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Board Governance Best Practices and Stories/Experiences Shared
Bruce Anderson: [00:00:01] Your starting point around metrics is absolutely essential. How do we know that we're going to yield some of this result? So if we get a certain number of things donated at the Habitat Restore, for example, which things are going to yield the best profits? Which things have the best margin? Which things have the quickest inventory turn? Because these are terms that people are going as a not for profit. What do you mean inventory turn? If it sits in our warehouse, it sits in the shop there for a period of time. It costs us money. It costs us floor space. It's an opportunity cost because we could put other things that are more profitable in there. So some of these metrics that you would naturally think about have to be used.
Munir Haque: [00:00:40] Hello everyone, and welcome to another episode of The Boardroom 180 Podcast. I'm your host, Munir Haque, an executive coach and senior board strategist. I have partnered with Action Edge Executive Development to lead their governance and political acumen division. In each episode, we meet with governance leaders and step into their boardrooms, where decisions shape the world around us. In this episode, we'll be talking nonprofit governance with Mr. Bruce Anderson. Bruce Anderson is a seasoned leader with 15 years in nonprofit leadership and over 25 years as an entrepreneur. He is a managing partner of Be Creative Group, a consultancy specializing in management and marketing, and teaches strategy and entrepreneurship at the University of Regina, where he also leads the Graduate Advanced Training and Entrepreneurship Center, or GATE. Bruce has a BCom as well as an MBA, and is a Chartered Director with the Icd.d designation and a Certified Management Consultant. His achievements include being named as a National Fellow of the Certified Management Consultants, as well as receiving the International Academic Fellow Award for Certified Management Consultants. Bruce has served on over 21 nonprofit, professional and regulatory boards, chairing ten of them, including Habitat for Humanity Saskatchewan, which he guided through a merger. Currently, he is a director with CAA Saskatchewan, chairing their HR committee and serving on the audit committee. His past leadership includes chairing the Regina and Saskatchewan Chambers of Commerce and the Saskatchewan Science Center, serving on the Council for Entrepreneurial Growth and Economic Development. A mentor to entrepreneurs and passionate community leader, welcome to The Boardroom 180 Podcast, Mr. Anderson.
Bruce Anderson: [00:02:21] Thanks, Munir.
Munir Haque: [00:02:23] I always find that a good gauge of how active somebody is in the community is whether or not my kids know them. And for this I've got stories of two of my kids that have crossed paths with you. So my daughter, I think was about five years ago, during some of her onboarding at University of Saskatchewan in Saskatoon, that onboarding weekend, she went up, and I attended with her and we got to at least watch. I think it was a student entrepreneur competition. And at that competition you were up in Saskatoon and you were one of the judges. So that's one of my kids. And then needless to say, she's not in business anymore. She switched into one of the more social sciences and now is just starting her master's in public health.
Bruce Anderson: [00:03:11] I remember those teams well, the kids were great.
Munir Haque: [00:03:15] We were just in the audience, but I saw you from the back, and I think I came up to you afterwards. The other thing is, my son is currently finishing off his bachelors of administration at University of Regina. He's taken a handful of courses from you, and he has good things to say about you. So once again, it goes to show how much you do in the community, how well my kids know your name.
Bruce Anderson: [00:03:36] Fair enough, yeah.
Munir Haque: [00:03:39] 21 boards, that's a lot of governance and volunteer work, even for this show. What initially brought you into governance and has kept you sustained coming back?
Bruce Anderson: [00:03:52] I got involved right out of university in a number of boards, perhaps advancing into some of the sports system boards, national charities and things like that early. And the connection for me was really about people. Somebody asked, could you be on the board? Do you have some skill sets we might use? And I enjoyed it and I kept looking for opportunities like that.
Munir Haque: [00:04:17] And we'll get into this a little bit more, but you do have diverse professional roles. Academic, consultant, executive leadership. In general, how do you see that you've helped pull all that together to help support you in your governance roles?
Bruce Anderson: [00:04:35] Well, it's a good point. The diversity of directors is absolutely essential. And I'm not a diverse director myself, but if I have different experiences that can be brought to the table, then I'm much more than a generalist in lots of ways. Generalists are great on boards, but we also need specific skills. And so if I can bring a new toolkit, a new skill set, I even, in some boards, I bring the idea that I used to be a staff person for a not for profit, and I had that experience as well.
Munir Haque: [00:05:09] And I think that's where we want to maybe spend a lot of the bulk of our conversation today. As I mentioned in the intro, we want to talk about the nonprofit space and governance challenges and trends that are unique to that. In general, nonprofits have some distinct characteristics to it. I'm not sure if you can maybe give us some, how a nonprofit board is typically structured and or financed, maybe a little bit about the challenges that nonprofit boards are facing, balancing their mission with their financial sustainability.
Bruce Anderson: [00:05:52] When a not for profit is structured, it usually has a founder to it or a couple of founders that are involved in. And all of those people are very much hands on. As the organization professionalizes and gets, perhaps, professional staff for example, then the board needs to start to separate itself from the management team. And so we move into what we call a traditional policy governance model, where the expression that's used is, eyes in and fingers out. So the idea that, look, we need to look at all the diligence to do those things, but we don't get involved in choosing the color of the wallpaper. So those are the way the organization starts at the most basic level, at the smallest grassroots level, we see organizations where you can't separate being a board member and a worker at the same time. And so as the groups become, again, a little larger or more sophisticated, perhaps regional or national in nature as well, they tend to be much more of a policy set. How do they get structured and financed? Again, they start off in, you're often in one of several categories.
Bruce Anderson: [00:07:03] One is you have a dues structure. You might be a professional body. Think of the chiropractors. Think of medical associations. You might be a professional association. Think of the directors program ICD, and think about those kind of involvements. At the grassroots level those organizations might be charities and they depend extensively on fundraising, goodwill from other people, perhaps some occasional corporate support. With the Habitat Board, it's quite an interesting board when I joined it because the organization is not only a home builder, it's a land developer. It runs three retail stores across the province. It's a family service agency and it's also a charity, and all of those things require different skill sets to manage, but also different skill sets for a board of directors. Similarly we look at CAA. On its basic, it's a motor club, but it has an insurance company, a bus line, a travel agency. It has a auto service group. It has a business they bought, Battery Depot. These are distinct for profit businesses that pay income tax inside of a not for profit. So the structure of boards and organizations can be quite unique. They can have the profit making component to it. They can have the fundraising component to it and sort of all walks in between.
Munir Haque: [00:08:48] During our pre-interview, one of the things that you were talking about is how you want to, within your nonprofit governance boards, want to bring in more business acumen. So running boards more like a business. Do you want to talk a little bit more about that and why you find that useful?
Bruce Anderson: [00:09:13] Absolutely, Munir. When I was taking my MBA on a part time basis, I was doing that. While I was the, in essence, the CEO with over time with two different organizations. And what I would do in my classes is I would try to take my projects and adapt them to that not for profit status. So how could I do my finance class where we talked about managing cash flow, for example, inside the organization. In the marketing class, we talked about how do we make distinct relationships with particular client groups and how do we-and I'll give you another example. So in the marketing side, the temptation is for organizations to do-it's all about them. They talk about, we need your support, we need your money. And what I talk to them about is the idea of a marketing flip. It's the idea of saying, you know what? Put yourself in the shoes of that corporation, or that organization you're asking, and ask them what they want. And so speak in the 'you'. You will get this, you'll benefit from this, you'll do it. And it's these kind of processes. And of course things like money, money's the same. And whether you're a big company then it's just more zeros, or you're a small company, you still have the diligence that you have to do as a board member around-there's still audits. There's still accounting practices. There's still all those things. And as we make these organizations more sophisticated, we need to bring in more business practices to them.
Munir Haque: [00:10:53] More often than not now, or at least it's a bit of a trend where businesses often use a lot of data to drive their decisions. I'm not sure, you're smiling here, would you have thoughts on that and how data driven decisions works or doesn't work within nonprofits?
Bruce Anderson: [00:11:14] I think largely not for profits are very unsophisticated in data analytics, predictive analytics. And yet the opportunities are endless. For example, do we know what the profile of a donor looks like? Do we know what the given pattern of a donor looks like? Do we know what our customer does on a certain behavior? Do they buy this much? How often do they buy? Is there any linkages in terms of buying decisions? So the analytics becomes really useful. And more and more, it's an area that I really enjoy learning a bit more about. Not that I'll become an expert in it, but understanding how organizations make decisions. For example, I have a colleague, Greg Hutch, that comes into my classes often and talks about predictive analytics, and he uses an example where the Ministry of Social Services had understood down to a very fine detail about the behavior and the triggers of this young woman. She was 14 years of age. And how, if a certain number of things happened, it was going to lead to an event. And it would be an event that would be, she'd run away from home, she would do something else.
Bruce Anderson: [00:12:38] So the challenge in this particular situation is, they came up to a certainty of almost 70% within five days this person was going to do something. And then that person got lost in the system, and not because of the social services, but they moved. And it wasn't until, I think it was an RCMP officer that actually made the connection back that this person might be that person originally. And so you get this complexity. If you've got silos of information between your units or your operations inside of it, then how do you connect those information. So the larger organizations make it even tougher, and the smaller organizations, they struggle with that kind of information. So we're seeing, on lots of boards, we're seeing a demand for more computer savvy people that would understand analytics, would understand those connections, and it's a talent that corporate boards are trying to deal with as well. They have the same problem as the not for profits and finding those people to do those kind of services. They may have departments of analytic people, but they have the same challenge trying to get board members with those skill sets as well.
Munir Haque: [00:14:00] Well, thanks for talking about that. Originally we were talking about the predictive analytics you're referring to, the community of people who use that nonprofit service. And I was trying to understand how those predictive analytics make their way up to the decision making, the governance structure. I think you outlined that a bit. Have you seen any specific tools or techniques that are being used on nonprofits to capture that, or even in this case, it could be profit boards for capturing some of those analytics.
Bruce Anderson: [00:14:33] One of the things I think is to understand that the information you do collect, of course you have to have permission from people to collect the information. And so you have to do that in an appropriate way. And more importantly, you have to have a better way to store the information. We see all sorts of breaches in security in companies and things like that. Ransomware and other things that happen. And so the security of that information is very important. But what we need to do is to start taking more than just basic information. So if a charity just keeps a name and address, for example, how does that involve-but perhaps they came into the organization with somebody else. Maybe they joined with somebody else, maybe they involved with somebody else. Maybe they had a connection that we weren't familiar with. So if we can gain other information, we can start to sort that information and start to understand what the decision making that might be used. Back to the situation in social services, here's one of the dilemmas. Many of the organizations we have set up in society are all treatment based. And what this young woman needed was somebody to intervene at the front end. And I think this is where predictive analytics becomes really quite exciting, is how do we get out in front of it so that we're spending more time predicting things that might happen as opposed to responding to them? Because we know in healthcare in particular, the vast amount of money in terms of dollars is spent on, not preventative maintenance of the person or preventative health care, but on treatment of some condition that's come out of it.
Bruce Anderson: [00:16:18] And so not for profits are the same way. And so can they understand the different decisions that they have depending on what that relationship they have with that client or that person. Maybe it's a donor relationship. Maybe they're a user of services, maybe they're a board member that needs to have a pathway to go forward. All of these things with better information we can get.
Munir Haque: [00:16:44] Maybe digging a little bit more into your financial and looking at it as a business model. You talked a little bit about marketing, right? So in a typical business, you'd look at your return on investment in a marketing campaign. That's usually measurable by sales. So in something like a nonprofit or a charity, you can measure your marketing campaign against donorship. Is that how you would see it being used?
Bruce Anderson: [00:17:32] There's lots of ways like that. So for example, in the fundraising, I know it's not working right now because Canada Post is on strike and we have no direct mail. And many organizations don't do the same amount of direct mail they used to. They're using email systems and so forth. But if you think about direct mail in the concept, or let's just use the term direct marketing. If we think about that, we're identifying the frequency that somebody donates. We're looking at what kind of gift they might make. Whether at a certain point in time, let's say if a person gives $100 a year, organizations can start to be more sophisticated. Maybe they go to that donor and say, look, why don't you give us $10 a month? Well, that $10 a month is now $120 per year. And so they've actually grown that donation. Once they're into a donor pattern of giving monthly regular, they're more likely to participate at some point in time in a major gift. And so in a simple fundraising, the fundraising is both an art and a science. The art is the relationship and the connection you make. But the science is, is that person ready to give? Have we found the right connection for them on this? What's their giving pattern shown towards that? And of course when we get into things like return on investment, charities and not for profits should be doing the same measures because they have even more finite amounts to invest. And so it's really important that they measure. And so some of those things might be, if we're acquiring members for example, can we track that these people responded to our email blast, or do we have something that shows that? Can they respond to maybe a person to person campaign that we used? So how do we track the success of that? And if we put X number of resources into that, clearly once we know where they came from, we can find out which is more effective to raise those kind of connections, if you will.
Bruce Anderson: [00:20:13] But your starting point around metrics is absolutely essential. How do we know that we're going to yield some of this results? So if we get a certain number of things donated at the habitat restore, for example, which things are going to yield the best profits? Which things have the best margin? Which things have the the quickest inventory turn? Because these are terms that people are going as a not for profit. What do you mean inventory turn? Well, if it sits in the warehouse, it sits in the shop there for a period of time. It costs us money. It costs us floor space. It's an opportunity cost because we could put other things that are more profitable in there. So some of these metrics that you would naturally think about have to be used. And that's the science that directors are becoming a lot more familiar with. And that's why you get people in from a corporate environment that might come on that have run direct marketing or marketing campaigns, or you might get somebody that's come in from a business development point of view and says, yeah, I know the return on investment is this, if we invest this.
Munir Haque: [00:22:05] And I think some of those decisions are a bit generational too. So there's certain generations that prefer the mailouts, there's others that often don't look at the stuff that comes in their mail. They are probably more intrigued by social media. And so I guess it's about knowing who your audience is, working through that, and tracking that too, typically from a nonprofit. Who's doing the bulk of your donating?
Munir Haque: [00:22:41] Well, thanks for your insights on marketing and business. What I want to talk about next is habitat for humanity. A year or two ago, you and I had an opportunity to sit down for lunch, and you talked me through a little bit about that merger. And I just want, if you can maybe give our audiences a background on how things, maybe a little bit of the history of Habitat for Humanity in Saskatchewan and what the impetus was for changing direction.
Bruce Anderson: [00:23:17] Habitat was created in the US and came up through here in Canada. There's over 50, basically, what they call affiliates. It can be a province. It can be a city. It can be whatever. And so in Saskatchewan there's three of them. Saskatoon, Regina and PA. And there was a restore in every location, there were home building. But as well, each of the areas had its own chapters or its own affiliates, if you will, that were building homes in Estevan and Yorkton and Melfort and all these places. So we started in the Regina. I was on the Regina board and we started thinking about, what's a big picture thought about what we could value, we could provide to the organization. And we're a large city within the province, but many of the corporations we're dealing with were provincial in scope and things like that. And I thought, well, if we could actually do a lot more cooperative things, and we approached the Saskatoon Habitat at the time. And we said to them, because they were just making a change in their CEO, we said, hey, why don't we look at the idea of cooperating or doing some things together? They were hiring along the process. They hired the CEO and then the three organizations later, each of the organizations go through flux over time, and I think the Saskatoon group had hit some speed bumps. And the Prince Albert had hit some speed bumps earlier.
Bruce Anderson: [00:25:15] And so we started talking about, where could we build from strength. So if we merged, it was never a discussion around, how could we save money? I mean, there's obviously, we don't need three CEOs, for example, but it's not about saving money. It was all about, how could we build more homes and how could we attract more resources provincially, get more people that could be part of the team, benefit from the system. And so that was our premise in starting. And a number of organizations across the country are, in fact, merging. After our merger, New Brunswick merged. Manitoba was already merged. And so there was some of those things. And so in that merger process, it was no different than a corporate merger. In fact, we got some assistance with the Habitat Canada, and one of the staff members, their husband was in a mergers and acquisitions business, if you will. And they're saying, wow, you guys are going through the exact same thing, to a degree, that we'd have to do in a corporation. We had three restores. Everybody gets paid differently. Different point of sale sales system, different inventory systems, different ways of attracting and realizing work with the donation community. Different things are being accepted for donations. Then you look at things like payroll. Well, everybody's paid differently. Different structures. You look at how the mortgages are managed in terms of the relationship. All of those things are different. All of our banking arrangements were different.
Bruce Anderson: [00:27:56] All of our audit arrangements were different. All of this had to be brought together. And it was something that, I don't know if any of us knew how big a deal it was going to be. It was huge. We started with the idea of a joint group together. So a couple of people from each of the affiliates got together and sort of formed an overall group. Then once we had negotiated some of the principles that we were going to be together and some of the things that were essential for each of the groups. Then we brought together a provincial body, and I happen to be the chair of that group as we got into it. And now we have all the hard work that's involved in administrating and even the finance to pull all the financial systems. We had three different systems of recording finances, and in a couple of cases, some people were even doing Excel spreadsheets and things like that. So there was just the dimension of having to do all of this work. And I guess like any business, the expression they use in business is, that it takes twice as long and twice as much money to start up a business. And I think that was our experience is that-I don't know about twice as much money, but it certainly took us twice as much time as we anticipated. Was it worthwhile? I think yes, I think it will be worthwhile.
Bruce Anderson: [00:30:29] And we saw gifts that came in from provincial organizations. Conexus Credit Union, for example, that made the donations because of the provincial nature of the organization, where they may not have made the donation in the past. And so we saw some benefits, but even three years later, and since then, we've enjoyed the opportunity of having a more diverse workforce across the province, specialists in areas, and also a board that's more reflective of a provincial focus and attracting new skill sets. So I would say the merger is worth it, and I'd say it's probably on trend from where organizations are going. I mean, the corporations are highly consolidating, but in a-the corporate mergers have a success ratio of only about 60%. And I'm sure that there are not for profits that try to merge together and it didn't work either.
Munir Haque: [00:32:07] As you were talking, it brought a couple of thoughts to mind. Or questions, I guess. Where you talked a little bit about receiving different types of funding. So I think there's an obvious way to gauge your ROI on this, has it affected the funding in terms of-or have they measured that?
Bruce Anderson: [00:32:34] We get decent support from the federal and local governments, and that helps. And we also get, on a national basis, we get corporate donations and things like that. So the model is different. And we have over about 200 families on mortgage. And so the organization is unique in that we get mortgages receivable that help our cash flow to help fund new properties. And so when you talk about uniqueness of sources of revenue, you've got everything from personal donations or monies that came from events, monies that came from restore profits, monies that came from government, and monies that came from the financial operations of your organization.
Munir Haque: [00:34:00] Is that something that changed, though, in terms of the mortgage? Before certain chapters where issuing the mortgage themselves, were others facilitating relationships with banks?
Bruce Anderson: [00:34:18] Yeah, that was a discussion that you and I had of course, just around what was the trend. And so there's, in habitat itself, there's sort of three different models. And one of them is, we call this the classic model, is basically the organization builds the house, the person works towards their own office, their own sweat equity towards down payment. And the organization funds, basically, the donations and the revenues that we received fund the building of the house. And we take a mortgage from that individual, but within the conditions, we're building houses for people that have family incomes of $30,000 to $65,000. And so there's a limited capacity to pay for the entire mortgage. So that's the classic model where the, because I forgot to mention, habitat is a bank as well. So the next model is, do you find another way of doing it. So for example, you go to corporations, like a bank for example, and say, okay, we'd like to-we're going to, again, provide the down payment to the family. They're going to work it off because they do 500 hours of volunteer work. And take any hourly wage you want to put at it and just figure out how much that is as a contribution is substantial. These are not free houses to them. And so the idea was that the first mortgage of an amount that would be payable within the means of the person, in other words, it wouldn't be more than 30% of their income, might come from a bank or a credit union.
Bruce Anderson: [00:36:42] And so the idea would then be, is the second mortgage, if you will, for the balance of the value of the house would be held by habitat. But the homeowner would get into building up their own credit, would pay off that loan to the bank. And once the home was sold, let's say, if they moved out of the house, because Habitat's homes are intended for a short period of time. They're not intended for a lifetime. They're intended to get a helping hand to get people up. And we often see people need the homes when they've got young kids. And by the time the kids get to graduating high school, the family has a different living circumstance needed and they might sell the house. And in that case, the proceeds might be shared then with habitat to pay off the second mortgage. So that's another model and there's all sorts of variations in between and really expensive models and markets.
Munir Haque: [00:37:37] You mentioned before, during this merger there were three different organizations. Everybody, three different ways of paying people. It was changing people's lives, essentially, that worked with the organization. What kind of pushback did you get internally? I'm assuming there was some pushback. Maybe there wasn't.
Bruce Anderson: [00:38:13] Like many organizations, when they come into a large change, everybody wants change, they just don't want to change themselves. The important thing was, at that point in time, is communication. So we spent a lot of time communicating with our families so that they were assured that we were viable as an organization. We spent a lot of time communicating with our funders, and the staff were as important, if not more important. And so we went to them and we talked about the benefits. So as the board chair, for example, I was on various calls with the staff members, collective calls where we talked about the benefits of it. We answered questions, we talked about the value of doing it and that we weren't doing it to cut money. In fact, when we did the merger, we only found three positions in the entire organization that were duplicate. And these were part time people. They were term people. And we just finished the terms with them. And so we didn't lay off people, per se. And so it was an opportunity for us to communicate the staff and really to buy into that whole change management. And again, we're using a business practice of a principle of taking them through a process, starting with the awareness of the change and leading to, obviously, the implementation of the change.
Bruce Anderson: [00:39:44] And so the staff were an ally. But, and I don't mean but, but when we experienced some challenges, like for example, somebody would say, oh boy, I'm not sure there's going to be a job for me, maybe I better look for another job. And so there's always, whether you say it or not, there's always a little bit of misinformation. I remember one of our people left and said, well, you're going to hire a new CEO, and the new CEO is going to bring in somebody new. They won't want me. And I said, well, that's never been discussed. And so that in fact was not real, but that person responded. And so in some other cases, somebody might have a collegial relationship with somebody and say, you know what? I've been doing this for a number of years. Maybe it's time for me to try something else. And so we had some natural departures, but by and large we didn't fire anybody. We just had the changes happen over time. But the staff were integral to this. The board had already gone through the discussions and were already on board about why we would do this. The staff had to be brought along.
Munir Haque: [00:40:58] I guess one of the last things I want to ask about this is, so you amalgamated three organizations. Did that reflect in the board? Did the board get bigger?
Bruce Anderson: [00:41:07] Actually, the board didn't get bigger. We did a couple of things initially. We wanted some continuity and we wanted people to be comfortable, particularly because the board members were often connected to the staff and the community. And so we started with the getting together. We had a range of board members that we allowed from a minimum of seven up to 15. We took the 15. So to your point, we were probably a little bigger than we are now. And we honored some of the founding board members from each of the affiliates. And then over the last number of years, those people have been retiring and we're, probably in the next year, we will have retired all the founding members. And so we use that as an opportunity to bring in new skill sets, new geography. And I'm delighted to say that we've got a board that is-I think we have 13 directors, we have seven are women and six are men. We've got diversity in terms of indigenous people serving on our board. We've got representatives from geography. We've represented different ages and backgrounds and workplaces. And that's a real challenge as a board, is building diversity on a board. But it's absolutely essential.
Munir Haque: [00:42:28] In terms of key takeaways from it in terms of the process, any organizations or anybody who serves on a board of an organization is considering possibly doing the same thing, provincial merger or even merging with another organization. Is there any advice that you'd give them, or takeaways?
Bruce Anderson: [00:42:47] I think there's a couple. You need to hire some advisors. We had a legal advisor that-we didn't pretend that we could do all our bylaws ourselves and all the articles in terms of reference, we didn't pretend we could do that. We had financial advisers to help us with the merger and some of the challenges around there. We had an interim board. We had a set of principles that we operated with. And so my very first board meeting that I chaired, I said to the group, okay, let's come up with the reasons that-we'd already done the reasons, but let's come up with what you think are the reasons that we could benefit. What did we do well in your community? What didn't we do well? And how can we ensure you get the benefit of being merged as a result of that? And so this was still before we signed the papers and we had the conversation about that. And so I think some advanced planning is really important. A working committee that's going to drive this, that is separate from process, I think it's important to have some resources dedicated to that because, do you ask the existing executive directors or CEOs to manage that at the same time as doing other things? And so that's where the extra people-I think you need to plan a real vibrant direction. You need to have a Gantt chart worked out so that you understand what goes in what order and how does it happen and what are the key pieces.
Bruce Anderson: [00:44:25] And you also need to understand that you're going to hit speed bumps and you understand that you're going to hit-you're going to find some skeletons in the closet when you get out and do these things. And so you need to sort of plan out with those skill sets are, what it looks like. We also honored-I believe very strongly in starting with things like this with a set of principles. Let's agree on this. These are the 5 or 10 or whatever things that we think are really important. And when we have some conflict, we can go back to those. And then somebody raises an issue. And I said, okay, is that in contradiction to our principle that we had because that principle should guide us. These are behaviors. These are values. They should guide us in our process. So can we meet this principle, handle this situation for us or did we get the wrong principle. And so we had to do some of that. And the the biggest suggestion is perhaps patience. It takes a lot longer than you think.
Bruce Anderson: [00:45:54] And so somebody has to be prepared to drive this and communicate it and be enthusiastic about it for a long time in that change. And I think you also, in the last thing, maybe this is not the-but you have to be realistic. And so we started with the premise that this was not about saving money. And so we never went there. We never went around the cost savings. We ended up reducing costs naturally, but we also had to reinvest those costs in somewhere else where we needed to make more investments and things like that. And so the complexity of the financial part of it was just mind boggling. As I mentioned at the outset, new set common payment systems, common point of sale systems, common audits, common financial controls, common budgets. It keeps going. Common bookkeeping systems, and the common banks and all of that. You'd think the banking was interesting, but-we're a complex organization and it took a long time. But we had to educate our suppliers and all the people around what was going to happen and what was going to be different. And it was nice to have somebody-occasionally we could ask, as we did with Manitoba, where we could ask the questions, what did you do in this situation?
Munir Haque: [00:47:38] We talked about this a little bit already, said we come back to it, about diversity. Diversity of the board and in particular, what makes for an effective board chair.
Bruce Anderson: [00:47:50] Diversity is a real great objective. So I teach business strategy and just to-I can't not tell stories. And so one of the- a study of US fortune 500 companies, there's about 19% of of those companies that are led by females, not anywhere close to what it should be. And in a study that was done, those female led companies outperform their male operated counterparts by about 20%. A similar study was done by Credit Suisse in Europe. They looked at a diversity of the team as opposed to just the leader, the CEO. And they found diverse teams age, gender, racial backgrounds, the whole bit. Those companies would outperform their non-diverse counterparts by 20%. And so when we get into diversity, we do it for the, what I think is, the right reasons. And the right reasons are, we want to have a board of directors and ultimately a workplace, a set of employees, that look like our communities that we serve. And so that's the challenge, is how do we get those communities involved, how are we reflective of those communities. So that's an important value in diversity. So we have to be very clear on diversity because that may mean that you're going to favor a particular person over another, because there's a need for diversity in the long term. And I'm very much in favor of quota systems. And I don't suggest that I've used them on boards, but we've made deliberate attempts to find people that are diverse in their thought process.
Bruce Anderson: [00:49:53] And that's back to the skills matrix, back to the piece that goes with it. And the other part of that diversity, I think, is that we get a diversity of thought. And so when somebody gets into a board meeting, it has a different lens and says, have you thought about this before? And we go, you know what? We haven't thought about that. We value that perspective. And so I think the quality of this decision making on a board with diversity is much better. But I think it's also in the diversity. Let's understand the difference between diversity and tokenism. Many organizations are saying, well, let's get in some indigenous people serving on our board, and there's lots of great indigenous people that are available to do this. And people don't look very far to get those people. But to add one member on the board and say, well, we've met our diversity candidate, that doesn't make sense to me. And so we have to reflect-the diversity has to be meaningful. Now you talk about the board chair as a sort of a thing. And the board chair is a unique arrangement on the-and I've done some research on this, and I've spent a lot of time talking to others about this. And the board chair, I believe very strongly that the board chair works in what we might call, back from the 1980s, what we call the servant and leader.
Bruce Anderson: [00:51:32] And so the board chair is not only a servant of the board. The board chair just can't do things because they're the board chair. But the board chair also has to, in the absence of things, has to lead the board to places the board hasn't thought about or got involved. I'll give you two examples. So in the servant leadership, what I say to my board very clearly when I'm the chair is, look, I will be the liaison with the CEO if that's what you want me to do, and this is the limit. But you have to tell me that you want me to do that. You have to tell me that you want me to represent the organization in public. You have to tell me that. I don't just automatically do it. And so in our organization, in all the organizations that are involved, the staff is always the point of contact. And so that makes it easier for the board chair, except if there's board related kinds of questions, then the board chair gets involved. And so I just say, well, the board chair, I can't take on jobs that I'd like to do just because I'm the board chair. I can't make decisions on things just because I'm on the board chair. So on the leadership side, you've been in lots of board meetings. I know you have, and I know the organizations you've been involved with, very good organizations, great people on those boards and all that kind of stuff.
Bruce Anderson: [00:53:03] But sometimes in a board room, you know that the discussion is not going well for some reason. There's a different makeup. People aren't jumping on to the key issues or things like that. Or maybe we're not hearing from all the members. And so the board chair really has to spend some time not talking in the board meeting, but really listening and then some say, I might have to say, Munir, I would like-we haven't heard from Munir yet. Would you speak up please. Or do you have something to add, or sometimes in a situation when the board has a very complex issue and the decision making goes too quickly, in my opinion, then I'm concerned about groupthink. I'm concerned about the board. That sounds like a great solution. Let's all go with it. And in those cases, if I'm able to, I'd prefer to say to the board, look, let's stop. There should have been a more rigorous discussion on this. What are we missing from the discussion? And let's have another discussion on this. Even if it means a special board meeting to do that. Let's have another discussion, because I don't think we'll be happy with this decision. If it's not, how will people support it if they don't like the decision. And so we have to have everybody participate. And then the board chair has to show the leadership to drive that process.
Munir Haque: [00:54:33] I agree, I was in a facilitation session the other day, and we were talking about the type of people you'd want on a board and talked a little bit about the diversity or skills matrix. But there's also, you look at personality types too. And when you're at a board level, you may be able to find the skills, but the personality is not there. Maybe sometimes you have to dig into it a little bit more to be able to get that skill level out of the board member. And so a lot of that, as you said, falls on the chair. And I think, being a governance professional, that's where somebody like me can come in and help work one on one with that chair and help them build the skills. Because sometimes you have to work with what you have. And honestly, you can't necessarily teach the skills that they come with them because those come with the job. But it's those interpersonal business and process management that we can work with them on.
Bruce Anderson: [00:55:39] But you and I have lived through, and I don't know what specific examples, but we know either ourselves or others have lived through the bad board experience. The bad board chair experience. And your board experience will be awful and the organization will have an awful outcome with a bad board chair. And too often we don't prepare our board chairs sufficiently, or we pick them because of popularity or pick them because of other reasons. And it's a real damage to the organization. So to your point, somebody that can come in and say, look, with some self-awareness as a board chair, you can be a lot different than you are now. You could be stronger in these areas. Or maybe I'll come in and watch you as a board chair and we'll discuss afterwards how you did with your meeting. And one of the things that I would look for, and I'm sure you do as well, is I'd look for how much time does the board chair spend preparing for the meeting, in listening in the meeting and managing according to the agenda. And board chairs that don't prepare their own agendas, I do it in concert with the CEOs, but I never let the CEO just prepare the agenda because it's the board's responsibility. And I think the CEO is in a situation where they want that leadership from the the board chair. And the board chair, I use that expression two ears one mouth, you should listen twice as much. And it's especially true of the board chair. If the board chair is talking all the time, nobody else is talking.
Bruce Anderson: [00:57:25] And then the meeting preparation, it's really a great idea for a board chair to sit down with board members throughout the term of the board. So between board meetings, it's a great idea to reach out to a board member and say, how are we doing? How are you doing? And so, for example, and I even do this as the past chair because I led the nomination process. I alerted our first year board members. I said to them, look, I'm going to call you because I want to see how your year has gone and I want to get some feedback, how we can-did we onboard you well? Have we looked after you well? What could we do differently? Where do you want to go to on the board? Because I think it's important that people understand that they have opportunities on the board to learn things. So there should be board development and they have opportunities to grow personally.
Munir Haque: [00:58:24] During our pre-interview, you talked a little bit about some unofficial research that you did on understanding, I think it was on longevity, how long somebody stays on a board. Does that sound familiar from the conversation we had?
Bruce Anderson: [00:58:42] A piece of research that I had done with the-it was with the chamber organizations. I was curious to find out how people became the board chair and how quickly they did it. And so it speaks to what you said about longevity on the board. And so what I found is board chairs have typically been fast tracked on organizations. And so that's an interesting conversation. So if you're looking for the board chair and you've got some good folks around you, do they get the opportunity or do you simply as a board member, a board adopt the most senior person moves forward. And if all the people are great, then the most senior person is a good choice. But the person that has been on the board a long time in most organizations, well, if I can say that this research is reflective of all the organizations, the person that's been on the board the longest is the least likely to step up to be the board chair.
Munir Haque: [01:00:18] I think once you've been chair, it all feels like it's downhill after that. So you strive for the top, and then once you have it, then you kind of let the next generation, next group take on that responsibility. I do like that idea of continuity, where you have past chairs, still have as an official position on the board so that you promote that continuity and don't put your chair out to pasture as soon as they're done.
Bruce Anderson: [01:00:46] Yeah, that's exactly-I make the joke that you're a past chair, but you're out to pasture. And so people have-the past chair has a valuable role in terms of, if they run the nomination committee, they have a very valuable role. The thing that the past chair must do is not interrupt the chair. It really diminishes the value of the current chair if the past chair is always jumping in and saying, no, we have to do this first.
Munir Haque: [01:01:23] So just as we close today, I just want to ask you, if there's listeners out there who want to find out more about you or interested in having a conversation with you, do you have some information where you can be contacted?
Bruce Anderson: [01:01:37] Certainly. I can be reached, probably easiest is through email. I can be reached at bruce.anderson@uregina.ca. But like many, I don't respond to strange phone numbers necessarily, so email is often better.
Munir Haque: [01:01:57] Okay, fair enough. Well, thanks for the conversation today, Bruce. I hope you enjoyed yourself. And I'm sure our audience, particularly those who are either serving on board or are in nonprofits, we'll get a lot out of this.
Bruce Anderson: [01:02:17] Yeah, great questions and I appreciate the opportunity.
Munir Haque: [01:02:20] Thanks everyone for listening to The Boardroom 180 Podcast. You can learn more about me and Action Edge Executive Development on our website at aeednow.com. Fill out the form if you want me to reach out to you, or if you have any thoughts for future subjects or guests on the podcast. We also have a free board self-evaluation that will be linked on our website. You and your board can fill this out either individually or together, and it gives you a bit of a quick temperature check on how your board health is. As always, don't forget to hit like and subscribe to The Boardroom 180 Podcast. It helps us grow and bring more governance insights. We're recording from the Pushysix studios in Calgary, Alberta, with production assistance from Astronomic Audio. You can find their info and the links to the AEX forums in the show notes. We've come full circle to conclude this episode of The Boardroom 180 Podcast. Goodbye, and good governance.