Doing the right thing in business

JMSB and HEC focus on public, private governance

By Barbara Black

Ordinary investors read the financial pages with alarm, and business students are looking to their professors for guidance. Roughly 55,000 Quebecers sit on boards, from business enterprises to unions, hospitals, school boards and the government itself, and many of them have no previous experience to help them.

Concordia’s John Molson School of Business and HEC, the business school associated with the Université de Montréal, have responded by establishing a school devoted to “best practices” at the senior management level.

The Institute for Governance of Private and Public Organizations was launched yesterday at the Queen Elizabeth Hotel by President Claude Lajeunesse and HEC director Jean-Marie Toulouse.

It will develop operating models for private companies, government corporations, public organizations and co-operative agencies. Research will be primarily done by researchers from the HEC Montréal and the JMSB, and its activities will be carried out in English and French.

Guests at the launch were former Concordia president Frederick Lowy and investment analyst Stephen Jarislowsky, who together provided much of the impetus for the project.

Jarislowsky, a highly successful financial analyst, could be called the conscience of the Canadian business committee. He’s known for expressing his strong views about governance issues.

He is also a major philanthropist who has already lent his name and generosity to a Concordia institute in Canadian art history.

He donated $2 million to get the Institute for Governance underway, and other donors are on board.

These include the TSX Group, Hydro-Québec, the National Bank of Canada, the Autorité des marches financiers, the Power Corporation of Canada and CGI.

Although the Institute will be affiliated with major international organizations in the field, it will focus on concrete examples from Quebec and the rest of Canada, and give priority to government corporations.

The Institute will hold conferences on specific issues, and workshops will be offered to the roughly. This off-campus training program will also be directed at Asian and European clients.

The Institute will have an 11-person board of directors. Its day-to-day operations will be overseen by executive director Yvan Allaire, a professor from HEC. Concordia finance professor Lorne Switzer will be associate director.

Contacted just before the launch, Switzer was excited about the prospect of working again with HEC. He administered a joint doctoral program in Administration with HEC, and enjoyed the experience.

He agreed that the Institute for Governance fills a need, especially in Montreal.

While he admitted that ethics means simply doing the right thing — “the sort of things kids are supposed to learn from their parents” — Switzer said it is often difficult in the business environment to decided what the right thing is.

“Ethics are a central feature of governance, which means the management of interactions between individuals through voluntary explicit or implicit contracts to create value for organizations and society as a whole.

“Whether people are on the board of a hospital, a day care centre, a university or a private company listed on the stock exchange, the challenges of governance need to be met.

“These include leadership and accountability, succession, turnover, remuneration, establishing and monitoring the long-term direction of the organization, social responsibility, and the protection of the rights of stakeholders.

“For the non-profit sector, governance refers to the actions of the volunteer board of directors, who typically operate with altruistic motives, yet remain full accountable for the organization’s performance.”

The University of Toronto’s Rotman School of Management established a centre for business ethics in 1988, and McGill offers programs, but mainly to major corporations. Switzer said the new JMSB-HEC institute will fill a niche by concentrating on public and small to medium private enterprises.