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(NATHAN DENETTE)
(NATHAN DENETTE)

Board Games

Out of the boardroom, into the field Add to ...

It was a tough job, but someone had to do it.

Veteran corporate director Purdy Crawford, a member of the board of Maple Leaf Foods Ltd., spent a day last February visiting Maple Leaf's food-services division. He even tagged along as an observer during a meeting to pitch new ideas to client Tim Hortons.

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"It's not a good place to be if you're not a skinny person.… We got to taste all the samples," Mr. Crawford says.

The visit was a far cry from the typical choreographed tour given to a board of directors as they troop en masse through a company's facilities.

Maple Leaf has adopted a growing U.S. board practice of requiring corporate directors to get out of the boardroom and into the company's operations at least once a year. And most critically, the directors go alone - no one from the corporate head office hovers over the visit.

Directors say the visits give them a deeper understanding of a large company's diverse operations, and allow them to meet up-and-coming local executives personally.

"You cannot understand anything about the business if you don't go out and see it, because a boardroom and the way boards work is so artificial," says David Beatty, chairman of Inmet Mining Corp.

Inmet asks new directors to visit its key operations within two years of joining the board, and gives all directors an opportunity to visit a company operation or development project annually.

Some large U.S. companies have made independent director visits part of their formal expectations.

Home Depot Inc., for example, asks directors to independently visit eight company stores each year and have a one-on-one meeting with a member of senior management at least quarterly. General Electric Co. directors are expected to visit two of the company's diverse business sites each year with no member of corporate management present.

Toronto-based director Geoff Beattie, a member of the GE board, says most directors visit more than two sites a year because they find them so rewarding.

"That's a testament to management, because they make them so productive and so effective that it allows you to be a good director - you want to go to more," he said.

Mr. Beattie has visited GE's locomotive plant, its jet engine operations, the GE Capital financing division and its NBC media division.

The visits typically involve a small group of GE directors - three to five at a time - but not the whole board.

"When you go with a smaller group, it lends itself to being more flexible," says Mr. Beattie, who is CEO of Woodbridge Co. Ltd., a private holding company that manages the assets of Canada's Thomson family.

"And with a company the size of GE, you can cover more area. It's such a big company that over a three- or four-year cycle, every director is not going to get to every business."

On a recent afternoon, Mr. Crawford was scanning a list of Maple Leaf sites he could visit next year. He decided on the Canada Bread Co. bakery subsidiary. Although he has served on 18 corporate boards over a lengthy business career, Mr. Crawford says he has never been offered a chance to go on similar visits by himself.

Indeed, a survey last year of 100 of Canada's largest companies by director search firm Spencer Stuart found only 8 per cent use site visits as part of their ongoing director education program.

Three-quarters of the boards said they relied on seminars led by corporate management for director education.

Mr. Crawford said he now believes all companies should require directors to get out in the field.

"It was always open to us - and I've done it - to call up somebody and have lunch with them or go visit them in their office. But unless there's some organized approach to it, those things don't always happen."

He believes visits should also be independent of corporate management. But he acknowledges not every CEO would be as comfortable setting directors loose as Maple Leaf CEO Michael McCain.

"It takes confidence," he said.

Inmet Mining's Mr. Beatty also advocates making director visits part of every company's board expectations. But he says the format should vary depending on the company's operations.

Inmet, for example, has only five active mines and developments, so he doesn't believe it is necessary to require directors to visit several sites each year to understand the business.

Despite that view, however, he notes the board visited two mines in 2010 and is planning another visit in the spring.

Beyond understanding the business better, he believes the visits are a key part of getting to know future company leaders on their own turf.

"If I'm going to hire you to run the company and I've only met you in the boardroom, that's pretty stupid," he argues. "Being a CEO is a lot more than communicating to the board."

Follow on Twitter: @JMcFarlandGlobe

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