Canadian HR Reporter

May 4, 2015

Canadian HR Reporter is the national journal of human resource management. It features the latest workplace news, HR best practices, employment law commentary and tools and tips for employers to get the most out of their workforce.

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CANADIAN HR REPORTER May 4, 2015 2 NEWS Recent stories posted on Check the website daily for quick news hits from across Canada and around the world. WEB O N T H E ACROSS CANADA Report on Ghomeshi scandal reinforces need for safe workplaces, say experts Mechanisms needed for employees to freely voice concerns Pair charged in central Alberta for alleged abuse of foreign temporary workers Man, woman facing human trafficking charges after investigation Leadership tops list of concerns for HR: Survey Culture, engagement next on list Oil-dependent Newfoundland and Labrador lacks competitive edge: Study Province has 'quickly greying' workforce CBC says conclusions from Ghomeshi report 'troubling and disappointing' Will work with union to review 9 recommendations AROUND THE WORLD Seattle CEO says he will cut his pay to give every employee minimum salary of US$70,000 Wants to make 100 employees happy, loyal Union seeks injunction from labour board over WalMart store closings Looking to have laid-off workers rehired U.K.'s Labour courts youth with pledge to end unpaid internships Promises to stop employers from hiring unpaid interns for longer than 4 weeks Women on board Canadian HR Reporter TV took a look at a recent rule amendment by the Ontario Securities Commission to promote board diversity. In part one of our two- part series, Maureen Jensen of the OSC sat down to tell us more about the amendment. FEATURED VIDEO No one ever expects to have cancer. When it strikes, having CAREpath as part of your benefit package shows your employees and their families how much you really care. Employees diagnosed with cancer are assigned a personal oncology nurse providing guidance and support throughout every stage of their cancer journey. CAREpath is the only complete cancer navigation provider in Canada. No one ever expects to have cancer. cancer? Does one of your employees have We'll be there. 1-866-599-2720 THE CANCER ASSISTANCE PROGRAM Anita McGowan, RN, CON(C), OCN Head Oncology Nurse Manager McDowall Associates in Toronto. Usually, there's a lot of discussion between the CEO and the board in terms of when they might be planning to retire and potential successors. It's almost like man- aging a big project, with mile- stones that need to be met along the way. "It would be very common in an employment agreement to see a minimum length of time to al- low for some transition, like three months for example, potentially a little more with a more senior per- son. I don't think I've seen a cap on an advance notice period — that's something that would more nor- mally be negotiated between the executive and the board and the organization, but it might make some sense to have a notional cap," she said. "I'm not sure that you'd want to put a cap on that in employ- ment agreements because it's more typically discussed for some time in advance, probably for sev- eral years before the CEO actu- ally moves, several years or even more, because the board would be looking at the next level down and two levels down at possible and probable candidates, and making sure that the right kind of devel- opment assignments were put in place for the individuals." e CIBC situation looks to be about both retention and sever- ance pay, said Martenson. "What it appears to be is the board not having concluded on who would be the natural suc- cessor and, therefore, wanting to make sure they kept Mr. Mc- Caughey around for a period of time to allow them to identify and appoint an appropriate successor and to give some transition time or changeover time if that was needed, if it happened to be some- body from outside," she said. "It looked liked… it got trig- gered a little sooner than expected and so therefore there was agree- ment to pay out the remainder of the contractual arrangement." Succession planning But it's a bit unusual because plan- ning the succession of the CEO and other senior people is one of the most important jobs a board has to do, said Martenson. "And it's planning for if there's been an accident or an early death, an unexpected death, or if it's an orderly transition based on when someone wants to retire and when there's availability of successors and making sure there's enough time to develop those successors; if they're internal, making sure they've got all the right experi- ence. So it's just a little bit unusual that it wouldn't have been a little more advanced. And maybe it was — you can't really tell from the outside for sure." In the circular, CIBC said the management resources and compensation committee began the CEO succession and search process more than a year before McCaughey's decision in April of 2014 to set a retirement date of April 2016. (COO Richard Nesbitt also announced his retirement at the same time, giving 18 months' notice.) But, over the subsequent few months, the committee expedited the search process, which then ac- celerated his retirement. (When contacted, a CIBC spokesperson said it was a board- level decision and "best to turn to the proxy for any language.") But it raises concerns as to how the succession planning process was done and what the board did or didn't do, said Michel Magnan, professor and Stephen A. Jaris- lowsky chair in corporate gover- nance at Concordia University in Montreal. "ey found somebody inter- nally within six months but why didn't they know that six months earlier? Why did they promise es- sentially two years?" he said. "e board should know most of the senior managers, should have had some exposure with them, should… have done some succession planning in terms of identifying adequate candidates for the CEO position. So then you don't need two years. If you admit you need two years, then you're in really bad shape." Greater mobility Employers have to be prepared for C-suite departures, most certain- ly, especially with a more mobile workforce, said Martenson. "Some of those candidates you might see as potential successors for the CEO may not want to stick around for that length of time ei- ther and may move on and be CEO for another company in the interim, so it's a far more mobile workforce than it ever used to be." e terms of CEOs have been shortening over the years, said Magnan. "CEOs last less years than be- fore, so that's a long-term trend." However, some CEOs don't like having very elaborate succession plans around them because that makes them disposable, he said. "Succession planning is often a tension point between the CEO and the board because of the fact that if you have a good plan, then as a board you gain leverage over the CEO — and the CEO knows this." But a big part of a CEO's job is to make sure he's grooming potential successors or potential candidates behind him, said Martenson. "ey will be assessed on that as well by the board and what I have seen has been more typically, 'OK, in five years, I would see this per- son as my potential successor so let's do all the right things to get them there.' So I haven't person- ally experienced it where it's been a tense situation, (I've seen) where it's been very much a managed situation and it would appear to be quite a comfortable agreement between the CEO and the board." CIBC < pg. 1 Part of CEO's job to groom successor Credit: Christinne Muschi (Reuters) Gerry McCaughey, former president and CEO of CIBC, speaks during its annual general meeting in Montreal on April 24, 2014. McCaughey announced that month he would retire in two years, but ended up leaving the financial institution just six months later when a successor was named.

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