Is Director Education Important?

When I came up with the concept for BoardSuite, I recalled business people would say to me, Governance… that is only for the big companies, it won’t be around for too long….

Well we are now in 2017, and we are still facing the same issues of 10 years ago.  When things go wrong, shareholders of companies are still asking the same question…

WHERE WERE THE DIRECTORS????

Good question.  In 2003, some great leaders William Dimma and others had a vision that Directors needed to have a framework and the birth of Institute of Corporate Directors (ICD) comes alive.  Ten years later ICD , The Conference Board of Canada, NACD have trained over 30,000 Directors in North America.  While this number is great, here is something that will really surprise you:

Today, there is over 1 Million active Directors in Canada and over 10 Million in the USA.

The real problem is the lack of proper education and the prohibitive cost for the 99% of the Directors who are active and are not able to get the professional training they need.

So what does this mean in terms the whole world can understand?

We will continue to see more Bre-x, Enron, Sino-Forest,  Ornge, Scouts Canada and Griffiths Energy

These issues will persist until we properly educate board of directors on their fiduciary duties and teach them how they can ensure the organizations governance and compliance practices are functioning effectively.

We need to start now to make sure the future is less about doom and gloom and more about success stories of well governed companies, overseen by educated board of directors.

What is a board portal?

Now you are asking yourself how many parts does a board portal have?

In fact there are many facets to a board portal but all that most people seem to think it does is hold documents for boards to review and have schedule board meetings.  In general this is a great first step but a board portal can be much more.

Think of board portal as a Visualization of your entire minute book, stakeholders and corporate activities associated with them.

Using a board portal can help you visualize your companies capital structure if you are either a private or listed company you have a capital structure to your company.  This information is often resting inside your minute book in a series of documents, which is only accessible to the person holding the minute book.  What is a board of director to do?

In the past executives accumulated and managed information on excel but soon found this tool inadequate for tracking and sharing.

Whether your company is a start up or 100 years old, managing your capital structure and minute book is important for a number of reasons:

  1. Raising Capital
  2. Securities Commission Reporting
  3. Insurance
  4. Bank Loan
  5. Board recruitment
  6. Expiration of Options/Warrants

Officers (CEO, CFO) and Board Directors need accurate information at all times.  Directors need to have assurances that the capital structure of the company adheres to the securities laws of the state or province in which it is registered.

When raising capital, the most powerful statement you can make to a potential investors is the accuracy of your information.  To show the information on your capital structure,

When you begin discussions with a potential director they need to know what they are stepping into.  It is important to know the shareholder make up, how the company capitalized to date, what is the capital structure, and reviewing the minute book to ensure it is up to date.

Managing your corporate information is important when practicing good governance and staying compliant.

Do you accept poor performance because you think it’s all you can afford?

Putting up with poor performance from staff members and volunteers just because I believed that I wouldn’t find someone else to do the job is something I did for many years as a business person. Because I was a small business and couldn’t afford to pay my staff top dollar for the work they did, I accepted mediocrity from my employees and didn’t think I could expect anything more.

It killed me every day to have to clean up work that was sloppily done, looked the other way when they came in late (again) and forced a smile in conversations with employees who blatantly disrespected my organization and my time. Day by day I felt like I was selling my soul to the highest bidder to keep my business running. The whole thing was a mess and I hated coming into work.

Have you ever felt like that? You cheapen your standards to keep your organization running because you doubt you could do better. Does this thought cross your mind “who I am to expect great results from this person? or (in the case of volunteers) “they’re volunteering their time after all. The fact that they’re showing up to help should be enough, right?” Wrong.  Dead wrong.

Without being melodramatic, this belief is an emotional death sentence to you as a leader. I finally had to ask myself after years of this “what does it say about my self-confidence as a leader that I keep someone who is bringing down my organization on my payroll? What is it costing me in terms of emotional energy, stress and self-respect to keep this person around just because I don’t think anyone else will do the job (the job that this person does a lousy job at anyway)?”

We think like this because we think we don’t have any other options. The job needs to be done and we need someone to do it. We feel like our back is against the wall and that our only option is to grin and bear it.

I want to end the post like this; there is always another way to get the job done if you’re willing to stand up for your integrity and think outside the box. Ask yourself some of these questions:

  • Could a team of volunteers replace this person in the short-term?
  • Could I replace this person with someone else who could do a better job for the same price? (The answer is yes).
  • Could an online application replace some of what the person was doing?
  • Does their job need to be done at all?

Here is a company that is working through some of of these questions on a local business perspective. Check out their website. What is your self-respect worth? Don’t trade it away because you feel that is your only option. Don’t make accepting mediocrity a habit.  Your organization deserves excellence from everyone who is involved and to take any less is not what your organization is about, is it?

Still Distributing Board Minutes via Email?

Its funny sometimes, the simplest things are the one’s that end up causing the most problems, forcing us to take immediate action to resolve them.

In my many travels, lectures, training and seminars, I often ask this basic question of organizations and board of directors, “how do you share board minutes with each other?”.

Their response is so casual, “via email”. I would then go into the whole issue of “THE WHAT IF”.

“THE WHAT IF”,
*the minutes are sent to the wrong person,
*sent to the wrong email address,
*they don’t even receive the email

Hard to argue with them sometimes when you have no real live example. During my daily reading of the Financial Post on 10 April 2013 I came across another example of “THE WHAT IF” scenarios I have been talking about was all over the media.

The error was simple, but the consequences horrible.

“The release was “entirely accidental,” Ms. Smith said. “This was a list of professional contacts that one individual had,” she said.”

The information that was accidentally leaked was very sensitive and it was released before it was announced to the public.

So what is the solution?
For most organization this problem has been plaguing them for years, but there was no other effective way do distribute this confidential information. The answer for organizations of any size and type need is to start using secure portals to store, manage and share their confidential information.

As an example:
If they were using BoardSuite secure board portal, Ms. Smith would have uploaded the board minutes (securely) then only those board of directors who have access to the organization would then be able to view the board minutes (securely). NO MORE EMAIL DISTRIBUTION OF BOARD MINUTES, NO MORE ACCIDENTAL DISTRIBUTION.