7/31/2019 Anderson puts Annette Verschuren in the Director's Chair - Listed (Summer 2012)

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The Directors Chair The Direc

ThecompleatdirectorIn The Directors Chair with David W. Anderson: Annette Verscformer president of Home Depot Canada and Asia, says todadirectors are equally successful in the boardroom and in the comm

PhotographybyJeffKirk

Annette Verschuren is a highly regarded CEO, chair and director whas president o Home Depot Canada and Asia or 15 years through

Here, in an exclusive interview withListed

contributing editor and govand leadership adviser David W. Anderson, Verschuren discusses howan experienced business operator inuences her work as a director. AccoVerschuren, directors must walk a ne line, providing quality straadvice to the CEO without getting too absorbed in details best lef to ment. She also elaborates on her strong viewsagain born o peexperienceas to the essential importance and high value that senior exdirectors and their companies derive when business leaders spenserving in their local communities.

Annette VerschurenPrimary role

Chair and CEO, NRstor Inc.

Other roles and organizations

National Leadership Executive, Habitat for Humanity; Executive Advisory Board, Summerhill Group

Current directorships

Liberty Mutual Group; The North West Company; Icynene Inc.; Centre for Addiction & Mental Health;

Conference Board of Canada

Former executive roles

President, Home Depot Canada and Asia; President and co-owner, Michaels of Canada; Vice-preside

corporate development, Imasco Ltd.; Executive vice-president, Canada Development Investment Corp.

Former director

Sobeys Inc.

Education

Bachelor of Business Administration, St. Francis Xavier University

Honours

kOfcer of the Order of Canada, 2011

kHonourary doctorates from St. Francis Xavier University, Mount Saint Vincent University, Dalhousie Univ

kRetail Council of Canadas Distinguished Canadian Retailer of the Year, 2005

Current age

55

Years of board service

15

7/31/2019 Anderson puts Annette Verschuren in the Director's Chair - Listed (Summer 2012)

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position because o the eect it has on the ability oadd value. Current and ormer CEOs have the best opoint o their businesses, so its clear why boards avoo experience. However, I see a lot o proessionals populawyers, accountants and others who have expertiseoperational side o the business. I think boards haveweighted in avour o proessionals. Arguably the worsa CEO is having a board largely composed o people wtry knowledge or operational experience and yet avouo involvement in decision-making Ive already cautIts important that boards put people in director roles wplined and best-suited to making governance-level dec

David W. Anderson Is it more dicult now to get operaenced business people with CEO-level experience on toAnnette Verschuren Yes, were so busy as CEOs, most otime or the rigours o todays board service. Many ballow their CEO to be on other boards or time and liOn two o my current boards, we are looking or thcapacity or the operational experience, but are havi

nding it. I think theres an opportunity to nd goodexperience in non-CEO executives. We just have to gothem. In my view, boards are not taking enough risks

David W. Anderson How should boards respond to texpectation that boards diversiy their compositAnnette Verschuren Diversity o thought is important opinions and richer debate it brings. Tis is extraordiingul. While Ive emphasized operational experience, it to have proessionals on b oard, particularly with nanBringing diering perspectives to boards is a work inbeen disappointed in the number o women on boaris getting a little better. Whatever their background, tmust communicate their views eectivelyand be w

to othersor the benet o diversity to be realized.

David W. Anderson How do you help build such diversAnnette Verschuren I mentor women and men. I love younger people, listening and giving advice. I take

can to put women orward as candidates or board posto women about corporate leadership and what it tak

David W. Anderson,MBA, PhD,ICD.DThe Anderson Governance Group inindependent advisory frm dedicated to and management teams enhance leadershHe advises directors, executives, investorbased on his international research and prdavid.anderson@taggra.com. Web: ww

the watchul eyes o regulators and exchanges are elt by directors,but more bracing still has been the swi change in the posture othe investment community. Investors greater assertiveness withboards and impatience with lagging perormance have cementedthe notion that individual directors ace reputational exposure asnever beore. Te experience o well-known ailures and challenges inthe marketplace, including examples close to home such as Nortel,RIM and CP, are the stu o nightmares or directors. Directorswork hard to stay out o these situations, in part by developing abetter understanding o where things can go o the rails. Finally,succession planning has become recognized as the great responsibilityo boards. Attention to succession at the CEO level and below hassharpened as directors have recognized the long-term impact o

leadership decisions on the corporate well-being. Boards must beadept at ensuring CEOs engage in solid perormance managementand actively develop pools o leadership talent in the organization.

David W. Anderson In practical terms, what are b oards doing dier-ently in these areas?Annette Verschuren Simply put, risk and succession management areareas in which boards have gotten much more process-oriented. Beore,it was not uncommon or insiders to make decisions seemingly o-the-cu, with scant analysis to back up their decisions. Directors now insiston being engaged and dedicate a lot o eort over longer periods o timeto get the process o decision-making right. ransparency has improved,reducing the distance between directors, managers and stakeholders.Te best inormation is rom the people who are invested, close to theissues and willing to speak the rankly. Succession planning, orexample, is greatly enhanced when directors give up the old ways ohaving little exposure to executives below the CEO and take time toget to know managers personally. How else can a board veriy a CEOs

judgment and come to its own conclusions?

David W. Anderson How do you respond to the concern that processreduces eciency? Can decision-making be too ecient, to thedetriment o eectiveness?Annette Verschuren Yes, I prioritize eective decision-making overeciency. Eciency that undermines eectiveness is no virtue. Tepositive eect o good processes in which directors share perspec-tives and insights among themselves and with the CEO, particularlyater visits with managers in the business and stakeholders, is ahigher level o condence in the decisions made by the board andtheCEO. Directors must rankly and honestly address the issuesthenlet the CEO decide how to work with the inormation and insight romthe board. Great CEOs welcome this kind o involvement.

David W. Anderson What happens when the CEOdoesnt agree withthe board?Annette Verschuren Tis is where in camera sessions o the ull boardand potentially the work o an executive committee or governance

committee are critically important. Wise directors listen careully, gatherinormation and bring well-reasoned, strong advice to the CEO.Dealing eectively with disagreements is a healthy process that weengage in a lot. But when a board believes it is not being listened to,it becomes a serious matter. Ultimately, the board must have con-

dence its CEO is in alignment on what matters most.

David W. Anderson Tere is much discussion today about board com-position. In your view, who should serve on boards?Annette Verschuren Im particularly concerned about board com-

competitiveness. On the boards I currently serve, I do the equivalent,because its critical to get good inormation rom all the stakeholders.

David W. Anderson Te idea that stakeholder perspectives should beintegrated into business decision-making is not widely shared onboards or in corner oces, yet this conviction has been at the hearto your leadership. How did you come to this view?Annette Verschuren Te 28,000 people at Home Depot, living in theirown communities, were central to Home Depots sustainability.Store managers were ambassadors to our communities. Tey builtHabitat homes and playgrounds in low-income areas. In a crisis,they had unlimited budget to go and help out in a community. Its parto why we were successul. Doing the right thing in our communi-

ties aligned with what our customers wanted. It may be hard to quantiythe return, but in the long run, it was positive. Corporations needto become more creative and engage employees in how they give back.Te return comes in customer and employee loyalty. I also believeits a great way to educate people in leadership. For example, ourdepartment manager leading a playground build in the communitydevelops leadership skills in planning, motivation and teamwork.

David W. Anderson Whats the learning rom this you apply to yourboard work today?Annette Verschuren he positive experience at Home Depot hasreinorced my view that promoting a culture o airness and o giv-ing back to communities is good or business. Protability withoutsocial responsibility gets you in trouble in the long run. I you are seento be selsh by employees and customers, taking the short route toprot or other considerations, you lose in the long run. Boards mustkeep this balance in mind, consider the implications or people andenvironment in their decisions,and ensure management acts accordingly,

promoting better health in aboriginal communities in places theyinvest, or example, and supporting community and business partners.

David W. Anderson Youve served on many types o boards: public,private, crown and not-or-proft. What distinguishes the ones onwhich you were able to make your best contribution?Annette Verschuren Ive been able to contribute my best and see theboard be most successul when there have been good relationships

amongst the directors and a proessional respect with the manage-ment team. Tis osters open, honest dialogue and a board culturein which were not araid to challenge and be challenged. Relationships

and the mutual respect that sustains them are a two-way street.

David W. Anderson How has the ocus o board deliberations changedin your experience,and what have been the catalysts or such change?Annette Verschuren As directors weve put a greater ocus on risk,reputation and succession. Discussions on sources and responses toenterprise risk are now integrated into major decisions. Certainly

David W. Anderson As a business leader, youve proven yoursel to bean outstanding operator, getting things done and producing results.How do you bring those strengths to your work as a director?Annette Verschuren I oer my view based on experience, and makesure weve considered the pros and cons. At times I oer my net-work to gain advice not represented at the table. Sometimes I sharemy thinking with the board and sometimes with the CEO directly.Its true Im an operator, but Im wary o boards being too involvedin the operations o the business. Te last ew years Ive seen a shiin governance that risks inviting too much o the wrong type o invo lve-ment. Boards have the power to make consequential decisions. Teyshould exercise that power with great care to judge the appropriatelevel o involvement to add value.

David W. Anderson How should boards involve themselves? What roleor boards do you think makes them most eective?Annette Verschuren Directors should provide insight and advice, but bemindul not to b ecome overly infuential in running the company.I have seen a board openly challenge a CEO on a decision to makeinternal organizational changes. While its appropriate to understandthe rationale behind such decisions, its not helpul to encroach uponthe domain o the CEO. Philosophically, I believe that getting tooinvolved as a board is a problem because it takes the responsibility awayrom management to run the business. In practical terms, when a boardgets into too much detail, the discussion with management is biasedaway rom matters o strategic direction and oversight. Furthermore,a board that isnt disciplined in its governance role takes the pressure oitsel to ensure management is doing its job. In my view, the board hasthe obligation to ensure the CEO is qualied to perorm to expecta-tions and to replace the CEO i not perorming to those expectations.

David W. AndersonYet the pressures on boards to demonstrate account-ability and valueand the desire o directors to avoid liabilityare

making it necessary or boards to be more engaged in the business.How do you reconcile these tensions?Annette Verschuren I think the tension is addressed in the divisiono labour among committees. Te place or getting into detail is atthe committee level. Tats where ne-grained examination, analysisand close support or decision-making are warranted. Board-leveldiscussions are best le to ocus on strategic matters, oversight oCEO perormance and organizational culture.

David W. Anderson How else are directors responding to these pressures?Annette Verschuren In my experience, directors have stepped upto the challenge by coming to meetings much more prepared andask probing questions in areas where they need clarication. I havemeetings with management between board meetings, spending timeto understand the business and where theyre going. I think direc-tors are pulling up their slee ves and are prepared to work.

David W. Anderson When you ran Home Depot in Canada, whatexpectation did you set as CEO or your directors, in order to get themost value rom them?Annette Verschuren I asked board members to spend time in our storeseach year. Our expectation was that each director would visit aminimum number o 10 stores a year, either announced or not, andwould talk to me about what they observed as a customer. he

original American ounders o Home DepotArthur Blank andBernie Marcusstarted this tradition and I maintained it becauseit reinorced the culture o customer ocus that was central to our

Promoting a culture o airness and ogiving back to communities is good orbusiness. Protability without socialresponsibility gets you in trouble in thelong run

Wise directors listen careully, inormation and bring well-restrong advice to the CEO. Wboard believes it is not being lto, it becomes a serious matter