Back to School for Directors

Conference Board, McMaster create college for directors

By Mike Pettapiece
The Hamilton Spectator

McMaster University is sending Canadian business leaders back to school. Up to 30 corporate directors are expected in class when the first directors' college session begins in November. The board members will study ethics, learn about their legal and governance duties, and about setting proper pay levels for management.

Barry Gray, the Hamilton Spectator Professor. Chris Bart, of McMaster's business school, says college for corporate directors will focus on teaching ethical leadership and exemplary behaviour.

They'll be taught how to plan strategies for their companies. They'll learn dicey things like how to deal with non-performers and how to tackle the board bully.

"We're out to change the boardroom culture. We're out to change boardroom behaviours," said Chris Bart, the lead professor at the college.

The novel inititiative is a joint venture between McMaster and the Conference Board of Canada. The partners have taken on Ernst & Young, the consultant-management firm, as the first of four national sponsors behind the college. They are also seeking a top-line law firm as a sponsor.

Graduates of all five sessions of the directors college get an accredited certificate from the DeGroote School of Business at McMaster. And they can sport "C. Dir." after their names, for chartered director.

Creation of the school, to be incorporated as a formal legal entity, was announced in March. Teachers will come from McMaster, the conference board, selected corporate directors, and other areas.

A focus on the roles of board directors as independent agents in a corporation -- separate from a company's managers -- has become a hot topic in North American business circles. The heat comes from accounting and auditing scandals that raced across the U.S. in the past two or three years.

Names such as Enron and WorldCom and Tyco International have become almost household names -- classic examples of how to crash a company and take down investors, auditors, markets, and others in its wake.

In Canada, regulators have pursued similar situations, although none has achieved the infamy of the U.S. companies.

In most cases, directors at these companies were seen as conspiring with managers in avoiding full disclosure of company operations and earnings -- or at the least, not being forceful enough in questioning top executives.

"The rules of the game for directors as professionals have not been clearly spelled out," said Bart. He is director of MINT, the management of innovation and new technology research centre at McMaster's business school.

"A lot of directors have expressed uncertainty and fear in terms of what it is they're supposed to do once they get in there."

So, the new directors college -- www.thedirectorscollege.com is the Web site address -- will put them through the hoops in a course that will run in five separate sessions. There will be strong focus on ethical leadership and exemplary behaviour at the corporate level, including how to deal with whistleblowing employees who complain about internal problems.

Average cost for each of the five sessions is about $4,000 for just over two days of concentrated teaching. The 11 or so days of education will be spread over a year.

The first session takes place in mid-November at the Niagara Institute in Niagara-on-the-Lake, a facility run by the conference board. The board has been holding similar courses for years in an unstructured way. The new college is an attempt to formalize such director education.

"We're going to take them right across the country in due course," said David Brown, principal in charge of governance and board issues at the conference board. While other business schools will be enlisted, "McMaster and the conference board would always be in the lead."

Ernst & Young chairman David Leslie said in a release that directors "play a key role in good governance" and the course is intended to be "a valuable resource for directors".

Brown said the college wants to tell "the director community" that it is committed to both education and to change within boardrooms.

"The regulatory community has been consistently positive about such programs. Director education is critical to them."

Unfortunately, added Brown, some corporate directors are just not interested. That comes as no surprise, he said, because "not every corporate director is committed to change."

Bart said directors will be taught about being independent from management, about how to challenge management "without creating a riot," about succession planning at the top, and about finance and accounting.

mpettapiece@thespec.com or 905-526-3283.

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