geeks and Dreamers Are Changing the Game, a été publié l’automne dernier par Goose Lane Editions.

HAROLD (HAL) KVISLE Chair of ARC Resources and Finning International, and director of Cenovus Président du conseil d’ARC Resources et de Finning International, administrateur de Cenovus

The 68-year-old grew up in Innisfail, Alta., earning a bachelor of science in engineering from the University of Alberta and an MBA from the Haskayne School of Business at the University of Calgary.

Âgé de 68 ans, Hal Kvisle a grandi à Innisfall en Alberta, obtenu un baccalauréat en ingénierie de l’Université de l’Alberta et un MBA de la Haskayne School of Business de l’Université de Calgary.

MANAGEMENT CAREER 1975-88: Held engineering, finance and management positions with the former Dome Petroleum.

CARRIÈRE DE DIRIGEANT 1975-1988 : Postes en ingénierie, en finances et de direction chez Dome Petrolrum.

1990-1999: Served as founding president of Fletcher Challenge Energy Canada, an arm of a New Zealand resources company.

1990-1999 : Président fondateur de Fletcher Challenge Energy Canada, filiale d’une société de ressources de Nouvelle-Zélande.

2001-2010: President and CEO of pipeline and power company TransCanada, now TC Energy.

2001-2010 : Président et chef de la direction de TransCanada, aujourd’hui TC Energy.

2012-2015: CEO of Talisman Energy, completing the sale of the company to Repsol in 2015.

2012-2015 : Président et chef de la direction de Talisman Energy, a effectué la vente de l’entreprise à Repsol en 2015.

DIRECTOR CAREER Besides TransCanada and Talisman, past board roles include: Bank of Montreal, Methanex Corp., Norske Skog Canada and PrimeWest Energy.

CARRIÈRE D’ADMINISTRATEUR Outre TransCanada et Talisman, il a siégé aux conseils de la Banque de Montréal, Methanex Corp., Norske Skog Canada et PrimeWest Energy.

Current boards: Chair of ARC Resources and Finning International, a large Caterpillar equipment distributor, and a director at energy company Cenovus. Keeps involved in private equity with U.S. and Canadian investors.

Conseils actuels : Président du conseil d’ARC Resources et Finning International et administrateur de Cenovus. Demeure impliqué en capital privé auprès d’investisseurs américains et canadiens.

Not-for-profit boards: Served many years as a board member and national board chair of the Nature Conservancy of Canada.

Conseils d’OBNL : A été membre du conseil et président du conseil national de Conservation de la nature Canada.

Chair of Mount Royal University in Calgary from 2002 to 2007; serves on the advisory council of the Canadian Centre for Advanced Leadership at the Haskayne School.

Président du conseil de la Mount Royal University de Calgary de 2002 à 2007; siège au conseil consultatif du Canadian Centre for Advanced Leadership à la Haskayne School.

Founding chair of the Business Council of Alberta.

Président du conseil et fondateur du Business Council of Alberta.

First Canadian to become chair of the Interstate Natural Gas Association of America; he was active as a member of the National Petroleum Council in the United States and the Business Council of Canada.

Premier Canadien à présider le conseil de l’Interstate Natural Gas Association of America; il a été membre du National Petroleum Council aux États-Unis et du Conseil canadien des affaires.

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The great hybrid-work challenge PHOTOGRAPHY BY LAURA DAVIDSON/UNSPLASH

The post-pandemic office will require more flexible policies that allow employees to work both on site and remotely, Virginia Galt reports. The test for boards will be to make sure management finds the right balance Le bureau post-pandémie exigera des politiques plus souples qui permettront aux employés de travailler sur place et à distance, rapporte Virginia Galt. Pour les conseils, le test consistera à s’assurer que la direction trouve le bon équilibre FOR THE PAST SEVERAL MONTHS, between lockdowns, the new managing partner of Torys LLP has made the lonely sojourn to his law firm’s stately head office in Toronto’s financial district. It’s a ghost town. “I can spend an entire day of work there and not see another human being. It’s very, very strange. There’s no buzz in the office, no noise,” said Matthew Cockburn, who was appointed to his post two weeks into the pandemic, with his colleagues all working from home.

Cockburn is now turning his attention to the next big management challenge: repopulating the post-pandemic office while retaining some of the advantages of remote work.

“Before Covid, we had everyone in the office. During Covid, we have everybody out of the office, working from home … and [despite the difficult circumstances], we have been incredibly productive,” Cockburn told Director Journal.

The challenge, when workplaces can safely reopen, will be to find the ideal balance between time at the office and working from

AU COURS DES DERNIERS MOIS, entre les confinements, le nouvel associé principal de Torys LLP a effectué le séjour solitaire à l’imposant siège social de son cabinet juridique dans le quartier financier de Toronto. Une ville fantôme. « Je peux passer une journée entière de travail là-bas sans voir un seul autre être humain. C’est très, très étrange. Aucun bruit, aucune effervescence », explique Matthew Cockburn, qui a été nommé à son poste deux semaines avant le début de la pandémie, alors que ses collègues travaillent tous de la maison.

M. Cockburn tourne maintenant son attention vers le prochain grand défi de gestion : repeupler le bureau post-pandémie tout en retenant certains avantages du travail à distance. « Avant la Covid, tout le monde était au bureau. Pendant la Covid, tout le monde était hors du bureau, en télétravail… et [en dépit de cette situation difficile], nous avons été incroyablement productifs », affirme-t-il au Director Journal.

Le défi, lorsque les lieux de travail pourront rouvrir en toute

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‘Our business is a people business. We benefit a lot from being together in person, collaborating, brainstorming, mentoring … so how do we encourage that, while at the same time recognizing and facilitating the degree of flexibility that we think people want going forward?’ « Notre entreprise est axée sur les gens. Nous profitons beaucoup du fait d’être ensemble en personne, de collaborer, de trouver des idées, d’offrir du mentorat… alors, comment encourager cela tout en reconnaissant et en facilitant le degré de flexibilité que nous croyons que les gens souhaitent pour l’avenir? »

home when feasible. It will require careful planning, and some experimentation, to hit on an approach that works for clients, partners and associates – client needs and preferences being the prime consideration, he said.

“Our business is a people business. We benefit a lot from being together in person, collaborating, brainstorming, mentoring … so how do we encourage that, while at the same time recognizing and facilitating the degree of flexibility that we think people want going forward?”

PHOTOGRAPHY BY KNATHAN REBOUCAS/UNSPLASH

New attitudes It’s a question that’s engaging boards of directors and executives in Canada and around the world. The genie is out of the bottle on remote work, and getting the office buzz back won’t be a simple matter of reopening the doors and calling everyone in.

While technology to enable remote work has been available for decades, most CEOs had, until now, resisted the idea of employees working out of sight away from the office. The reason was often “that’s not the way we do things around here,” said Jean-Nicolas Reyt, an assistant professor of organizational behaviour at McGill University’s Desautels Faculty of Management.

But the forced global move to remote work in March, 2020, to curb the spread of the deadly Covid-19 coronavirus has shifted attitudes, said Reyt, who has monitored thousands of corporate earnings calls since the onset of the pandemic.

His research has captured the full gamut of developments and opinions: a radical move to permanent remote work (e-commerce giant Shopify Inc); a willingness to adopt a hybrid model of in-office and remote work (engineering services company Stantec Inc.); and skepticism that employees can be just as productive working from home (as enunciated by Ed Sonshine, then CEO and now non-executive chair of RioCan Real Estate Investment Trust.)

“The effects of Covid-19 have led us to reimagine the way we work, resulting in the decision to be a ‘digital-by-default’ company,” Ottawa-based Shopify announced last year. In addition to reduced real estate costs, longer-term benefits will include “levelling the playing field for employees, opening ourselves up to a diverse global talent pool [and] eliminating unnecessary commutes,” Shopify elaborated in a February, 2021, management discussion and analysis document. The company will retain some work space for team collaboration and events.

sécurité, consistera à trouver l’équilibre idéal entre le travail au bureau et le télétravail, lorsque c’est possible. Cela exigera une planification judicieuse et un certain degré d’expérimentation afin d’en arriver à une approche qui conviendra aux clients, aux partenaires et aux associés – les besoins et préférences du client étant la principale considération, selon lui. « Notre entreprise est axée sur les gens.

Nous profitons beaucoup du fait d’être ensemble en personne, de collaborer, de trouver des idées, d’offrir du mentorat… alors, comment encourager cela tout en reconnaissant et en facilitant le degré de flexibilité que nous croyons que les gens souhaitent pour l’avenir? »

De nouvelles attitudes C’est une question qui engage les conseils d’administration et dirigeants d’entreprises au Canada et de par le monde. Le génie du travail à distance est sorti de la bouteille et pour retrouver l’effervescence du bureau, il ne suffira pas de rouvrir les portes et d’inviter les gens à rentrer.

Même si la technologie qui permet le travail à distance est disponible depuis des décennies, la plupart des chefs de la direction ont résisté, jusqu’à maintenant, à l’idée d’avoir des employés loin des regards. La raison invoquée était souvent que « ce n’est pas ainsi qu’on fait les choses ici », souligne Jean-Nicholas Reyt, professeur adjoint de comportement organisationnel à la Faculté de gestion Desautels de l’Université McGill.

Mais l’obligation forcée de recourir au télétravail à l’échelle mondiale en mars 2020, afin de freiner la propagation du coronavirus mortel, a modifié les attitudes, explique M. Reyt, qui a supervisé des milliers

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Gord Johnston, CEO of Edmonton-based Stantec, said in an earnings call last year that most of his staff wanted to return to the office, but could work from home one or two days a week. While Sonshine, of Toronto-based RioCan, expressed the view that “anybody who says everybody’s just as efficient working from their dining room table with a laptop as they are in an office doesn’t live in the real world.”

Hybrid culture The question remains whether corporate acceptance of remote work becomes mainstream, Reyt wrote in a recent post for The Conversation, a hub for academic research on new and emerging issues. “For many employees, the answer will depend on what senior management decides.”

Victor Dodig, CEO of Canadian Imperial Bank of Commerce, has taken a decisive lead on this front, stating on April 8, 2021, at the (virtual) annual shareholders meeting that “the future of work at CIBC will be more flexible, with many team members operating in a hybrid model of remote work coupled with an in-person component.

“We see an upside here in terms of employee engagement, productivity, worklife balance – and, critically, in our ability to attract and retain top talent as part of a winning culture at our bank. Our investment in our new headquarters, CIBC Square, will also be a game-changer for us,” Dodig said. “Our modern physical presence at Square enables us to accommodate social distancing in the near term, while enhancing our ability to collaborate with each other, engage with our clients and foster the health and well-being of our team over the longer term.”

Microsoft Canada’s business manager, Lisa Gibson, is closely following the work being conducted at parent Microsoft Corp., which has established a test lab in Redmond, Wash., assembling a team of Microsoft researchers, engineers, and real estate and facilities experts to “understand the most effective, inclusive set-up for hybrid work.”

Fear of missing out or being overlooked will be a real concern for people who continue to work remotely while their colleagues return to the office, Gibson said in

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de téléconférences d’entreprises depuis le début de la pandémie.

Ses recherches couvrent la gamme complète des opinions : changement radical vers le travail à distance permanent (le géant du commerce électronique Shopify Inc.); volonté d’adopter un modèle hybride (l’entreprise de services d’ingénierie Stantec Inc.); et scepticisme quant à l’idée que les employés peuvent être tout aussi productifs en télétravail (tel qu’énoncé par Ed Sonshine, alors chef de la direction et aujourd’hui président du conseil non membre de la direction de RioCan Real Investment Trust). « Les effets de la Covid-19 nous ont menés à repenser notre mode de travail et à prendre la décision d’être une entreprise « numérique par défaut », a annoncé l’an dernier l’entreprise Shopify, située à Ottawa. En plus de coûts immobiliers réduits, les avantages à long terme comprendront notamment « l’égalité des chances pour les employés, notre ouverture à un bassin diversifié de talent [et] l’élimination de déplacements inutiles », a ajouté Shopify dans un rapport de gestion publié en février 2021. L’entreprise conservera certains espaces de travail consacrés à la collaboration en équipe et à des événements.

Gord Johnson, chef de la direction de Stantec, une entreprise d’Edmonton, a déclaré l’an dernier que la plupart des employés voulaient retourner au bureau, mais pouvoir travailler de la maison un ou deux jours par semaine. Mais M. Sonshone, de la société torontoise RioCan, croit que « quiconque dit que chacun est aussi efficace sur un ordinateur portable à la table de sa salle à manger qu’au bureau ne vit pas dans le monde réel. »

Une culture hybride La question demeure à savoir si l’acceptation du travail à distance par les entreprises deviendra courante, a écrit récemment M. Reyt dans The Conversation, une plateforme consacrée à la recherche académique sur les enjeux nouveaux et émergents. « Pour beaucoup d’employés, la réponse dépendra de ce que la haute direction décidera. » Victor Dodig, chef de la direction de la Banque canadienne impériale de commerce, a exercé un leadership décisionnel sur ce front en déclarant, le 8 avril 2021 à l’assemblée annuelle (virtuelle) des actionnaires, que « l’avenir du travail à la CIBC sera plus flexible, alors que plusieurs membres de nos équipes travailleront sous un modèle hybride de travail à distance avec une composante de présence au bureau. » « Nous y voyons un avantage pour les employés, soutient M. Dodig, en matière d’engagement, de productivité et d’équilibre entre le travail et la vie personnelle. Et, de façon essentielle, pour notre capacité d’attirer et de conserver nos meilleurs talents dans le cadre d’une culture gagnante. Notre investissement dans notre nouveau siège social – CIBC Square – nous donnera un second souffle. » La directrice commerciale de Microsoft pour le Canada, Lisa Gibson, suit de près le travail mené par la société mère Microsoft Corp., qui a établi à Redmond, dans l’État de Washington, un laboratoire d’essai réunissant une équipe de chercheurs, d’ingénieurs et d’experts de l’immobilier et de l’infrastructure afin de « comprendre la configuration la plus efficace et la plus inclusive pour le travail hybride. »

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an interview. The technology exists to support collaboration under the hybrid model — for instance, participants can jot down ideas from anywhere using Microsoft’s interactive whiteboard feature.

“But it’s also a culture thing,” she said. The mindset has to be developed. “It’s about managers getting their head around how they need to build a culture that really fosters the flexibility [of the hybrid set-up] and ensures that it doesn’t impact how people are being promoted, how people are being measured.”

If there’s a meeting that simultaneously involves people off-site and at the office once public health officials have declared it safe to return, “you have to really make sure you are driving inclusiveness by calling on people who are on the line or joining in by video.”

The board’s role While it’s the role of senior management to develop return-to-office plans and present them to the board, directors should be open to hearing proposals about innovative new work models in the context of their overall digital strategies – and not engage in what corporate director Brian Hayward refers to as “skeet shooting.”

La crainte de passer à côté de quelque chose d’important ou d’être ignoré sera un véritable sujet de préoccupation pour les gens qui continueront de travailler à distance pendant que leurs collègues retourneront au bureau, a reconnu Mme Gibson en entrevue. La technologie existe pour soutenir la collaboration en mode hybride. « Mais c’est aussi une question de culture, dit-elle. Il faut que les dirigeants s’efforcent de bâtir une culture vraiment axée sur la flexibilité qui n’affecte pas la manière dont les gens obtiennent des promotions ou comment ils sont évalués. » Si une réunion regroupe des gens en télétravail et d’autres qui sont au bureau, « il faudra vraiment s’assurer d’être inclusif en donnant la parole à ceux qui sont en ligne ou se joignent à la réunion par vidéo. »

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Le rôle du conseil Même s’il revient à la haute direction d’élaborer des plans de retour au bureau et de les présenter au conseil, les administrateurs devraient être ouverts à des propositions de nouveaux modes de travail innovateurs dans le contexte de leurs stratégies numériques globales – et ne pas s’engager dans ce que l’administrateur de sociétés Brian Hayward appelle du « tir au pigeon d’argile ».

La pandémie a irrévocablement changé notre mode de travail et il y a de nombreux avantages concurrentiels à intégrer certaines des meilleures pratiques établies durant cette année de télétravail, affirme M. Hayward, ancien président du conseil de la section régionale du Manitoba de l’Institut des administrateurs de sociétés, président de l’agence de conseil en gouvernance Aldare Resources et administrateur de la société de gestion d’actifs Wellington-Altus Private Wealth.

Comme président du conseil de l’entreprise de Winnipeg Cerebra Health, spécialisée dans le traitement des troubles du sommeil, M. Hayward a récemment recruté un nouveau chef de la direction qui vit au New Jersey « et possède une expertise que nous n’avons pu trouver nulle part ailleurs. » Les deux hommes communiquent sur Zoom et, fin avril, ils ne s’étaient toujours pas rencontrés en personne. M. Hayward reconnaît qu’avant la pandémie, il n’aurait peut-être pas été ouvert à une telle possibilité.

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The pandemic has irrevocably changed the way we work, and there may be competitive advantages to embedding some of the best practices established during our year of working remotely, said Hayward, past chair of the Institute of Corporate Directors’ Manitoba chapter, president of governance advisory firm Aldare Resources and a director at asset management firm Wellington-Altus Private Wealth.

As chair of the board of directors of Winnipeg-based Cerebra Health, which specializes in the treatment of sleep disorders, Hayward recently recruited a new CEO who lives in New Jersey “and has expertise we couldn’t get elsewhere.” They communicate by Zoom and, by late April, had yet to meet in person. Hayward acknowledged that prior to the pandemic, he might not have been open to the possibility of a remote CEO. “I think this hybrid thing is significant” and organizations should be attuned to the trends even if their most pressing priority, at this stage, is just getting people safely back to the office, said Hayward, author of a recently published book, The Great Chair: A Window on Effective Board Leadership.

At organizations where the CEO is proposing a move to a hybrid work model, boards should exercise their usual oversight role with probing questions about strategy, cost and implementation, he said. Does the organization have policies to support such a change? How will they measure productivity under the new model? Are they investing in new technology? “What does your organization look like if your salespeople have crappy Wi-Fi?” After such a tumultuous year, most organizations “are still trying to figure out what the new normal looks like,” said Ryan Resch, chair of the ICD’s Greater Toronto Area chapter and managing director of executive compensation at Willis Towers Watson.

“It’s not a simple thing and boards have to realize it’s not just a decision on do we go virtual or not. There’s a lot of nuance that companies need to think about in order to ensure they are making the right decision,” Resch said.

“This is one of those topics where everyone has an opinion, but the board has to

step back. Let management come forward with the strategy and then the board should weigh in and ask questions to make sure the strategy is holistic and addresses some of the key questions around culture and diversity and well-being.”

If an organization does decide to go hybrid, “the change-management aspect is quite significant,” Resch said. If the front-line managers are not trained, and still judge success by looking over employees’ shoulders in the office, “things aren’t going to change.”

Up in the air In a global survey conducted by Microsoft in January, 2021, 65 per cent of the 31,000 survey participants reported that they were craving in-person contact with their colleagues once offices reopened, but hoped to retain the option of working remotely some of the time. The survey found that the enforced work-from-home isolation had taken a toll on mental health and that young employees, in particular, were disadvantaged by the lack of mentorship.

At Torys, Cockburn misses those random hallway encounters where a spontaneous conversation turns into a great idea. He is consulting the firm’s partners about how to manage the return-to-office protocols – dates to be determined pending the all-clears from public health officials across the country. In addition to the practical aspects of how work teams will collaborate if some are at home and some are in the office, he worries about some of the human

Les organisations devraient s’harmoniser à ces tendances, même si leur priorité absolue, à cette étape, demeure le retour des employés au bureau en toute sécurité, croit M. Hayward, auteur d’un ouvrage récent, The Great Chair: A Window on Effective Board Leadership.

Chez les organisations où le chef de la direction propose un passage vers un mode de travail hybride, les conseils devraient exercer leur rôle habituel de surveillance en posant des questions sur la stratégie, les coûts et la mise en œuvre, dit-il. L’organisation a-t-elle les politiques pour soutenir un tel changement? Comment mesurer la productivité sous ce nouveau modèle? Investira-t-on dans une nouvelle technologie? « À quoi ressemblera votre organisation si le Wi-Fi de votre équipe de vente laisse à désirer? » Après une année aussi tumultueuse, la plupart des organisations « tentent toujours d’imaginer à quoi ressemblera la nouvelle normalité », assure Ryan Resch, président du conseil de la section régio-

Board Leadership Centre Digital transformation, purpose-led growth, cyber threats, geopolitical risks, environmental issues, social change The COVID-19 new reality demands more of Boards. KPMG is here to provide you the insights and tools needed to help you navigate this unprecedented time of acute change, challenge and opportunity so you can deliver on your mandate as a director.

Find out more: home.kpmg/ca/blc

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aspects. How comfortable will people feel taking public transit to and from work or getting into an elevator?

Cockburn has a great in-house resource in Torys partner Mitch Frazer, chair of the firm’s pension and employment practice and a director on the North York General Hospital Board. “First and foremost is obviously the health and safety of your employees,” said Frazer. “Then you have the vaccination question: Can you make anyone take a vaccine? What are your premises going to look like? Do you need everybody there? Do you want everybody there?”

Especially for professional services firms, flexibility is key, said Frazer. “What your work will look like is, in many cases, what your clients’ needs look like.”

Frazer has been dealing with back-towork questions from clients for the past year. “Normally I like to solve problems but here I am asking clients more questions than they are asking me. I need to understand what they are thinking and they’ll [say] ‘I’ll get back to you on that.’”

Even the answer to the question of whether an employer can keep an unvaccinated employee out of the office is not clear. “We can analogize, but we don’t know until the first lawsuit or the first human rights case gets decided,” Frazer said. On the topic of lawsuits, employers should also be cautious about making promises such as agreeing to let an employee work from home permanently. “If you change your mind, if it’s not working out and you want them to come back to the office, are you then changing a material term of employment, and is that constructive dismissal?”

Frazer is of the same mind as Resch when it comes to sweeping changes in the way work is performed. “You want to make sure that you look at everything before making quick decisions when people return to the office.”

And hold off on the celebratory returnto-work beverages and buffet. DJ VIRGINIA GALT, a former business and education reporter for The Globe and Mail, covers legal, education and management issues for a number of publications.

nale du Grand Toronto de l’IAS et directeur de la rémunération des cadres chez Willis Towers Watson. « Ce n’est pas simple. Les conseils doivent réaliser que ce n’est pas juste une décision d’aller ou non dans le virtuel. Il y a beaucoup de nuances auxquelles les entreprises doivent réfléchir pour s’assurer de prendre la bonne décision », soutient M. Resch.

Si une organisation décide d’adopter le mode hybride, « le rôle de la direction très important, explique M. Resch. Si les gestionnaires de premier niveau ne sont pas formés et mesurent toujours le succès en regardant par-dessus l’épaule des employés au bureau, les choses ne vont pas changer. »

Beaucoup de questions dans l’air Dans le cadre d’un sondage mondial mené par Microsoft en janvier 2021, 65 pour cent des 31 000 répondants affirmaient avoir très envie de reprendre les contacts en personne avec leurs collègues, une fois que les bureaux seront rouverts, mais espéraient conserver l’option de travailler à distance de temps à autre. L’enquête a aussi indiqué que l’isolement forcé par le télétravail avait affecté leur santé mentale et que les jeunes employés, en particulier, avaient été désavantagés par le manque de mentorat.

Chez Torys, M. Cockburn s’ennuie de ces rencontres de couloir où une conversation spontanée mène à une idée brillante. Il consulte présentement ses associés sur la gestion des protocoles de retour au bureau. En plus des aspects pratiques relatifs à la collaboration entre équipes de travail dont les membres seront au bureau et d’autres à la maison, il s’inquiète des aspects humains. Jusqu’à quel point les gens se sentiront-ils à l’aise de prendre les transports en commun vers le bureau ou la maison ou de monter dans un ascenseur?

Mais M. Cockburn peut compter sur une excellente ressource en la personne de l’associé de Torys Mitch Frazer, président de la pratique de pension et d’emploi et membre du conseil du North York General Hospital. « Ce qui compte avant tout, c’est évidemment la santé et la sécurité de nos employés, assure M. Frazer. Ensuite, il y a la question de la vaccination. Pouvons-nous faire en sorte que chacun soit vacciné? À quoi ressembleront nos locaux? Aurons-nous besoin que tout le monde soit là? Voudrons-nous que tout le monde soit là? » En particulier pour les firmes de services professionnels, la flexibilité est la clé, explique M. Frazer. « Dans beaucoup de cas, votre travail ressemblera à ce dont vos clients auront besoin. » Depuis un an, M. Frazer a dû répondre à des questions sur le retour au travail de la part de ses clients. « Normalement, j’aime trouver des solutions, mais ces jours-ci je pose plus de questions à mes clients qu’ils ne m’en posent. J’ai besoin de comprendre ce qu’ils pensent. » Il n’est même pas clair qu’un employeur pourra empêcher la présence au bureau d’un employé non vacciné. « On ne le sait pas avant que soit tranché la première poursuite ou le premier cas de droit de la personne, explique M. Frazer. Il faut vraiment s’assurer d’avoir tout vérifié avant de décider quand les gens retourneront au bureau. » DJ VIRGINIA GALT, autrefois reporter en éducation pour le Globe and Mail, couvre les enjeux de droit, d’éducation et de gestion pour diverses publications.

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CONFRONTING THE ‘VERY REAL’ THREAT OF INFLATION

SIGNS THAT LIFE is becoming more expensive are everywhere. So many things are pricier than before the pandemic, including homes, cars, gasoline, beef, lumber, computer chips and more. In some cases, buyers are paying double. There is now serious talk of another commodities supercycle and the dawn of a new inflationary era.

You have to go back a long way — to the 1960s and 1970s — to see similar rumblings of inflationary pressures. Then, like now, a powerful confluence of forces helped drive prices higher, including massive government stimulus spending, low interest rates, bursting economic demand and scarcity.

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You have to go back a long way – to the 1960s and 1970s – to see similar rumblings of inflationary pressures.

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For years, economists warned that falling interest rates and demographic trends could push the West into a deflationary environment. But Barrie McKenna finds that the pandemic has changed the calculus for many companies, and boards are beginning to consider the risks posed by a return to inflation

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Central banks in Canada and the United States have characterized the expected uptick in inflation as a temporary phenomenon, but many experts aren’t so sure.

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Fading memories of that history make the current economic environment worrisome.

Even among today’s crop of business leaders old enough to have lived through earlier bouts of high inflation, very few were sitting around board tables five decades ago.

“It’s a complete change in mindset,” says Patti Croft, former chief economist of RBC Global Asset Management and a director of the Ontario Teachers’ Pension Plan and the Ontario Pension Board. “We’ve all become used to living in a world of low and stable inflation.”

Croft worries there is too little “lived experience in boardrooms” to prepare organizations for what may lie ahead.

What’s novel this time around is that central banks are buying government bonds, and the government is turning around and putting that money into the hands of consumers. That is leaving many Canadians flush with cash, driving up the savings rate.

Meanwhile, many of the factors that relentlessly drove inflation lower in recent years — globalization, demographics and cheap labour — are now moving in the opposite direction. There’s deglobalization and a surge in more economic nationalism as countries create new domestic supply chains — for everything from masks and vaccines to microchips. There is an inevitable cost to all that.

“From a board perspective, this falls into the category of emerging risks, and there are implications no matter what line of business you’re in,” Croft warns. “I really hope boards are talking about this.”

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Too hard to ignore If there is complacency about the threat of inflation, central banks and governments are partly to blame.

“Many people running companies started their careers after the Great Recession and the financial crisis [that began in 2008 ],” points out John Murray, deputy governor of the Bank of Canada from 2008 to 2014. “All they have seen is persistently low inflation and persistently low interest rates, and the assurances of central banks that they will do everything to keep things stable.”

WHAT’S NOVEL THIS TIME AROUND IS THAT CENTRAL BANKS ARE BUYING GOVERNMENT BONDS, AND THE GOVERNMENT IS TURNING AROUND AND PUTTING THAT MONEY INTO THE HANDS OF CONSUMERS. For the past decade, central banks have kept short-term rates near zero and experimented with innovative monetary policy tools, such as large-scale purchases of government and corporate bonds, to prop up demand and provide liquidity to the financial system. They’ve done so without yet stoking much inflation, surprising even themselves.

“That sent the message to people that it would continue without difficulty,” says Murray, who is on the board of the Ontario Teachers’ Pension Plan. He emphasizes that his views are his own, not Teachers’.

“The consensus view was that ‘low for long’ was going to be ‘very low and very long,’ and continue.”

Even in recent months, central banks in Canada and the United States have characterized the expected uptick in inflation this year as a temporary phenomenon. And they have continued to pledge they’ll keep their key rates low — even as governments simultaneously pump massive amounts of fiscal stimulus into the economy. Indeed, U.S. Federal Reserve Board chairman Jerome Powell said recently that he expects the inflationary effect of the latest US$1.9-trillion Covid-19 recovery package to be “neither particularly large nor persistent.”

Both the Fed and the Bank of Canada acknowledge that inflation is likely to be significantly higher than their 2-per-cent targets, but that it’s likely to be temporary. However, many experts aren’t so sure that the result of all this stimulus will be a mere blip. They worry that the short term will bleed into a much longer inflationary period. That’s because many of the factors that have been driving down global prices in recent decades are now stalling, and will soon reverse course.

British economists Charles Goodhart and Manoj Pradhan argue in their recent book, The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival, that we’re moving from a world of plenty to one of scarcity. They expect that the global labour glut that drove prices, wages and interest rates down in recent decades will become a labour shortage as birth rates continue to fall nearly everywhere around the world.

Meanwhile, supply chains set up to tap that labour are already being disrupted, not just by the pandemic, but by deglobalization and a push for more national self-reliance in the production of

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goods and services. Longer term, there are steep costs of dealing with the effects of climate change and the rising health-care needs of a growing population of retirees.

The result, they argue, will push up wages, inflation and interest rates.

Others, however, aren’t buying the inflation story. They say that technology, including innovations in artificial intelligence and robotics, will help counter inflationary forces. And central banks and governments also have the tools to control inflation – by pushing interest rates higher – if they choose to use them.

Vancouver entrepreneur and director Jeff Booth isn’t convinced higher inflation is inevitable. Booth, author of The Price of Tomorrow: Why Deflation is the Key to an Abundant Future, argues that new technology is a potent force that is driving down prices everywhere. And no amount of monetary and fiscal stimulus can counter that effect indefinitely.

“Technology is continuing to drive disinflation,” says Booth, co-founder of online building materials marketplace BuildDirect and a director of several tech startups. “You need exponentially more stimulus to offset that.”

Getting prepared How well Canadians would handle sharply higher interest rates is unclear. They won’t go down easily, particularly for businesses and homeowners with a lot of short-term debt, suddenly forced to renegotiate loans at higher rates. If not managed carefully, the consequences could include a housing crash, business bankruptcies, and resulting pain for banks and other lenders.

Inflation was running at more than 5 per cent a year in the late 1960s, and double that in the 1970s. It took a couple of decades of high interest rates, peaking at 21 per cent in 1981, to beat back inflation and work off the debt overhang.

If inflation becomes a thing in 2021 and beyond, what can organizations do to bolster their defenses?

A lot depends on the sector you’re in.

Maryse Bertrand, a former corporate lawyer, serves on the boards of a bank (National Bank of Canada), a grocery chain (Metro

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Inc.), a global manufacturer (Gildan Activewear Inc.) and a pension fund manager (Public Sector Pension Investment Board). She acknowledges there is growing talk, and angst, about inflation around board tables these days, though it’s more acute for some than others.

There are so many unknowns that if you want to be risk averse, you have to account for inflation and understand it won’t be easy to manage, Bertrand says.

For banks and pension funds, inflation and interest rates colour everything they do, she points out. For others, it’s less of a risk. Until recently, talk of inflation rarely came up in boardroom discussions.

“The view was that it was going to be low for long, and it’s going to be like that for 30 years,” Bertrand says. “Now, the prospect that it’s not going to be like that forever is very real.”

Some inflation is manageable and perhaps even a good thing for banks and grocers. Interest rate margins for lenders are typically better in a higher-rate environment. Likewise, grocers can often pass along higher prices to consumers, resulting in improved profit margins in an inflationary environment.

For manufacturers, inflation is typically more complicated, and can depend on market position, debt load and source of inputs.

Montreal-based Gildan, which makes T-shirts and other casual apparel, faces inflationary forces that are largely beyond the power of the Bank of Canada or the Fed to counter. So, it uses various hedging techniques to limit the impact of fluctuating cotton prices, which are set in global markets. Its labour costs are dictated by conditions in Latin America, where the bulk of its factories are located.

“No one knows if inflation is going to be benign or not, and whether central banks will be able to tamp it down,” Bertrand says.

Tracey McVicar, a partner at Vancouver private equity firm CAI Capital Partners and a director of Teck Resources Ltd., sees a dangerous buildup in demand, and price pressures. She worries that governments and central banks will “overshoot” with too much fiscal and monetary fuel. Inflation will “go nuts” if central banks stick to their commitment to keep rates low as the economy emerges from the pandemic, she says.

“People are booking cruises for the next three years, they’re buying clothes and driving demand for building products,” points out McVicar, who also sits on the boards of several private companies.

“Keeping rates low and pumping money into this economy, it’s inevitable that we create these bubbles.”

IF INFLATION BECOMES A THING IN 2021 AND BEYOND, WHAT CAN ORGANIZATIONS DO TO BOL­STER THEIR DEFENSES? A LOT DEPENDS ON THE SECTOR YOU’RE IN.

To ward off trouble, companies should be shifting to longer-term debt, she says. CAI is heavily focused on service businesses, which she says should be better positioned if inflation picks up.

“I’m both scared and opportunistic as I invest, and as we run our businesses,” McVicar says. “We are carefully watching to make sure that our firms are positioned to make it through to the other side.”

PHOTOGRAPHY BY EDUARDO SOARES/UNSPLASH

Waiting for the fog to clear In spite of plenty of anecdotal evidence of higher prices, the most commonly cited inflation gauge – the Consumer Price Index – is running close to the Bank of Canada’s 2-per-cent target.

But other gauges, including Canadian Federation of Independent Business’s Business Barometer, point to rising price expectations. In March, the CFIB survey showed that businesses expect to raise their prices by an average of 2.5 per cent over the next year. That’s a full percentage point higher than a year ago, and just shy of an all-time high in the survey, which has been tracking business behaviour since 2009.

Wage expectations, however, remain relatively subdued, reflecting the large number of employees of small businesses who remain unemployed owing to the pandemic, according to Simon Gaudreault, senior director of national research at the CFIB. The pandemic has been a shock to businesses of all kinds and companies are still figuring their way through the uncertainty, Gaudreault says. Some companies will be able to pass on price increases relatively easily, particularly in professional services. For companies in hospitality and manufacturing, however, it could prove more difficult.

“We’re in a new economy, and we’re all learning as the weeks and months go by,” Gaudreault says. “Everything is still foggy and companies are in a waiting period.”

Ultimately, the inflation threat may be less about data than about people’s neglect of history and time-tested economic principles. Director Maryse Bertrand recalls that when she worked as a corporate law-

Grocers can often pass along higher prices to consumers, resulting in improved profit margins in an inflationary environment.

yer in the late 1990s, many of her colleagues were rushing to take jobs at dot-com companies. They believed in a “new math,” where it didn’t matter if companies were losing piles of money.

“Sure enough, it all came crashing down,” Bertrand says.

There is a similar sense of naiveté among proponents of modern monetary theory. Too many people believe that governments and central banks can almost limitlessly create money and spend it, without serious consequences.

“I wonder if there isn’t going to be a day of reckoning as there was in 2000, when people believed there was a new paradigm.” DJ BARRIE McKENNA is a veteran business writer, columnist and foreign correspondent. He spent 30 years at The Globe and Mail, posted in Washington, Ottawa and Montreal. He has also worked at the Financial Post. He is a six-time finalist for Canada’s National Newspaper Award. Born in Montreal, he now lives in Ottawa.

ICD.CA | 37

38 | DIRECTOR JOURNAL

BY Jeff Buckstein

Building global trust with good governance

ILLUSTRATION BY AKINDO/ISTOCK

The pandemic has highlighted how strong corporate governance can improve international ties

THE TRAUMA THAT COVID-19 has inflicted upon the global economy and health-care systems around the world is driving home the importance of strengthening international governance standards to enhance trust and co-operation.

“Countries are recognizing how they are linked globally and economically [and] digitally as well. Opportunities and risks go around the planet in a flash. It really happens in the blink of an eye,” says Rahul Bhardwaj, CEO of the Institute of Corporate Directors in Toronto.

“Corporate governance needs to evolve and keep up with those standards, above all to build trust, because I think there is a growing recognition that trust is at a deficit, and it is causing various challenges — politically, culturally, socially, corporately,” he adds.

The corporate sector, in particular, has examined how strong governance standards can help establish trust both domestically and globally. In so doing, they have assessed their relationships with various stakeholders, including employees, customers, supply chains and capital markets, notes Bhardwaj.

ICD.CA | 39

“We need trust to really advance our organizations, and this has had a profound impact on how we look at corporate governance.

This is why I’ve been saying it’s time to make corporate governance Canada’s global competitive advantage. We’re working off a strong base, but we can do a lot more to attract talent, as well as capital, in Canada. That’s what we need to grow this country,” he says.

“That’s why there’s such a focus on corporate governance and building trust. It’s at the very core of the ICD’s purpose.”

Trust is also, in many ways, the lifeblood of corporate governance. A country with a political environment that does not evoke trust will experience severe ripple effects in a highly competitive global market, such as difficulty in attracting talent and capital, or having to pay a higher cost for capital, Bhardwaj says.

Recognizing this, some countries are slowly embracing or enhancing early-stage development of corporate governance as part of improving ties to the global network, he adds – all done in an effort to gain greater access to talent, opportunities and capital.

‘I think there is a growing recognition that trust is at a deficit, and it is causing various challenges — politically, culturally, socially, corporately.’

Greater risks

—Rahul Bhardwaj, CEO of the Institute of Corporate Directors

The 2020-21 survey report of the Global Network of Director Institutes (GNDI), of which Canada is a founding member, found that 60 per cent of respondents believed that Covid-19 has changed the rules for corporate governance. Specifically, they agreed there is a need to incorporate a new set of broader risks into boards’ scenario planning.

In conversations with global peers, there is a recognition that managing risk is central to the oversight of a board, says Bhardwaj, who in addition to his full-time position with the ICD is also chair of the GNDI, which has 22 member organizations. Moreover, there is recognition that risk and strategy are opposite sides of the same coin.

“You want to make sure you have a strategy that can create value for your stakeholders, but also be very mindful of the risks that could create a problem for, and undermine, the strategy. That also involves examining the nature of a risk, because if that risk is creating opportunities, you need to consider ‘how do we adjust our strategies to take advantage of those opportunities?’” Bhardwaj says.

Risks also vary depending on the problems that a particular jurisdiction faces. For example, in some jurisdictions there may be a heightened sensitivity toward climate risk or cyberrisk or geopolitical risk.

Another key issue identified in the GNDI’s 2020-21 survey report was that 50 per cent of responding directors said they considered it likely that Covid-19 would contribute to a long-term slowdown of globalization as a result of increased protectionism.

“Where there was a particular trajectory towards globalization in a more unified fashion, now there are going to be some pockets where it may slow down — even perhaps taking a step back,” says Bhardwaj. “I think people are aware of that and its potential negative impacts. But I didn’t get the sense there was a concern this was a direction that couldn’t be turned around again.”

Shareholder power Kerrie Waring is CEO of the International Corporate Governance Network (ICGN) in London, an investor-led organization that promotes effective standards of corporate governance.

40 | DIRECTOR JOURNAL

Waring is not concerned that international governance standards are starting to diminish as a result of contemporary political and other forces, including Covid-19. “If anything, governance standards are strengthening,” she says.

“In any event, the only really effective enforcer of corporate governance is share ownership. Investors are not restricted by national boundaries, and the increased proportion of overseas share ownership in most markets gives global sophisticated investors – such as ICGN members – a high degree of influence in holding companies to account,” Waring says.

But there are potential threats to the existing corporate governance structure. One area where standards are visibly regressing is around dual-class shares, says Waring, who notes that there appears to be a trend in many markets for stock exchanges to allow dual-class share ownership structures that do not align economic interests with voting rights.

“This is a worry. [It] diminishes the ability of minority investors to have real weight and influence with companies,” she stresses.

Geopolitical divergence on key issues involving systemic risks can also be problematic. Take the risks associated with climate change, for example. Waring notes that some governments – such as New Zealand’s and Britain’s – have embraced mandating risk disclosure requirements, while others have not, which establishes an unfair playing field.

Governments need to show leadership by first establishing clear targets to reduce carbon emissions, as well as a time frame in which “net zero” emissions are to be achieved. Markets will then follow that lead, she says.

ILLUSTRATION BY AKINDO/ISTOCK

Sharing best practices The contemporary digital era, heightened by the Covid-19 pandemic, has accelerated global uncertainty with respect to numerous financial issues, including capital flow and supply chains, as well as social issues like immigration and human rights.

“I think that’s what boards are really grappling with. And that’s why having a global network is super important” – because members around the world can share what they’ve learned, Bhardwaj says.

The GNDI has an important niche in fulfilling that critical role because it is a robust network whose members share best practices with each other and then take those ideas back into their own communities, he adds.

“For instance, when Norway was making significant and rapid inroads on board diversity, particularly around gender, it was quite an aggressive experiment. To listen to what they did, why they did it, and what the results were, was extremely instructive for the rest of us to understand and appreciate how that worked,” he says.

“That helps us form the type of questions that we want to ask our directors and it helps us get ahead of some of the issues that we’re thinking might come down the pike [by] actually seeing it play out in different places,” he adds.

Each member institute is also devoted to helping corporate boards in their respective jurisdictions become more effective. This has a collective impact on value creation for stakeholders in each of those countries, Bhardwaj says.

Waring agrees that it is imperative for countries to share best governance practices in an effort to try to establish an even stronger governance agenda. She says the investing public has a tremendous stake riding on the result, including social well-being, economic prosperity, and even the future of the planet.

The ICGN also shares best practices on corporate governance. “We respond to dozens of consultations every year. This is an example of how investor perspectives on high standards of good governance is transcribed in different markets,” Waring says.

Moreover, the ICGN’s global governance principals serve as an overlay of the highest standards of governance that many national governments refer to when updating their own national codes, she notes.

“Corporate governance is a broad discipline and covers many areas. Ultimately it is about the quality and effectiveness of boards of directors who are accountable to shareholders for promoting a long-term success of the company while having regard to other stakeholders,” says Waring.

“Having the right foundations of good governance in the first instance – responsibility, fairness, accountability and transparency – is of paramount importance.” DJ JEFF BUCKSTEIN is an Ottawa-based freelance business writer with a CPA, CGA designation. He writes about personal finance, accounting and other business-related issues and current events.

ICD.CA | 41

ICD-ROTMAN DIRECTORS EDUCATION PROGRAM

Better your skills.

BETTER YOUR BOARD. Canada’s Leading Program for Directors “The ICD-Rotman DEP is a best-in-class program for experienced directors looking to enhance their governance capabilities. The curriculum continues to be highly relevant and I was impressed when they were able to seamlessly pivot to digital delivery. The DEP gives participants tangible skills to be better directors and I highly recommend the program.”

STACEY E. MCDONALD, ICD.D DIRECTOR, BIRCHCLIFF ENERGY LTD

Although it is too soon to resume in-person, peer-to-peer learning, the ICD and the University of Toronto’s Rotman School of Management are working closely with Canada’s top business schools to co-ordinate the digital delivery of DEP modules until such time as we can return to the classroom.

Our faculty of leading governance experts will provide participants with the same dynamic curriculum and experiential learning that has made the DEP Canada’s leading program for directors.

BE MORE EFFECTIVE AS A DIRECTOR. APPLY FOR THE DEP TODAY.

Applications are now open for the 2021/22 DEP academic year: CITY

MODULE 1 START DATES

APPLICATION DEADLINE

Toronto

Sept. 27-29, Oct. 7- 8, 2021 (online)

August 5, 2021

Calgary

October 14 -16, 2021 (online)

August 19, 2021

Vancouver

Oct. 25-27, Nov. 1-3, 2021 (online)

August 28, 2021

Montreal

April 1- 3, 2022

January 13, 2022

Please note that the Montreal offering will be delivered in both English and French.

icd.ca

CONTACT THE ICD AND APPLY TODAY. 1.877.593.7741 x230 I education@icd.ca I icd.ca/DEP

ICD DIRECTORS ON THE MOVE

DIRECTORS ON THE MOVE The ICD would like to congratulate the following members on their recent board appointments Energy & Power

Brenda Eaton, ICD.D

John Seaman, ICD.D

Mary-Jo Case, ICD.D

CHAIR B.C. FERRIES

DIRECTOR I-80 GOLD CORP.

Amanda Walton, ICD.D

John Begeman, ICD.D

DIRECTOR WHITECAP RESOURCES INC.

Sophia Langlois, ICD.D

CHAIR PORTS TORONTO

DIRECTOR I-80 GOLD CORP.

DIRECTOR LOOP ENERGY INC.

Technology

Insurance

CHAIR MISSISSIPPI RIVER POWER CORP.

DIRECTOR TAAL DISTRIBUTED INFORMATION TECHNOLOGIES INC.

DIRECTOR WESTLAND INSURANCE GROUP LTD.

Not-for-Profit

Sarosh Nanavati, ICD.D

DIRECTOR LAWYERS’ PROFESSIONAL INDEMNITY CO.

David Goldsmith, ICD.D DIRECTOR MISSISSIPPI RIVER POWER CORP.

Adrian Foster, ICD.D

Art Leitch, ICD.D VICE-CHAIR OAKVILLE HOSPITAL FOUNDATION

Liza Aboud, ICD.D DIRECTOR MOTOR VEHICLE SALES AUTHORITY OF BRITISH COLUMBIA

Patrick Donnelly DIRECTOR FOOD FOR LIFE CANADA

John Carmichael, ICD.D CHAIR ONTARIO SCIENCE CENTRE

Mike Nolan, ICD.D CHAIR COMMUNITY FOUNDATION OF NORTH OKANAGAN

Liza Aboud, ICD.D

Deborah Rosati, ICD.D

DIRECTOR RAISE PRODUCTION INC.

Richard C. Powers, ICD.D DIRECTOR PIVOTREE INC.

Chris Schnarr, ICD.D CHAIR VITALHUB CORP.

Metals & Mining Ron Little, ICD.D

DIRECTOR GOLD RESOURCE CORP.

Priya Patil, ICD.D

Binah Nathan, ICD.D

Suzanne Gouin, ICD.D

CHAIR INTER PIPELINE LTD.

DIRECTOR CO-OPERATORS GROUP

Rakesh Saraf, ICD.D

Medical & Healthcare

Retail & Consumer

Nancy McKenzie, ICD.D DIRECTOR SWISS WATER DECAFFEINATED COFFEE INC.

Elaine Bereziuk-Smith, ICD.D DIRECTOR CALGARY CO-OP.

CHAIR SIMA GROUP INC.

Oil & Gas

Mark Gerlitz DIRECTOR RECONNAISSANCE ENERGY AFRICA LTD.

Financial Services

CHAIR CANADA REVENUE AGENCY

DIRECTOR NURAN WIRELESS

DIRECTOR RED RIVER COOPERATIVE LTD.

DIRECTOR PROSPECTORS AND DEVELOPERS ASSOCIATION OF CANADA

Margaret McKenzie, ICD.D

Mike Csversko, ICD.D

Gary Timlick, ICD.D

Lori Sterling, ICD.D

DIRECTOR EXPORT DEVELOPMENT CANADA

Vitor Fonseca, ICD.D

DIRECTOR SAMUEL SON AND CO.

Rosario Astuvilca-Rojas

Richard Payette

DIRECTOR BONTERRA ENERGY CORP.

DIRECTOR CONEXUS CREDIT UNION

Paul Jewer, ICD.D

DIRECTOR MAG SILVER CORP.

D. Michael G. Stewart

Broadcasting & Telecommunications

André Hudon

Tim Baker, ICD.D

DIRECTOR FINDEV CANADA

Bradyn Parisian, ICD.D

DIRECTOR RAMBLER METALS AND MINING PLC

DIRECTOR BC REAL ESTATE ASSOCIATION

DIRECTOR WINDMILL MICRO FINANCE

Don Morrison, ICD.D

Pierre Matuszewski, ICD.D

DIRECTOR UBC INVESTMENT MANAGEMENT TRUST

Adrian Foster, ICD.D

Marie Mullally, ICD.D DIRECTOR NOVA LEAP HEALTH CORP.

CHAIR HEALTHCARE OF ONTARIO PENSION PLAN

Education

Karim Teja

VICE-CHAIR PEARSON UNITED WORLD COLLEGE

DIRECTOR CONNECT FIRST CREDIT UNION

Pierre Matuszewski, ICD.D DIRECTOR SOCIÉTÉ GENERALE

Government

Allison Mendes, ICD.D DIRECTOR CREATETO

Lori Sterling, ICD.D

Natalia Lishchyna, ICD.D GOVERNOR MCMASTER UNIVERSITY

Consumer Products & Manufacturing Joanne Hruska, ICD.D DIRECTOR VITREOUS GLASS INC.

Janet Ecker, ICD.D DIRECTOR INVEST ONTARIO

Send your board appointment publication requests to: Sheldon Mahabir, Director of Member Engagement, smahabir@icd.ca ICD.CA | 43

BY Bob Ramsay

Rethinking the social contract The head of the London School of Economics argues for new policies designed for the times

FEW GLOBAL POWER PLAYERS have played so well, for so long, on so many fields.

Minouche Shafik has served as the director of the London School of Economics since 2017. Before that, she was the youngest-ever vice-president of the World Bank, deputy governor of the Bank of England, deputy head of the International Monetary Fund, and the top official at Britain’s Department for International Development. Few were surprised last year when she was appointed to the British House of Lords.

But her manner is not to the manor born. Baroness Shafik emigrated as a child from Egypt to the United States.

“We weren’t poor,” she told The Financial Times. “But it was humble.” She was bused to schools in three different states as they all dealt with desegregation.

44 | DIRECTOR JOURNAL

It’s a coincidence that her new book, What We Owe Each Other: A New Social Contract for a Better Society, came out at the same time as that of her former Bank of England colleague Mark Carney — Value(s): Building a Better World for All. But the fact that the two calls for change have come from the temples of power rather than the fringes of society should be a wake-up call for leaders everywhere.

In April, Director Journal spoke with Minouche Shafik about her book, our world in flux, and engineering change from inside the walls of power.

You’ve said: “I don’t need to be the smartest person in the room.” Does that really work?

If you always want to be the smartest, you can score points and get the last word. But you’ll always recruit people who are less

smart than you. I’m keen to have people who I can learn from and they can learn from each other. So, when I chair a meeting, they do all the talking. If things start going astray, I’m happy to intervene, but I think this enabling approach to leadership is so much more powerful.

How can women keep the gains they’ve made?

We need to address two things: child care and unpaid work. What you see happening to women as they graduate from university is, they earn the same money. But as soon as they have their first child, there’s a massive divergence in wages, and because they have less experience when they return to work, they never recover professionally from those years of child care. Economists call it the “child penalty.”

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‘As people live longer, they should just expect to work extra,” says Minouche Shafik, director of the LSE. “If you used to live to be 70 or 75 and now you’re living to 80 and 85, it’s not like you’re disabled for those 10 added years.’

ICD.CA | 45

‘IN ORDER FOR EVERYONE TO REALLY GAIN THE BENEFITS OF FLEXIBILITY THAT TECHNOLOGY HAS CREATED, AND THAT WE’VE ALL LEARNED FIRST-HAND DURING THE PANDEMIC, COMPANIES NEED NOT ONLY TO PAY GIG WORKERS AND CONTRACT WORKERS A LIVING WAGE, BUT TO OFFER THEM BENEFITS AS WELL.’ The answer is not more maternity or paternity leave. We need parental leave which says to both parents “you can take time off to care for your child.”

Your book is titled What We Owe Each Other and clearly, you believe we owe each other more. How can we afford it and how can we create more?

The basic social contract in societies throughout history is that able-bodied adults are expected to work in exchange for being looked after when they’re young or old or unable to work. That shouldn’t change. What must is the idea we’re just going to give people a cheque every month.

It doesn’t work for them and it doesn’t work for society either.

How assertive do you think boards of directors must be around their organizations becoming more sustainable in their operational and investment decisions?

Very. It’s the directors who have such a vital role in creating the organization’s per-

46 | DIRECTOR JOURNAL

formance framework for management, and clearly ESG [environmental, social and governance policy] is moving rapidly from the fringes to become a central part of that framework. But ultimately, I don’t think voluntary measures are good enough and good corporate citizenship is not enough. I actually believe we need regulatory changes to create a level playing field for everyone.

That way, the laggards have to step up, and the good corporate citizens aren’t compet-

itively disadvantaged because the laggards aren’t doing what they should.

You also write that we should link retirement age to life expectancy, with the hope that each would rise in lockstep.

I do, and as people live longer, they should just expect to work extra. If you used to live to be 70 or 75 and now you’re living to 80 and 85, it’s not like you’re disabled for those 10 added years. Actually, our final

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three years of ill health have stayed more or less the same. It’s only towards the very end of life that most people can’t be productive. So if people can be more productive for longer, hopefully our children won’t have to take care of us as long as we took with our own parents.

The pandemic has seen massive acrossthe-board spending to enable entire nations to keep their social contracts alive.

Do you think that has to continue in order to keep their economies growing?

hand during the pandemic, companies need not only to pay gig workers and contract workers a living wage, but to offer them benefits as well. Otherwise, the very flexibility that is tech’s promise will be stunted.

Earlier this year, the Supreme Court in the U.K. ruled that Uber drivers are employees. They have the right to pensions and health-care and sickness benefits, and so on. I think we should make that a legal requirement and not just at Uber.

We saw what happened during Covid-19 when the most vulnerable workers couldn’t afford to take time off to get tested or vaccinated. A good social contract will not abandon large groups of people who are fulfilling their part of the contract. DJ BOB RAMSAY is a Toronto-based writer and communications consultant and the founder of the RamsayTalks Online speaker series, where Minouche Shafik spoke on April 29.

A few targeted dollars are worth more than massive dollars indiscriminately spent. Let me give you an example. There’s a very good study coming out of Jamaica where some infants were visited once a week by a health-care worker who made sure the kids got good nutrition and were mentored.

This was compared to another group who weren’t visited by the health-care worker.

And 20 years later, the ones who were visited were earning 42 per cent more. So, with that small cost came a huge benefit.

If you don’t help kids in those really early years, no matter how good a school you send them to, they’ll never catch up.

We’ve always thought of those early years as the responsibility of families. But I’d argue that the social consequences of those early years are so great that society needs to support families to equalize those opportunities.

Your concerns around technology have more to do with tech’s ability to forge vast changes in the labour markets than the traditional critiques around privacy and lack of personal control. Why is that?

One of the growing areas of economics is platform economics, understanding how platforms like Amazon and Google and Uber changed the way we work. On the one hand, technology has made it possible for much more flexible ways of working.

But because these are some of the biggest companies in the world, let’s not forget how their own employment practices are changing how we work as well.

In order for everyone to really gain the benefits of flexibility that technology has created, and that we’ve all learned first-

ICD.CA | 47

pwc.com/ca/directorconnect

Driving change through difficult conversations: board evaluation and refreshment Like every other workplace, the boardroom looks different in 2021. The shift to virtual interactions has made sensitive conversations —like those regarding board refreshment and director performance— more challenging to navigate.

Join PwC Canada for a conversation about board evaluation and refreshment.

Date: Thursday, May 27 2021 Time: 2:00 – 3:00 pm EST Register here: icd.ca/DrivingChange

©2021 PricewaterhouseCoopers LLP, an Ontario limited liability partnership. All rights reserved. 871175 0321

POLICY PERSPECTIVE

Public policy in the boardroom

ILLUSTRATION BY AARON MCCONOMY

Getting involved in social issues adds new risk for companies, but so does ignoring them

SIR GEORGE STEPHEN, the first presiThere are also policy measures that only 18 dent of the Canadian Pacific Railway, from months ago might have met resistance from 1880 to 1888, was born in Scotland under large and small businesses. Universal basic modest circumstances but rose to amass income, for example, seems to contradict the great wealth, becoming a confidant of King essence of the capitalist system, but support George V along the way. for some minimal income standard can now Stephen also proved sensitive to the sobe found across the political spectrum and cietal challenges of his day and was a genthe private sector has offered little challenge. erous philanthropist (including donating Access to affordable child care, included $1-million to found the Royal Victoria Hosin the latest federal budget, is another interpital in Montreal – about $30-million in toesting development. While there may be adday’s value). But despite any personal sense vantages to some businesses, the costs to the of social responsibility, Stephen’s business public purse will be enormous and will have priorities were clear and were reflected in to be paid for somehow. Carbon pricing, Matthew Fortier his public, private and financial support of once seen as anathema to economic growth ICD’s Vice-President the Macdonald government to complete the in Canada, has wriggled from the far left of Policy railway. For Stephen, business’s relationof the political spectrum and is now firmly ship with government was simple: support ensconced in the middle, having been emand advocate for those measures that dibraced by all federal political parties. Rather rectly improve the bottom line. Questions than challenge what might be an expensive of social progress did not factor – those input cost, most businesses are looking for were matters of personal belief or charity. ways to work within this new system.

This has been more or less the philosophy of business leaders These examples underscore some of the changes to public ecoever since. Put simply, the public policy issues of corporate concern nomic policy that not long ago would have been considered pohave traditionally been those that enable a better environment in litical “non-starters” and, therefore, of little concern to business. which to conduct business. These might include lower corporate Now, they are suddenly mainstream and directly affect business. tax rates, less regulation, trade deals that open up market access A concurrent but no less rapid evolution on issues of social justice, and, more recently, immigration policies that facilitate a predictengagement with Indigenous Canadians, and diversity and incluable and reasonably priced supply of labour. sion, means that business is also at the epicentre of discussions that The upheaval of the past year is testing this orthodoxy. The paninfluence social policy. These are developments that could not have demic has reshaped Canada’s fiscal situation for at least the next been predicted even five years ago. generation. One might expect business leaders to express their alarm Board directors who may have been comfortable with managethat Canada will be living beyond its means for years but, so far, noment focusing their public policy attention on measures that keep body seems too fussed by the idea. Perhaps this is just accepting the taxes low and regulation light will need to adapt to this rapid evoobvious: The drastic financial measures taken during the pandemic lution. The risks of allowing CEOs or others in the organization to were necessary to allow companies to pay their rent and keep emweigh in on public policy matters could be significant. On the other ployees on the payroll, and will take a long time to pay off. It’s unlikehand, so too is the risk of not engaging on the issues defining Canaly, though, that we’ll be able to simply “grow” ourselves out of this dian society, of which business is an integral part. hole, meaning that corporate tax rates will likely increase.

What would Sir George Stephen make of it all? DJ

ICD.CA | 49

PARTING SHOT

Close quarters Do you have the courage to sail the high seas again?

PHOTOGRAPHY COURTESY COSTA CRUISES

The Canadian government isn’t ready to lift docking restrictions on cruise ships, but U.S. ports could be open by mid-summer. Health officials there will require that at least 95 per cent of passengers and 98 per cent of crew members are fully vaccinated, and even then the Centers for Disease Control warns that “cruising will never be a zero-risk activity.” In the Mediterranean, however, tourists are already back on the water. On May 1, Carnival Corp. launched the first of four of its ships from Italian ports. Touting new health and safety protocols, Mario Zanetti, president of the company’s Costa Cruises subsidiary, said: “We hope that [the] restart will be a sign of a return to normality.” DJ

50 | DIRECTOR JOURNAL

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