EFFECTIVE CHAIRING SKILLS – or –

1. EFFECTIVE CHAIRING SKILLS – or – Large Credit Union Conference September 18, 2008 Dealing with the Rhinocerous in the Room

2. The Context • Never before been as much attention and focus on “good governance” • Increasing pressure on Boards to perform at a higher standard • Recent high-profile governance failures not result of Board’s lack of business acumen - rather their inability to “act like a board is supposed to act”

3. The Context… • Most corporate failures can be attributed to failures in governance • Most failures in governance can be attributed to the inability to step up to the “difficult people issues” • Effective Chair skills reduce potential risk

4. Meet the Rhinoceros – the “Difficult” People Issues: Governance Risk • Leading through the difficult people issues will be the most challenging responsibility you face as Chair • Requires strong leadership, integrity, strength of character, emotional intelligence, wisdom • Lean on your governance policy/process to ensure that expectations are clearly communicated, there is commitment by individual Directors, and that the issues are “de-personalized” as much as possible

5. The Risks… • Inability to fulfill accountability to Members • Legal/regulatory risk • Potential personal Director liability • Potential negative impact on achieving desired business objectives

6. Facing the RhinocerousHead On If a rhinoceros were to enter this room now, there is no denying he would have great power here. But I should be the first to rise and assure him that he had no authority whatever. Anonymous

7. Leading Through the Difficult People Issues

8. For Example… • The “silent” Director • The “non-silent” Director • Board polarization around “new” way of thinking versus “old” way of thinking

9. For Example… • Director that can’t take his/her “customer” hat off • The non-contributing - unprepared/absent Director • Directors who take the meeting to places unknown…

10. For Example… • Board meetings that take place at the water cooler – or on the drive home • Under performance (Board, individual Directors, CEO)

11. The Risks: • Ineffective or dysfunctional Board • Lack of strong leadership • Lack of clear strategic direction • Lack of clear direction to management • Poor Board/Management relationship

12. What Does it Take? Strength Training

13. The Solutions… • Bad news – there are no “miracle” solutions to people issues • Good news – you can, as Chair, make a difference • Put in place governance polices/process that will help avoid them arising in the 1st place • “De-Personalize” it

14. Strength of Character Leadership is a combination of strategy & character. If you must be without one, be without the strategy. Gen. H. Norman Schwarzkopf

15. Role of a Chair Inside the Boardroom: What Does it Take?

16. Responsibilities • Assuming principle responsibility for operation & effective functioning of Board • Providing overall leadership without limiting principle of collective responsibility • Ensuring Board is able to function independently of management • Generally (Board controlled Board meetings – not management controlled) • In camera meetings • Engaging external advisors

17. Responsibilities • Oversight/control over Board agendas (reviewing the “right” things, in the “right” way, with the “right” information) • Chairing meetings effectively (lots more in handout) • Ensuring Board compliance with governance policies & process • Maintaining effective relationship with CEO & Corporate Secretary

18. Skills & Qualifications • All those required by individual Directors & knowledge of internal & external governance best practice • Following additional attributes: • Strength of character & professional approach • Emotional intelligence • Credibility, stature, and ability to command respect (Meeting participants need to know that you are “in charge” without being unnecessarily heavy handed) • Willing to accept accountability for meeting outcomes • Ability to “step up” to table when required and deal with difficult people issues

19. Additional Attributes • Ability to speak, listen and think at the same time • Ability to understand the issues and the larger context within which individual issues are being discussed (strategic objectives, etc. – don’t lose sight of the forest) • Ability to summarize discussion and identify key issues (what’s important, what’s not) • A respect for the integrity of the process (If you don’t respect the process, neither will the Board) • Directors generally will “step up” to the tone set by the Chair • Sense of humour

20. Helpful Hints Tricks & Tools

21. Challenges – Beyond Parliamentary Procedure • Effective meetings usually have little to do with adhering to rules of parliamentary procedure • Has more to do with skills & attributes of Chair (and board) in dealing appropriately with behaviour, staying focused • Maintain a speaker’s list • Your credit union will likely have already defined your expectations – Chair’s responsibility to ensure behaviour is consistent with expectations

22. Skill or Art? • Chairs must be able to carry on two different conversations at once (external and internal) • Both participating directly in the meeting as well as “watching” the conduct of the meeting itself • Set the right “tone” from the beginning – a respect for the process – for example, be rigorous around walk-on agenda items, cell phones, blackberries, etc. • Let participants and management know that your expectations are that due process will be followed

23. The Conversation in Your Head • Must be focused on the discussion and debate – but at same time must be asking themselves questions like: • Has this gone on too long? • Why haven’t we heard from Director “x”? • Have we heard too much from Director “y”? • Have we gone off topic? • Are we straying into micro-management? • Are we focusing on the pertinent issues? • Am I hearing any consensus – and if so what is it? Or in what areas do we disagree? Can I try to formulate summary now? • Are we really clear about what we’ve decided? • Is management really clear about the direction we’re giving? • Read the faces & thought bubbles around the table

24. Consensus • Question: Is it the Chair’s responsibility to achieve consensus among the Board?

25. The Lone Ranger & Tonto • And remember what the Lone Ranger said to Tonto

26. Chair’s Role Inside & Outside the Credit Union

27. Before Meeting • Ensure agenda is focused on “right” things, in “right” way, with “right” amount of time allocated, and “right” information with which to make a well-informed decision • Ensure material out to participants in sufficient time • Familiarize yourself with issues & topics to be discussed (are there any items that may require an in camera session?) • Determine what the key issues or questions for the participants will be – in advance (this will help you ensure and/or guide the discussion in a manner that achieves expected outcomes)

28. Before Meeting • What requires approval or is for information only, etc. (Familiarize yourself with “why” something requires approval – legal or regulatory requirement, Board policy, etc.) • Understand the background/history of the agenda item • Ensure that management will be speaking to key issues/executive summary – not repeating or reviewing all material sent out in advance

29. Before Meeting • Review minutes from last meeting – matters arising? • Confirm expected attendance and ensure quorum will be present • Note - Clarify with Committee Members attendance expectations, that absences should be communicated to Chair as soon in advance as possible – share thoughts on agenda/material with Chair so that Chair can share those thoughts with Committee, etc.)

30. Beginning of Meeting • General welcome & introductions if necessary • Set tone/atmosphere for meeting at outset • Start on time • Set ground rules (remind participants to turn off cell phones, blackberries, etc.) – get participants attention from the outset • Review agenda and clarify/confirm with participants

31. Beginning the Meeting • Focus on Directors around the table – management are there as resource only – this is your meeting • Clarify participant preference – would they prefer to ask questions and discuss points raised during presentation – or restrict to clarifying questions only during presentation? • Assume participants have read the advance material (if they haven’t – this will encourage them to do so in future)

32. DURING THE MEETING Now…for the Good Stuff

33. In Theory • Things should go according to plan • Monitor management presentations & intercede when necessary • Are they on point? • Taking too long? • Addressed the key issues? • Is management talking more than Directors? • Is “ask” clear?

34. In Theory • Initiate and monitor discussion and debate • Are Directors contributing equally? • Is one/several Directors doing all the talking while the rest remain silent? • Read the “thought bubbles” • Encourage putting the real issues on the table • Has a point been raised more than once by the same Director? • Once you’re comfortable that full discussion & debate has occurred – bring discussion to closure • Close by summarizing & clarifying issue resolution (decision or direction to management – what remains to be resolved or deferred?)

35. In Theory • Note the Directors indicating they wish to speak • If necessary, keep list of order of speakers • In reality – easier said than done • Question – To what extent should the Chair actively participate in discussion and debate?

36. End/Subsequent to the Meeting • Conduct a meeting “de-brief” at end of each meeting. Don’t just ask for general comments – ask for specifics: • What did you like about the meeting? • What didn’t you like? • Review draft minutes for accuracy and completeness • Assess personal performance (ask yourself how you did – and where you could have done better)

37. Role of a Chair Outside the Boardroom

38. Responsibilities • Fulfilling responsibilities of office as articulated in by-laws • Taking a leading role in ensuring effective communication between Meridian, Members, stakeholders, industry, regulators, and community • Representing the Board and its policies externally, including communicating Board decisions/positions to regulators and other government officials

39. Outside the Boardroom • Taking a leadership role in ensuring effective Board and individual Director training & education planning & execution • Proactively lead the Board in its governance performance assessment processes – including mentor/performance related discussions with individual Directors • Fostering & facilitating an effective relationship between Board and Management (including acting as a liaison between the Board & CEO regarding compensation and/or performance assessment)

40. Outside the Boardroom • Ensure, with Board, quality of external reporting (Annual reports, etc.) • Ensuring acquisition of requisite skills & qualifications & keeping up to date on governance best practice • Mentor to Vice-Chair (or successor) • Chair annual general and special meetings of Members

41. SUMMARY • Chair performance should be assessed regularly • Goal – participants leave meeting feeling their time was well spent • Goal – decisions/direction is clear – both to Board and to management • It’s really all about maintaining a “presence” and commanding respect– without being autocratic or overly controlling

42. Summary • Remember that director liability arises more from a lack of due process and due diligence then it does from poor business judgment – so the process must be respected without jeopardizing meeting effectiveness • The greatest governance risk exists in the things “unsaid” which become the risks “unknown” • Know the “Chair’s Vocabulary”

43. Phrase • To Silly Sally – Thanks Sally, we appreciate your perspective and think we have understood the point, which is…

44. Translation • Sally – you’ve repeated yourself 12 times, and I think we’ve all got it – can we move on and possibly hear from someone else?

45. Vocabulary • In the interests of time…

46. Translation • Ok…enough of that…

47. Vocabulary • Perhaps we could hear the rest of the Board/Committee members perspectives

48. Translation • We’ve heard enough from those who keep repeating themselves – it’s time for the rest of the Board/Members to speak up

49. Vocabulary • I think your perspective as a Member and a customer is very helpful for the Board to understand the potential implications of its decision

50. Translation • Take off your customer hat and think bigger – like on behalf of the entire Membership – be a director – not a customer