TRANSCRIPT
Matt Voiceover
Welcome back to Sound-Up Governance. I think it's fair to say that the best part of my profession, if you can call it that, is the privileged access I have to a huge variety of super smart, super interesting and super influential people. Confronted with an endless menu of awesomeness, one has to use some kind of criteria to determine who, exactly, to hang out with, since everyone's at least a little great. I like to look for the folks with a spark of, I don't know... counter culture. Like, the people who you'd really like to glom onto and drink with at a party because you just know you're gonna learn something and have tons of fun. So who am I talking to today? Reanna Dorscher and Ciara Wakita. Respectively, a Partner and Principal at Hugessen Consulting, one of the serious major players in executive compensation and governance in Canada. Part of their awesomeness is reflected in the fact that they're decidedly different than most of the influential folks in this space for lots of reasons, not the least of which is that they're less male and less... old than the status quo.
Reanna Dorscher
It's great to work in this space, because we are considered young,
Matt Voiceover
That's Reanna Dorscher.
Reanna Dorscher
There's very few professions where we would be the young up and comers. You know, I certainly do think impostor syndrome is a real thing, particularly for me. And it's funny how it can swing from day to day, from mandate to mandate. To me the imposter syndrome settles when you take the time to build the relationship, understand the individual, how they like to work, what your business does, I understand what's top of mind for you, I really want to listen to what's keeping you up at night, and you kind of build that trust. I find the relationship gets strengthened, and it helps my imposter syndrome fade. I have a lot of great mentors in this business as well. They have, you know, put me front and center in front of groups, they've given me so much confidence, because they show they had confidence in me and they've passed the reins on a number of really big client files. And so having those kinds of people in your corner and having them even in my corner today still makes a big difference.
Ciara Wakita
When I first came into the governance space, you know, I think we need to acknowledge that boards are a very mysterious place to most early and mid stage professionals.
Matt Voiceover
That's Ciara Wakita
Ciara Wakita
Yeah, it doesn't quite have the same cachet as going into finance or going into strategy or into marketing. Like you're going into governance is a little bit different. And, and it's not taught in business schools and that sort of thing, either. And so it's very mysterious, I think, until you know, people reach sort of senior executive stages of their career. And so coming into this industry as a service provider, and I came from management consulting, where all you do in management consulting is reimagine the art of possible, right? And you're always thinking about a new way to do something or a different way to approach a problem. And there's a lot of space for that, I think, in governance, because we have benefited, I think, from a steady, predictable set of boards in Canada for a really long time. And I think that is something that does offer some value, right? But there is, like I said, opportunity to innovate, to rethink how we do that. And rethink what levers are available to offer more value or to really lean into their role as a strategic asset of the organization.
Matt
So, there's something in what each of you said that I really want to pick up on. The mentorship thing, Reanna, that you talked about, I find really interesting, too. Because I think this is a space, where we may be, from our perspective, we get this access to mentors in a way that for instance, like... Board's have to, like a director has to be forced to have a mentor, like there's not a lot of people who are in the board world who are like, sufficiently self aware to say, "you know what? I really wish I had someone on my side who was helping me to see the things in myself that I don't see, and unlock that value and so on." So, you know, I I've had some mentors in my life that have been really amazing. I've just my statement here is, I think, I think maybe we should be like champions of have a greater like, acceptance, or maybe giving permission for these super like influential, high powered people to also want mentors. I mean, does that make sense?
Reanna Dorscher
It does and I think for me, the best mentorship I've had has always been natural. It wasn't like me asking someone to be a mentor. Right? And something with that Ciara mentioned is boards are such a mystery, and we need to find a way to break down that mystery and help people see how they can add value and why it matters. And then I think that natural learning Curiosity will will come about or I would hope that it would.
Ciara Wakita
I think there's this concept, some people call it reverse mentoring. I, for many years, I used to have a cool coach because as I started to get older, I realized I started to become less cool. And I, I didn't think I knew all of the new lingo. So there was this like young, brilliant consultant that came out of out of undergrad. So I mentored her professionally and she mentored me to be cool.
Matt
Did it work?
Ciara Wakita
It did it did. I'm pretty cool. I'm pretty cool, Matt.
Matt
I think maybe these this like mystery factor. Do you think maybe boards or senior corporate leaders kind of want the mystery to be there? As not on not intentional gatekeeping, but to make themselves feel special? I mean, I'm being a little bit nonsense, but but I think here's what I'm getting at. I remember having a conversation with some faculty when I was at Rotman trying to make a case to them as as I was trying to, as I was understanding boards and governance more intimately. I was like, "Wait, why aren't we being, like more intentional and active about teaching this to the MBAs? like, I think that really enjoy it. And it would help." And the answers that I would get would always fall somewhere along the line of "Yeah, well, they're too young to really get it. So, no." I was like, they're only too young, because you're not teaching it to them. You know what I mean? So is this is there maybe a little bit of either intentional or unintentional gatekeeping going on that perpetuates both the mystery, and the lack of access to like early resources and mentorship?
Ciara Wakita
I think it's less gatekeeping. And more about relevance, because like, rightly or wrongly, I think that people associate governance with process. And that's ultimately what it is right? Like, like governance in itself is not a business outcome. It's a means to a business outcome. And because governance is connected to process, it's a very unsexy term. And it doesn't spark a whole lot of curiosity or inspiration amongst professionals, early and mid stage, you know, as they grow their careers.
Reanna Dorscher
Yeah, I would agree with that. I think, if you ask most people that don't work in this space, and that don't work with boards, what they think of when they think of governance, they probably say bylaws, and no one wants to sign up for a course where they learn about bylaws, right? They think of it as being a purely legal process function. And so it's, I think that's probably one of the barriers is just the barriers of interest, because nobody really understands how impactful and interesting it can be, and that it's not bylaws.
Ciara Wakita
And I think that's exactly where the governance community is going. Like, I think that there's an opportunity to connect governance to business outcomes and connect it to purpose, right? I truly believe that every organization is different, therefore, every strategy is different. And therefore every board should be approaching their role differently. I think once we can connect governance to something more intrinsic, once we can connect it to purpose, that's a lot more inspiring in terms of something that I want to do. Right? And when I'm teaching directors, you know, one of the first things we ask is, "why do you serve on a board?" And we'll get all kinds of things I'm I want to give back, I want to serve my community, like it takes five or six answers before somebody says they're doing it to get paid. Right? And so money is not the motivator of, you know, joining the governance community, particularly in Canada. And so I think that we have to find a way to connect to purpose and I think we have a generation that's actually willing to do that now more than it ever has.
Matt Voiceover
It won't surprise any listeners that I like this idea of corporate governance having the potential to really matter and not just be some boring, bureaucratic necessity. Throughout our conversation, both Reanna and Ciara made a point of saying that the work of consultants in the governance space helps people. I happen to agree, but I sometimes have a hard time explaining it to folks who might see me and others like me as just another cog in the vast capitalist machine. Here's their take, starting with Ciara.
Ciara Wakita
I think what connects me to this work most, Matt, is that I'm truly convinced that boards, like industry corporate boards, can influence the fabric of our country. Can influence the fabric of our societies, how we govern ourselves, what our beliefs are, whether we're inclusive, whether we're not. And the work that we do in board effectiveness, you know, our role is to help boards better their odds of making good choices. It's to better their odds of making choices that are meaningful to the communities in which they operate, to the people in which they employ, to serve the whole realm that works around the organization. And I think if we can influence who's at those tables, how they think through their problems, and help them get to outcomes that are inclusive of all of those perspectives, then I think we're doing our part.
Reanna Dorscher
And I would think, you know, in helping and adding a lot of value is just taking the time to really understand the priorities, the issues at hand, the challenges, the opportunities, and offering an external perspective and asking the right questions. I think it helps just make boards make better decisions when they have an external perspective, asking... an informed external perspective, asking the right questions and kind of pushing their thoughts a bit, because you don't bring about change by doing the status quo. And unless you bring in an external perspective, I'm not sure how you, you push meaningful change.
Matt Voiceover
I have a pretty strong, maybe strident, opinion that organizations in general are making a big mistake by not working hard to bring young people onto boards and other positions of influence. I was curious for Ciara and Reanna's as perspectives on how to get some movement here.
Reanna Dorscher
You know, when we think about, like, diversity of thoughts and perspectives, I also think of diversity of knowledge base, right? And so what are the few subject matters or the few topics that we think that traditional boards don't pay enough attention to, or they don't necessarily naturally have the knowledge from their years of service, both at either the management team level or the board level? And so then how do we identify those individuals that possess those unique knowledge bits, right? And try to share with them like, "Hey, by the way, it would be great for boards to understand better, what you understand or what you know," and kind of try to create that connection between the mystery of a board and the value creation of advising, if that makes sense. Like, how do you kind of show people what the value is of what they know that others don't? And how can we be impactful?
Matt
Yeah, and like without it being this, sometimes there's this tendency to tokenize young people and bring them in boardrooms and just be like, "tell us about the youth!" And like, Well, no, there's to you than just that, right?
Reanna Dorscher
I think it's also making sure that you're bringing people into the conversation, because you're genuinely interested in hearing from them. And you feel like you have something you you can learn and your open minded to their contributions. I think to a certain extent, I mean, chang is constant, right, and appeals like the board. I think everyone has good intentions, they want to do things better, they want to change everyone who says, "well, the status quo could be pushed, we could think about things differently. We should be making more time for this." But then other priorities getting away. Right? And so I think there's just that lack of taking the time to take a step back and say, "what have we been doing forever, or spending time on forever, that we are just spending time on because we've been doing it forever, not because of value add? And can we take it away to make space to do these other activities or think differently?" And it's just the world changes so quick, businesses change so fast, priorities change so fast. I really think boards don't necessarily get that time to have that conversation about what can come off the agenda to make space to do things different.
Ciara Wakita
Yeah. Change resistance, I think is such a natural human behavior. And of course, we see it in boardrooms, we see it in every aspect of human life. And I think, especially like in business, one of the ways that we get change is because we have leadership, or we have hierarchies, or we have some sort of power force that actually really enforces change in organizations. Boards are unique, because there's nobody more senior than the board telling them to change or change their behaviors and the way they do things or, or their processes. And so it takes a really strong chair, there's a huge role for leadership on boards. And to some degree, a chair is also a first among peers, too, right? And it takes everybody on the board to be on board with change. And so that's actually I think, a force that works against change in this space. Because simply of how they're structured and there's nobody truly saying okay, you must make change.
Matt Voiceover
I had to take advantage of the fact that I had two people with me who kind of eat sleep and breathe listed company governance stuff. Some of you may know that for more than 20 years, I ran the data collection efforts for two sets of what we called board ratings, including for a project called Board Games that gets run in Canada's national newspaper, The Globe and Mail. We vacuumed up countless thousands of data points every year and spat out scores that claimed to measure good governance. But really were just metrics of very specific types of public disclosure. They were useful, for sure, but it was a bit of false advertising. Anyway, I was curious about the state of affairs in the way listed companies think about and work on disclosure in the years since I've been out of that racket.
Reanna Dorscher
Yeah, so I will say, and if you go back to, you brought up Board Games, I do think and we saw it with many clients, people take their Board Games, and it would be a bit of a check the box activity.
Reanna Dorscher
I'm gonna put this in my proxy, because it's gonna get me two more points in Board Games. It's not necessarily that we we feel that this is, you know, a meaningful change, but it's gonna get us two more points. And in my mind, anytime you're doing a check the box, it's goes against creating value and good governance. And it just, it inherently doesn't line up to me doing check the box activities in the governance world. So in terms of what we've seen, from a trend, I do think we're seeing more transparency in the terms of plain language like proxies used to be very legalese. They used to be very, you know, you'd have to really understand either like the specific technical aspects of the business, or the securities requirements that drive the form requirements, to actually get any value from it. So, you know, I always tell my clients, if you, if you want someone to pay attention to your proxy, you have to know they're gonna look at two places: the letter to shareholders at the front of the CD&A and the summary compensation table that shows how much you paid and the year over year changes, right? And so those are your two places to share any key messages and ones just numeric. So if you really want to tell a story, put it in that letter to shareholders. And I think it's become a great opportunity for the committee chair and the board chair to pen a letter that talks about key performance highlights for both the corporation and the executive team. What were some of the pay decisions that were made. What are some of the things that the board plans to change to be better or to do better. And as well, letter to shareholders also include, "if you don't like something, here's how you can get a hold of us, here's how you can engage the board directly." Which I think is a change. So I mean, big picture, plain English, lots of pictures and charts. And just kind of a let's take the mystery away from this. Here's how it's structured. And here's the decision we made as a result of this performance.
Matt
Totally!
Matt
So first of all, this is a great trend. Second of all, I wonder if like if maybe they could also add like a selfie video from the CEO, just be like "Hey, guys!" this is like just, you know, make it give us as many different media so like, you know, people like me, who decided I never want to read a proxy again, I would watch a video, I might listen to a podcast. You know what I mean?
Reanna Dorscher
I think that's an interesting evolution out of COVID that when AGMs went to virtual Right? And you actually did have a CEO doing like a webcast AGM corporate presentation. I mean, not really as much about the proxy, but as much as the business how the business is doing. But that is kind of interesting thing now that most websites, you can actually watch the webcast of an AGM as opposed to, you know, read the proxy and attend in person.
Matt
On the flip side, Is there stuff here that you you feel like boards are really spending a lot of time on just like, dudes, like, this is not worth the time.
Reanna Dorscher
It's not so much that it's not worth the time. But I feel like we should be at the point now where ESG doesn't need to be this big mystery pillar, but it's just kind of something that's a part of the way we do business and making good strategic business decisions, right? And so sometimes I think boards can spend a little bit too much time speculating what ESG is and what it means for their business without just taking the concept and breaking it down to what are the environmental, social and governance things we are already doing in our business, and where do we want to go on each of these pillars? So you know, I'm hesitant in saying ESG is taking up too much time, because I do think it's important strategic conversations. But I think sometimes we're missing the practicality of the conversation and just breaking it down into what are we already doing? And what do we want to do better?
Matt
Yeah, it's one of those situations, I think, where there's the way they talk about it is worse, in some cases, I will exaggerate a little bit. It's worse in some cases than virtue signaling. It's just signal with no virtue, you know whatI mean? Where we could be like, talking about, "okay, well, like you said, what do we actually want to be in the world?"
Reanna Dorscher
Yeah. And, you know, I want to go back to the Board Games thing for a minute because it's interesting, you know, I said people were doing it for a check the box to get extra points. But for boards that really didn't know where to go to make their disclosure better, it was a good starting space, right? And so if we think about how we can make boards better how we can make disclosure more useful, what are the resources other than a Board Games that someone can go to and say, "I want to do better with my proxy, but I have no idea where to start?" Right? And I will give Board Games credit that it gave people some ideas that if you wanted to build on your disclosure, here's how you might be able to start.
Matt
I agree. I think the mistake wasn't caring about disclosure, it was making it gamified. Right? Making it a ranking, implying that that there's winners and losers. And if you're at the bottom of the list, there's something wrong with you, which, frankly, it's really stupid. You know...It is what it is for now. Ciara, what about, are you seeing stuff where you find yourself witnessing things you wish, you could just be like, can we move, Can we like, just move on to something better?
Ciara Wakita
Yeah, I do. I mean, I spend probably two thirds of my time helping boards with their board evaluations. And first and foremost, we have to stop calling them board evaluations. I think the word evaluations just doesn't set anybody up for candor, and trust and transparency. And so I think we need some, some different nomenclature around that. But what I often see is very like routine, truly check the box exercises. We're going to do the exact same survey, and we're going to ask the exact same questions that we did last year. And you know, we're going to maybe find different outcomes, which you're probably not going to. And so one of the things that I hope starts to shift is that we actually take all of the energy that goes into board evaluations, and it's a lot, it's a lot of precious Director time that goes into this every year. And we can actually reframe it and think about this, rather, as an alignment exercise. And so think of if we think about it like, okay, a board has a purpose, an organization has a purpose, a board has a purpose, then we can start to think of like, what are all the things and levers that are available to us to make that come true? Right? And are we are all of those dimensions, balanced and in harmony? Because what's happening right now is we're saying, we're asking questions like, "do we meet enough?" You know, "are our materials good? Are we getting them on time? Is the quality good enough?" But really, unless you're connecting that to something else, all of those responses are a matter of opinion. They're not actually connected to an outcome that the board is trying to generate. And so I think we can start thinking about it more holistically, and really generate things that can offer structural shifts in how boards operate, as opposed to tinkering with processes or, you know, trying to shift director behaviors.
Matt Voiceover
See what I mean? These two are the true embodiment of the cool kids when it comes to governance consulting. Embedded right in the heart of influence in the Canadian system, questioning status quo, coming up with big ideas. This is the rising generation of governance expertise. Thanks again for tuning in. And sticking with me on this nerdy adventure. Shoot me your cocktail bar recommendations or cocktail recipe recommendations at that, plus any compliments and complaints to soundup@groundupgovernance.com. For those of you in temperate regions, make the most of the seasonal changes by wearing your coolest jacket as much as possible. Catch you next time.
Ciara Wakita
I'm a figure skater on a synchronized skating team. Our role is to represent Canada internationally. Synchronized skating is kind of like ice dance with 16 people. We all look alike, and then we make shapes and squares and stuff on the ice.
Matt
And frankly, I've never heard of it until you talked about it. And so I immediately that night after we partied, I looked it up and it's like, it's really cool!
Ciara Wakita
It's pretty cool. The view from the top is pretty awesome, right?
Reanna Dorscher
And she's gonna be representing Canada in Italy.
Ciara Wakita
It's true. Next year. Yeah.
Matt
That's really it's very cool.
Sound-Up Governance (ep.45) - The next generation of governance experts (feat. Reanna Dorscher & Ciara Wakita)