An unlikely convergence of opportunity and expertise opened the boardroom door for Gail Cook-Bennett in an era when even men her age were typically deemed too young. Since then, she’s played a key role in many corporate and public sector successes. In 2014, Cook-Bennett began her third chair position, with the Institute of Corporate Directors, having previously chaired the board at Manulife Financial and been the founding chair of the Canada Pension Plan Investment Board. Here, in an exclusive conversation with governance and leadership adviser David W. Anderson, she shares some of her accumulated insights on the role of the chair, the meaning of good governance, and the importance innovation plays in taking boards above and beyond levels of standard practice.
David W. Anderson You became a director on the boards of Manulife and Consumers Gas at 37—far younger than the men on those boards. How did that come about?
Gail Cook-Bennett I started my career as a professor of economics at the University of Toronto, teaching and conducting research. On moving to the C.D. Howe Institute in Montreal I worked with Canadian and U.S. CEOs, labour leaders, academics and senior public servants to understand their respective perspectives on public policy issues. Two board chairs—Syd Jackson of Manulife and Doug Gibson of Consumers Gas—were participants in our round tables and subsequently invited me to join their respective boards in 1978. Ahead of their time, they sought the perspective of a woman director, encouraged by senior women executives. With a nudge from a colleague, I accepted an extraordinary opportunity to learn and contribute.
David W. Anderson How would you compare your experience on boards starting in the 1970s to today?
Gail Cook-Bennett The most important change is that directors now are more likely to have a deeper knowledge of the business and the determinants of performance. Directors are expected to get their arms around complex businesses and contribute to decision-making. An indication of this change is that directors are now able to speak intelligently about the business to investor groups and regulators without the assistance of management. A second notable change has been in education. In the last decade, formal director education has fast-tracked learning and helped accelerate the sharing of experience. When I started as a director, opportunities for formal director education inside and outside the boardroom were hard to come by and, truth be told, they weren’t much sought after or welcome. I had to learn on the job.
David W. Anderson What lessons did you pick up by observing other directors that shaped your own work?
Gail Cook-Bennett I learned a few things by watching others, seeing firsthand what worked and what didn’t. First, asking a question or a series of questions is better than making an assertion when you’ve got a point to make. Second, how you formulate questions determines the quality of information you get. It’s best to stick to fundamental questions that probe the bigger picture. For example, a series of detailed questions on a presentation are not as powerful as a contextual question on how subject matter relates to other parts of business or to strategic direction. Third, style matters. A whisper inside the boardroom is like a shout outside the boardroom. Effective directors use a respectful style that is likely to elicit the best contribution from management and from each other. Being heavy-handed is not necessary, as most executives want to engage the board and provide what it requires.
David W. Anderson You’ve chaired boards continuously for 16 years and are known for being firm, focused and fair. How do you approach your role as chair?
Gail Cook-Bennett I believe in the wisdom of the group, so the most important thing is to get the right people around the table. People make or break a board; we choose directors for their business-relevant experience and ability to contribute as part of a team. The second requirement is to harness that knowledge and insight represented at the table. It’s a challenge to steer the board to a common view and foster cohesion in the face of disagreement. A chair has to listen carefully to people with different perspectives. Of course, directors are not always right; individual directors can be dead wrong in a disagreement with management or fellow directors. Yet contrary views respectfully stated can illuminate bigger truths. The value of a board is found in its collective judgment. The third important ingredient is agenda setting, which is used as a tool to manage the board’s scarce time. To set the agenda requires knowledge of the critical issues in order to frame and foster debates and maintain focus.
David W. Anderson Chairs work hard to find a balance between showing enough support to the CEO without degrading the board’s oversight interests. How do you manage that tension?
Gail Cook-Bennett The chair navigates carefully between the board and the CEO. You have to look after the legitimate needs of both without losing objectivity. Just as you need candid, respectful dialogue with directors, so too with the CEO. It’s vital to have that constructive relationship so that you both are able to say what you think and hear the other’s view. Particularly in times of stress, there’s a risk that the directors and CEO each sees you taking the other’s side. That may mean you’re doing just fine, but one must continuously check with both to make sure you remain fair and open to critique.
David W. Anderson As founding chair of the Canada Pension Plan Investment Board, you faced initial skepticism that such a prized entity could remain insulated from political pressure. How did you succeed in building credibility?
Gail Cook-Bennett A crown corporation competing for investments in the private sector, with what was anticipated to be a large asset base, presented obvious risks. The federal and provincial finance ministers had the courage to set up an arm’s length governance framework that fit the mandate of CPPIB. This would be essential to the success of the organization. The board’s unique challenge was to operationalize this framework and ensure it wasn’t compromised. In our first year, without staff or investment track record, we had to create a reputation in the market. We knew that the key to success would be ensuring our investment professionals were free to make their judgments without any government pressure. As a board we established a foundational code of values to guide us and our investment professionals. We had to make it clear to Canadians and the intermediaries who communicated to them that we were committed to those values. To drive this home, we championed the establishment of an external conduct review adviser and developed a strong transparency policy to build trust externally. The board paid close attention and engaged in real problem-solving to be sure our values would become a differentiator. It wouldn’t have worked if management hadn’t bought in. The late John MacNaughton and David Denison, our CEOs in the early days, were fully committed to living this value set in the operations.
David W. Anderson CEOs want their boards to provide value as much as investors do. What must boards do to demonstrate the value of governance?
Gail Cook-Bennett The hallmark of a deep understanding of governance is the board’s ability to organize itself and deal with its subject matter in a thoughtful, responsible way. This goes beyond whether you have policy and process; you can pull those off a shelf. Really good directors do innovative things—and sometimes can’t talk about them. When you’re dealing with the performance of the organization, you have to recognize the context and have the cour- age to try novel things. Good board process gives safe harbour, but my preference is for directors to think about what’s really needed. For example, when I became chair of the board at Manulife near the beginning of the global financial crisis, we were facing high director turnover due to age limits. We needed new people and wanted to get them up to speed before losing the knowledge and wisdom of those retiring. We chose to significantly increase the size of the board for a period to create overlap. Although we knew the larger board size wasn’t optimal, and we would be marked down for it in external rankings, there was a clear rationale. While we could have remained onside with the rankings by keeping the board complement low, we would have lost out on the generational transfer. The right decision trumps slavish adherence to so-called ‘best practice’ and ranking criteria.
David W. Anderson You’re intellectually curious and practically minded—a problem solver by nature. How does your board leadership reflect this?
Gail Cook-Bennett I’m an advocate for innovating, looking at what we can do better. I’m energized by the very problems for which there are not pre-packaged solutions. Why? Because it’s there that we can add the most value. I’ve been a part of experimentation with novel approaches to in camera sessions in an audit committee, committee structure and succession planning. In each case we fit a solution to the problem in our context. Sometimes the best answer for one board isn’t generalizable to others.
The complexity increases, moreover, when you factor in the people on those boards. Each board has its own social dynamic—which evolves over time and can change markedly as board composition changes. The particular combination of corporate circumstances and people dynamics makes every board’s options and outlook unique. Indeed, some approaches that I found productive used by one board would almost certainly not be suitable for others.
David W. Anderson How do you square innovation with best practice?
Gail Cook-Bennett Each board has a set of corporate circumstances that distinguishes it from others. Should we not then expect boards to take different paths, if in fact they try to make the best decision specific to their organization? Directors ought to tailor their governance practices to their company’s needs; governance is not following a rulebook of processes. Best practice is useful for bringing lagging boards up to standard, but becomes troublesome when its definition interferes with a board applying its own judgment in context. For those boards that have the potential to be innovators, let’s not crush them with a solution fit for another circumstance. I think we ought to guard against the tyranny of best practices.
David W. Anderson Pressure to perform in published board rankings doesn’t generally encourage innovation, but does it produce better governance?
Gail Cook-Bennett Board rankings have focused attention on some important
issues. People are more aware of constituent parts of governance, but it’s not the
whole story. You’re right to say rankings don’t encourage innovation, but they
may move some organizations more quickly to what I’ve called standard practice
in basic areas. However, you have to look at more than one dimension to
appreciate the complexity of governance and the effectiveness of a board. What
really matters is what goes on around the board table.
David W. Anderson Do we need to update our view on governance for the
Gail Cook-Bennett Yes. I’ll offer three related suggestions. First, we need to avoid becoming too prescriptive, telling others what to do and diminishing innovation. Governance should be about how we do things in context to get to the right outcome. Directors should have the freedom to experiment, applying their judgment within context, once the basic standards are met. Second, directors’ focus ought to skew to the strategic and the longer term. Boards really have to fight for time to look up from the weeds and forward to the future. Time is the scare resource; if a matter doesn’t have high materiality, the board shouldn’t talk about it. Third, and more fundamentally, I think we need to think about the growing mismatch between expectations for boards and their ability to deliver—no matter who you put around the table. It’s not clear to me how far we can push the current system. Having directors spend more time and beefing up external resources available to boards are not the answers. This growing mismatch doesn’t absolve directors of their responsibility; we still need directors with deep knowledge.
David W. Anderson After close to four decades of service on boards, you exude excitement for your work. What is the source of this wellspring?
Gail Cook-Bennett I find the work of a director fascinating! It combines business issues that are complex and always changing, a firsthand view of significant domestic and international decisions affecting the machinery of our global economy, and collaboration with smart, knowledgeable people who are committed to learning and making a contribution.
David W. Anderson, MBA, PhD, ICD.D is president of The Anderson Governance Group in Toronto, an independent advisory firm dedicated to assisting boards and management teams enhance leadership performance. He advises directors, executives, investors and regulators based on his international research and practice. E-mail: firstname.lastname@example.org. Web: www.taggra.com.
Gail Cook-Bennett — Biography
Current roles Chair, Institute of Corporate Directors; Director, Bridgepoint Active Healthcare; Member, Government of Canada Audit Committee; Member, Salvation Army, National Advisory Board
Former chair of the board Manulife Financial Corp., Canada Pension Plan Investment Board
Former corporate directorships TD Bank, Petro-Canada, Enbridge Consumers Gas, Emera Inc., Mackenzie Financial, Transcontinental Inc., Cadillac Fairview Inc., Campbell Soup Co. Ltd. (Canada), Manufacturers’ Life Capital Corp.
Former crown directorships Bank of Canada, Ontario Teachers’ Pension Plan, The Stadium Corp. of Ontario Ltd., IDEA Corp., Institute of Hydrogen Systems
Advisory roles Advisory Committee on Financing (to the federal Minister of Finance); The Trilateral Commission (Canadian Group); President’s Advisory Council, Carleton University; Governance Leadership Council, Ontario Hospital Association
Education PhD (Economics), University of Michigan; BA (Hons) (Economics), Carleton University
Honours > Member, Order of Canada (2008) > Honourary doctorates: York University (2009); Carleton University (2004) > Fellow, Institute of Corporate Directors (2000) > Montreal YWCA Honour for Contribution to Working Women (1977) > Canadian Diversity Champion by Women of Influence (2012) > WXN Canada’s Most Powerful Women: Top 100 Award (2012, 2011, 2003)
Years of board service 36 years (16 years as chair)
Photography: Jeff Kirk
Editor’s note: This version includes a correction to add text that was mistakenly omitted in the printed version. The second and third last question/answer pairs in this version are correct.