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The Directors Chair

Jean-Ren Halde

An open playbook

In The Directors Chair with David W. Anderson: Sports teams thrive on trust among teammates. Successful boards
and board-chair-CEO relationships work the same way, says veteran CEO and director Jean-Ren Halde
Photography by Jeff Kirk

Jean-Ren Halde is the first one to say he doesnt have all the answers. But its
clear from his varied and illustrious career as a CEO, board chair and director,
and from his remarks in the following conversation with governance and
leadership adviser David W. Anderson, that Halde usually has the right answer
when its needed. Hes run numerous public companies in a wide range of
sectors and had an especially significant run as the CEO of the Business
Development Bank of Canada. As a director, hes grappled with activists,
high-profile takeovers and complicated voting structures. The sum of that
experience is revealed in his insights on CEO-chair and CEO-board relationships,
where he endorses a no surprise policy and a team approach to problemsolving where success still relies on individual accountability.

Jean-Ren Halde
Corporate directorships
TD Bank Financial Group; Commandit-directeur Avions C Series Inc.
Board chair
cole de Technologie Suprieure
Current non-profit directorships
Institute of Corporate Directors; Montreal General Hospital Foundation; World Presidents Organization
Former chair
Montreal Heart Institute; Grocery Products Manufacturers of Canada; Association des MBA du Qubec
Former corporate directorships
CCL Industries, Inc.; Gaz Metropolitain Inc.; Rona Inc.; Groupe Vidotron Lte; OMERS Capital Partners;
Phoenix International Life Sciences Inc.; Provigo Inc.; Reichhold Chemicals Ltd.; Unigesco Inc.
Former non-profit directorships
Association des MBA du Qubec (chair); Canadian Council of Grocery Distributors; Conference Board of Canada (chair);
Grocery Products Manufacturers of Canada (chair); Montreal General Hospital Foundation; Institute of Corporate
Directors; Montreal Heart Institute (chair); Quebec Deposit Insurance Board
Former CEO
Business Development Bank of Canada; Experlead Corp.; Irwin Toy Ltd.; Livingston Group, Inc.; Culinar, Inc.;
Atlantique Video and Sound Inc.; Metro-Richelieu, Inc.
Education
BA, College Sainte-Marie; MA (Economics), Western University; MBA, Harvard Business School; ICD.D,
Institute of Corporate Directors
Current age
67
Years of board service
37

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Jean-Ren Halde

David Anderson You became a CEO in your early 30s and remained a CEO for over 35 years, culminating in your leadership of the Business Development Bank of Canada. How did
you become a CEO at such an early age?
Jean-Ren Halde Its something I dont take credit for. At that time
there was a desire for francophones to take up top executive roles
in Quebec and the reality was there were not many of us with advanced education, as I had from Western and Harvard. Some of my
Harvard classmates from Quebec became a premier, a finance minister and mayor of Montreal.
David Anderson Even if you benefited early on from a direct
effort to promote francophone leaders, once in the top job,
you proved the quality of your leadership over an illustrious
career. From the vantage point of a long-tenured CEO, what
lessons on leadership can you distill?
Jean-Ren Halde I hesitate to answer as I dont want to contribute
to the idea theres a leadership formula. Theres nothing magical
here. My view is more pragmatic. Leadership is about remaining
yourself, being humble, asking the right questions, understanding
your blind spots. Its about following through on commitments and
working hard. It takes courage, fortitude and sometimes luck. I
dont think its complex. Its how you behave and the example you
set. If youre going to ask others to work hard, be one of the first to
the office in the morning and last to leave. Leadership is a collection of a lot of simple things easily said that are tough to execute
well. Execution is where people falter.
David Anderson What advice might you offer CEOs in their

work with boards?

Jean-Ren Halde If you want to retain the confidence of your board,

make sure your whole management team has a no surprise policy

and dont play games; it always turns against the CEO. Talk about
bad things that have happened and anything thats looming. This
approach builds confidence, especially when you discuss issues
that you could hide. Directors lose confidence and stop trusting
when they feel they are not being given the full story. At this point
directors begin to question everything. When that happens, directors have a choice to makechange the CEO or resign.
David Anderson Did you ever resign as a director?
Jean-Ren Halde Ive resigned from a board because I knew I

wasnt getting the straight goods and I was convinced the CEO
was not listening. You shouldnt stay on a board if you dont believe
youre getting 100% truth about whats going on. Its a different situation when management wants to provide information but isnt
able to get it. Often management is frustrated they dont have the
information to share. While thats not comfortable for the board
either, you know youre all in the same boat. There will always be a
huge asymmetry in knowledge, but you must feel the management
team operates with an attitude of transparency and is dedicated to
providing you with everything you need.
David Anderson When is it appropriate for a board to get out-

side information of its own accord, to reduce proactively the

board-management information asymmetry?
Jean-Ren Halde The board should always form an independent view,

but only under exceptional circumstances should it go outside, excluding the typical work with auditors and HR specialists and the like.
Id consider it when the management team isnt voluntarily giving information or in an involuntary sense theyre not seeing the world as
the board is. But Id avoid running a parallel process; Id go through
the management team to promote mutual study. At BDC, we werent
doing well with venture capital so we said to the board we werent sure
how to turn it around. With board support, as we werent hiding anything, we hired McKinsey. You want management to have outside help
when necessary and to be sure as a board you also understand whats
at stake. This arrangement worked at BDC because we had a relationship of trust built on transparency. The relationship between chair and
CEO is particularly important in this respect.

Ive resigned from a board because I wasnt

getting the straight goods and I was
convinced the CEO wasnt listening. There
will always be asymmetry in knowledge,
but you must feel management operates
with an attitude of transparency.
David Anderson How meaningful is the relationship between
the chair and CEO, more generally, to the functioning of both
board and management?
Jean-Ren Halde The right chair and CEO combination is essential because the impact of that relationship is huge. It works when
the CEO sends the signal to the management team to be open and
the chair sets the tone with the board to handle good and bad news
through productive discussion. The tone from both CEO and chair
is key, as is their ability to complement each others roles. If you get
this right, everything else will get fixed. As a recent director at TD,
Ive observed a healthy level of trust between the board and management, facilitated by a close relationship between the chair and CEO.
David Anderson My observation of boards suggests the perfor-

mance of the chair is the greatest determinant of board effectiveness. Does your experience bear this out?
Jean-Ren Halde Yes, the chair is vital to the success of the board
and the CEO, and this is not well enough recognized. We refer to
the board and its centrality in governance, but the board behaves to
the level of the chair.
David Anderson Given this uniquely valuable role and the effect

it has on the quality of corporate leadership, how do boards

think about chair succession?
Jean-Ren Halde In particularly complex organizations its ideal
the next chair should come from the board because a lot of time
and effort is required to understand all facets of the business, the
industry context and the senior executives. When done well, the
chairs successor is someone youve worked with on the board for
a while and has shown informal leadership on various issues. Its
someone well respected by other board members who is seen as a
natural fit. So when a board is selecting directors, you want people
who could become a chair. In the case of Crown corporations, they

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Jean-Ren Halde

have the unfortunate habit of appointing from the outside and not
through a rigorous process from the inside. When it does work, its
because of specific circumstances. For example, in BDCs case, Sam
Duboc came with the right background and had a brilliant mind,
so he learned the business quickly and asked the right questions.
However, in general, if you appoint from the outside, you should
have extreme rigour to mitigate the risk.
David Anderson The chair and CEO are equally important in the

tone they set with their respective colleagues and the quality
of corporate leadership, both in governance and management.
Are boards rigorous enough in chair succession, commensurate with its role?
Jean-Ren Halde Its fair to say boards put in more effort and follow clearer process in CEO succession than chair succession. Its
not uncommon for boards to let their chairs make the call when to
leave. When used properly, regular board assessment, including a
review of chair performance, is a good tool to stimulate discussion
on chair performance, the future-oriented needs of the board, and
the timing of the next chair. I can say in hindsight, reflecting upon
my own experience as chair, that I could have worked on chair succession sooner and introduced more rigour to the process.
David Anderson Its a sign of progress that thinking evolves on
such matters. One issue that has seen hard opinions soften
of late is dual-class shares. Where do you stand on notions of
shareholder democracy and one share, one vote?
Jean-Ren Halde The pendulum is shifting back from the view that
dual-class shares are bad and never ought to embraced. This view
was championed by shareholder rights groups such as the Canadian
Coalition for Good Governance and many governance experts. From
a financial point of view, one can understand the company isnt always in play, so you dont get the premium, but companies with dualshare structures do well over the course of time as many studies have
shown. From a Canadian standpoint, we have companies still here
that would have gone to foreign ownership. Im glad the accepted
view is now more nuanced and balanced. There is still a risk of abuse
from controlling shareholders; this reinforces the need for a particularly strong board that will do whats right for the corporation.
David Anderson Youve contributed to decisions as a director
in high-profile transactions, balancing competing interests
to seek the best outcome for the corporation. What was your
thought process?
Jean-Ren Halde At Rona we received an acquisition offer from
Lowes and immediately we asked ourselves, How do we think
about this in the appropriate way? What in fact is the company
whose interests we have to protect? We decided the company
had three constituents: employees, suppliers and shareholders. A
successful offer had to adequately address all three. As we were
happy with the growth trajectory of the company, we needed a
compelling offer on all counts. In the end, the offer was very good
to shareholders, while doing the right thing for employees and suppliers. We weighed the benefits to each of the stakeholders over
the long term, looking at the jobs of our employees, the business of
our suppliers and the financial reward to shareholders. With the
right price and right behaviours vis--vis other constituents, such

as moving head office to Montreal and making an effort to understand Canadian suppliers, approving the sale was an easy call intellectually, but still not emotionally.
David Anderson Shareholder activism also puts directors du-

ties in sharp relief. How do you think about increased efforts

by some shareholders to exert corporate control and a boards
efforts to serve the corporate interest?
Jean-Ren Halde People are too black-and-white on shareholder
activists. Learning from the experience, boards must be more alert
and quicker on their feet to address serious performance issues
and act to preserve long-term value. When a company is sliding in
terms of results, the board should ask tough questions and react
quickly to get it fixed. That means not standing by as performance
deteriorates. Its better to have an activist board than have activists
on board. The board still needs to make sure the company is investing for the future, applying its wisdom in reacting quickly enough
to a deteriorating situation to address the issueand discerning
where to cut and where to preserve or invest anew.

Boards put in more effort and follow

clearer process in CEO succession than
chair succession. Reflecting upon my
own experience as chair, I could have
worked on chair succession sooner and
introduced more rigour to the process.
David Anderson The federal government is opening up its director selection process for Crown corporation boards via the
internet, seeking more diversity and transparency in the process. Is this the future of board search?
Jean-Ren Halde No, but theres nothing wrong saying to the general
public were looking for directors. General outreach is good as long
as the right people get chosen. Well still need active recruitment to
find the best talent. This should be a board-led effort involving full
search with the minister making the final decision on the advice of
the board. Lets remember these crown corporations are bigCBC,
Canada Post, BDC, EDC, CMHC. They require the best talent with
the right mix of skills, experience and temperament. No reasonable
person would leave it to chance, hoping to attract the right talent
by simply asking people to apply online. The talent you want wont
be attracted by the poor pay and onerous application process. Most
have to be approached to be aware of the opportunity and wooed to
take it seriously. Our Crown corporations, like our public companies,
need the best talent we can find to lead them.

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:
david.anderson@taggra.com. Web: www.taggra.com

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