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How to become an effective corporate director

Laura Formusa, former CEO at Hydro One and now a director with Equitable Life of Canada, admits she was a bit of a ‘doubting Thomas’ when it came to her taking the course.

Kevin Van Paassen/The Globe and Mail

First as a student and now as an instructor in the Directors Education Program, Bonnie Dupont has a unique perspective on the course.

After taking the course seven years ago at the University of Calgary's Haskayne School of Business while she was an executive at Enbridge Inc., Ms. Dupont went on to become the first woman to serve on the board of the Calgary Petroleum Club, eventually becoming its president. She is now on the board of governors at the University of Calgary and a director at both Nav Canada and Bird Construction Co., among other business interests.

"This is a relatively new thought … you don't just automatically realize how to be an effective director," Ms. Dupont says. "There are some processes that you need to know about, and there are some expectations, so it's important that people who aspire to that role have some training and exposure."

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The 12-day course, jointly developed by the Institute of Corporate Directors and the University of Toronto's Rotman School of Management, was first offered in 2004 and now can be taken in nine cities across Canada. About 3,000 people have graduated from the program, which teaches prospective directors how to govern companies and corporations to the best of their ability – developing strategy, monitoring financial records and overseeing management.

Ms. Dupont credits the course with teaching her some things she didn't know, consolidating her existing knowledge and introducing her to other directors in the course. But she cautions that the course isn't for everyone.

"It's only at a certain level in an organization that you really start to appreciate the governance function," she explains. "As people move up the organizational structure it becomes more relevant."

Experience as a director is a prerequisite for admittance to the course, although in the case of politicians and accountants, who are not allowed to occupy a board seat while they are still in politics or practising accounting, that requirement can be waived.

But given that the majority of people in the course already serve on the boards of for-profit corporate, Crown and co-operative boards, what can students hope to gain?

"Directors want to improve their skill sets so they can add more to the organizations that they're serving," explains Richard Powers, the national academic director of the course.

"So the program covers a wide range of topics that are all geared towards the director rather than management, because the duties are different and that's one of the things we talk about."

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Broken into four three-day modules, the course is undertaken over a period of about six months. The commitment breaks down into one long weekend every six weeks or so, and costs a total of $16,750 plus taxes. Given the demanding work schedules of the majority of the students, the added burden is not for the faint of heart, particularly given the amount of reading that is required.

But there is a certain amount of flexibility, and a missed module can be made up later on, or even taken at another city's business school if need be.

Laura Formusa, former chief executive officer at Hydro One and now a director with Equitable Life of Canada, admits she was a bit of a "doubting Thomas" when it came to her taking the course at Rotman in 2011.

"Lawyers are like that, that's my background, and we all think we know everything about corporate governance, but you really don't," she says. "A lot of the case studies are things that you might have heard about in the press but you really don't get into the details."

Those case studies are often regionalized, so they might focus on the oil and gas industries in Calgary, corporations in Toronto and family-run business in Halifax.

Ms. Formusa admits it was difficult to juggle her work commitments with her study obligations, but says that despite her initial trepidation she is glad she completed it, and says she learned just as much from her classmates and their diverse backgrounds than she did from the professors.

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"You get your usual allotment of accountants and lawyers, some CEOs, quite a number of CFOs [chief financial officers], people contemplating retirement and many who have retired," she says. "So a wide-ranging group of individuals, some who have been in the not-for-profit sector almost exclusively so they added a lot of value to the class."

The classes, which are almost split 50-50 along male-female lines, take in an average of just 36 students in a single cohort. Mr. Powers says that the program has been 100-per-cent full in every city it's been held in.with the Rotman school recently completing its 100th offering of the course this year and counting former Ontario premier Dalton McGuinty among its recent students.

"I think directorship these days is a serious undertaking or vocation and I believe that the director education program does exist to allow those who take the program to learn from top faculty, from their peers, share best practices and ultimately come out of the course with a tool kit that will enhance their effectiveness of their boards," says Stan Magidson, president and CEO of the Institute of Corporate Directors.

Mr. Magidson was involved in the development of the course and while he says it isn't an essential undertaking for every director, he feels they will benefit from it, particularly in the increasingly competitive global environment that we all live in.

"There is certainly the opportunity to learn through observation in the board room," he says. "I think this is a little bit like if you wanted to play golf, would you just kind of go out to the golf course and watch people play the game, or alternatively, do you want to learn the proper swing and some of the proper strokes from the get-go so that when you go in there you've got some good benchmarks to start with."

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