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WATSON Views

Focusing on the ‘G’ of ESG

February 23, 2023

Posted in: WATSON Views

Last year, WATSON brought together board directors in Vancouver and Toronto for a coast-to-coast conversation. In multiple sessions, our governance experts and other thought leaders discussed many aspects of ESG, including the challenges for boards in starting, championing, embedding, and measuring ESG initiatives across sectors. And if we walked away with one thing from these conversations, it’s this: just start.

In both Toronto and Vancouver, we heard that integrating and embedding E, S and G in the company’s purpose, strategy and risk management is the most optimal means of governing E, S and G. To embed ESG effectively, a board must first discuss and align on the particular relevance and meaning of E and S to the company: Where are the organization’s greatest opportunities to decrease its climate footprint or elevate its impact to the community it serves? Does the business or delivery model need to shift to serve new markets or better respond to emerging issues? What is our current impact? Context is everything and tees up integration effectively.

But sometimes boards need to walk before they can run. If integrating and embedding ESG looks to be too daunting for any reason, take a step back and look around. Taking stock with management of what an organization is already doing is a great place to start.

It is important to avoid overburdening the organization with separate structures and processes but if starting with a committee dedicated to E and S helps to get the ESG board discussion started, then do it. It is also important to avoid the temptation of trying to do everything at once. Instead, focus on a manageable set of issues and goals and build up from there over time.

Ask WATSON

As always, WATSON is here to help. Reach us at letwatsonhelpyou@watsoninc.ca to talk about how we can help your board in the ‘G’ of ESG.

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Is Canadian Culture Preventing Constructive Dialogue?

January 17, 2023

Posted in: WATSON Views

It’s that time of year again. Endless emails outlining the many things boards should focus on this year: 5 things for directors to consider…, 3 practices for 2023…, 10 topics facing boards this year… As directors and board advisors we are highly attuned to the ever-growing list of mission critical issues boards need to focus on and the challenges this growing list poses to the execution of the board’s responsibilities. With increased business complexity, demanding board stewardship requirements, and the need for more board oversight, the director role is becoming more demanding, and more complex.  

So, as we enter 2023, we have ONE thing to share. From our observation advising and partnering with hundreds of boards, it’s not about what the board does, but about how it does its work.   

Over the last year, we’ve heard about, and seen a culture of distinctly Canadian collegiality in boardrooms that limits constructive dialogue. It’s not simply that we’re too nice or too polite, it’s that in this highly complex context, individual directors are not actively sharing reservations, concerns, and alternative views, and boards are not having the quality of conversation they need to make important decisions. This isn’t intentional and doesn’t come from a bad place. It is, in part, attributed to a Canadian culture that avoids conflict and pursues consensus–perhaps too quickly–at the expense of intellectual curiosity and debate. In some cases, lack of debate may be an indicator that more work is needed to foster genuine inclusion at the board table. 

We believe there are opportunities for boards to embrace more openness and healthy tension to elevate the level of constructive dialogue and the board’s value-add. For critical discussions, we see the value of intentional dissent that embraces opposing points of view and enables directors to disagree and build on each other’s points. Intentional dissent is a productive way to introduce friction into the decision-making process. It’s an important step to root out blind spots, kick the tires of recommendations, and bring different perspectives on issues and options to get to the best decision. To be fully satisfied with their decision, boards should not only be satisfied with the decision itself, but the process to get there. 

Regardless of the issue on the agenda–from cyber, talent, and DEI to supply chain, energy transition, and recession–the quality of the board’s contribution depends on the quality of the conversation. And given the challenges facing organizations and boards this year, strategic conversations require that boards embolden all directors to weigh in on context, options, and paths forward. Here are some ways the best boards, chairs, and directors we know combat Canadian collegiality: 

 


Boards Chairs Directors

  • Explore and advance board diversity with the lens of respectful challenge (e.g., are directors bringing similar worldviews and experiences; is the board missing experiential or generational diversity factors). 
  • As you advance diversity, don’t forget about inclusion and psychological safety; you won’t get the full benefit of diverse perspectives if don’t you have a culture where all directors feel safe to contribute.  
  • Provide feedback to management on topics and recommendations in the moment; don’t wait for in camera sessions. 
  • Try to broaden management’s thinking by asking how they got to a recommendation, what options were explored, or how related strategic or risk considerations weighed in. 
  • Check in on progress through board and director evaluation processes. 
  • Don’t be rude. Be careful not to swing too far on the pendulum, just encourage more active challenge in a direct and respectful way. 

  • Prompt directors to intentionally share different perspectives (e.g., “may I hear another point of view…”). 
  • Use your in camera sessions to frame the spirit of discussions before meetings (e.g., “let’s really push each other’s thinking in our discussion on X today”) and check in on progress at the end of meetings.  
  • Manage the agenda wisely. Ensure there is time and space for this level of discussion on the board’s agenda and welcome it explicitly, while recognizing that you can’t have robust debate on all agenda items. Be disciplined about when this type of dialogue is most important.  
  • Encourage directors to share how they show up as individuals to help understand where their peers are coming from and how best to engage with them. Do they think out loud? Do they need time and space to reflect on things? Are they visual or verbal thinkers?  
  • Use the director evaluation process to gather and provide feedback on the nature of director contributions. 

  • Prepare for board meetings with this lens in mind. Explore issues from different angles with a plan to ask questions and share perspectives that you don’t expect from others. 
  • Adopt devil’s advocate thinking in the boardroom, including when management is present (e.g., “what if we looked at this from a different perspective…”). 
  • Reflect on your own experience from your professional life and board work and apply this in an additive way. Share lessons learned from a different context, test ideas, make connections, and push the thinking beyond what is presented. 
  • Reflect and consider:  
    • Do you encourage or discourage peers from bringing their true views forward?  
    • Are you personally holding back from contributing your full knowledge and perspective? 
    • How you can contribute to overcoming these barriers, both individually and systemically? 

We often hear that the best directors ask hard questions in a “soft” way. They put tough issues and different perspectives on the table in a way that others can hear. Their tone and style complement and enhance their contributions. They are polite and collegial, and skilled at sharing different perspectives, or challenging the status quo. They are skilled at depersonalizing feedback and instead focusing on ideas and options. This level of EQ often requires time and experience, superb role models, and high-quality feedback to truly master. It also requires courage. At the board level, it requires someone to call attention to the problem to start to see a shift in behaviour. Getting used to more intentional dissent and encouraging different views can be a slow and uncomfortable progression and one that should be monitored and acknowledged.  

All boards make decisions today that will shape the future of their organizations. For boards that practise good governance, enhancing the quality of dialogue and decision-making in the boardroom is an opportunity to go beyond the mechanics and lists of oversight areas and add real value in shaping their organization’s future. This one thing will not be easy, but it will have significant impact on the board’s effectiveness in the year ahead.  

Wishing you a safe and spirited 2023. 

 

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How WATSON is Spending the National Day for Truth and Reconciliation

September 30, 2022

Posted in: WATSON Views

September 30 is the National Day for Truth and Reconciliation, a day to commemorate the legacy of the residential school system and honour the children who suffered within it.

At WATSON, we have chosen to let our employees recognize this day in their own way. On September 30, our staff are invited to use the day to deepen their understanding and learning on matters related to reconciliation or Indigenous culture.

Here are just some of the ways we’re planning to spend the day:

Our intention is a day where the WATSON team feels supported in its continued learning about reconciliation, equity, and inclusion; where we continue to strengthen and learn together as a firm; and where we invest in ourselves to have impact for our clients and for society.

 

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From the Throne Room to the Board Room: Three Leadership Lessons from Queen Elizabeth II

September 28, 2022

Posted in: WATSON Views

On September 8, 2022, Queen Elizabeth II passed away after 69 years as monarch and head of state for 15 Commonwealth realms. Whether you’re a monarchist or not, that’s quite an impressive run, especially when you consider her 90% approval rating.

Leaders have huge impact on their organizations, regardless of size. From small start-ups to multi-national corporations, tone is set at the top. So what can we learn from a global leader with unprecedented longevity and popularity?

 

  1. Know Your Purpose

In a speech to the nation in 1947, the Queen declared her purpose: “I declare before you all that my whole life, whether it be long or short, shall be devoted to your service and service of our great imperial family to which we all belong.”

Having a clear purpose statement and communicating it relentlessly creates transparency and a clear sense of direction. The best leaders bring that purpose to life and consistently translate it into action.

 

  1. Model Your Values

Over the course of Queen Elizabeth’s reign, the British Royal Family endured its share of scandals. And yet through them all, the Queen embodied her values of commitment, restraint, and hard work. Modelling a culture consistently over the long-term builds trust, allowing others to follow and appreciate a leader.

While it can take tremendous time and effort to build, trust can be broken in an instant –  it only takes one wrong move in the moment or a picture that creates a bad impression. Consistency is key.

 

  1. Be Aware That People Are Watching

The Queen was one of the most photographed people in the world. This meant being “on” for any situation in life. A walk to the car, a state ceremony, or the illness and death of a husband would all be punctuated by hundreds of flashbulbs. Yet the image of the Queen remained consistent .

For those new to top leadership roles, one of the most challenging aspects is getting used to the fact that people are constantly watching. There’s no room to be careless with your words – they carry great weight with employees and stakeholders who often try to interprete them for more meaning.

 

The Queen’s popularity and success as a monarch are founded on competencies that make strong leaders. Even if your setting is more board room than throne room, the example the Queen lived over her 96 years can be an inspiration.

 

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