Shownotes
Gender diversity has been a prominent issue when it comes to corporate governance. Frequently, it is evident how women hold few positions in the top management and on boards of directors. Mary McBride, Independent Director of CatchMark Timber Trust, walks us through her journey to becoming the first woman board member of this publicly-traded timberland company. The Senior Advisor to Catalyze and the former President of CoBank gives insights on the value of learning about corporate governance early on to develop the skill sets to be a part of the board. Mary is an alumna of the Corporate Boardbound program offered by the Women’s Leadership Foundation.
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Putting Gender Diversity In Corporate Governance with Mary McBride and Guest Co-Host Jo Lynne Whiting
We have a special guest and we have a cohost. Mary McBride is an Independent Director of CatchMark Timber Trust, a Senior Advisor to Catalyze and the former President of CoBank. We have Jo Lynne Whiting. She is Chair of the Boardbound by the Women’s Leadership Foundation. She’s a former executive of US West. We’re going to be talking a little bit about Mary’s background and also how that fits into her board experience. Mary, thanks for being on the podcast.
Thank you for having me. I’m pleased to be here.
Jo Lynne, thank you as well. Mary, if you would tell us a little bit about your background and what led up to your participation in the board world?
I started my career at Bank of Boston as an energy lender in the 1980s. Prior to that, I attended college and got an MBA. I went all through my career building up more and more lending experience and managerial experience. I then worked for First Interstate Bank of Denver. I worked for them for about eight or nine years. Some of the absolute best lending experience I received was as a workout lender during the oil and gas crash here in the 1980s.in
For certain people, it was an awful time. For me, it was certainly a stressful time but you don’t learn more than when you spend Valentine’s night, which is a Friday at [10:00] PM in bankruptcy court. That’s when your learning is at its best. It was a great experience for me. In the early ‘90s, I moved over to CoBank. I worked at CoBank for 23 years and in just about every area you could from lending to operations. I had the capital markets group. I had the finance group, a whole host of various areas there. I left there at the end of ’16. Following that, I said, “I’m not going to be working full-time, but how am I going to spend my time?”
I was not ready to turn it off fully. I said, I’ve got a good background in lending commercial finance and financial services, but more importantly in management and how to run an organization. What are the important components of an organization? How do you govern an organization? How do you set up compliance? How do you set up compensation systems? That led me to an interest in doing corporate board work. When I started that I started building a network. I started looking around and I went through the Boardbound program that Jo Lynne runs here, which was a great program from several aspects. It was wonderful from the content of the program. It was also great to meet other women who have similar interests and are also interested in being on a board. It was also great for making contacts, particularly in the Denver community.
As you go through your career and if you were to offer advice to other people that are interested in being on a board, whether men or women, would you do it as you did and wait until after you got done with your career? How would you do it as you’re looking back now?
I would not wait. I waited too late. This is something that both men and women tend to do. When you are in a career, you tend to get singly focused on your career and also on your family. When you’re trying to balance the career, the family, get everything done and do what you need to do, you don’t look beyond that. The best advice I could give would be to tell people to start ten to fifteen years before you’re considering ending the career aspect and say, “What do I want to do later? Do I want to do board work? If I want to do board work, how do I best set myself up for that?” There are several things I would have done differently. One is I would have certainly worked at building a network. I didn’t begin any of that until after I left my job.
There’s a point in my future that I want to take and maybe start serving on boards and you say, “I want to build my network.” What advice would you offer to that young man or woman that’s trying to build their network?
There are several things you can do. One, you start by getting involved in the nonprofit community and an area such as the metro chambers in your area, even Rotary groups. Groups like that where you can meet people from other industries and other careers. Exposure to people in the professional services area. A lot of times boards when they’re seeking new candidates turn to their accountants or their attorneys and getting to know people in those areas is important. It’s generally getting to know your community, other people in it. Also to the extent that you’ve got an industry focus, looking at the industry associations nationally. So that if you are involved in the oil and gas industry, look into an oil and gas industry association nationally, get involved with that, get to know people across various other businesses and companies. That’s one way to start to build a network.
One other thing is that we have as a Community Boardbound program. Mary went through the Corporate Boardbound program to prepare for board service of a for-profit large business. The Community Boardbound program is great for people earlier in their career because they learn corporate governance. It’s a six-session certificate program. You learn due diligence, the financials and with twenty or so other participants. That is the way to build the network too. People that are serious about this and nonprofits can be your local nonprofit with the passion you have or it can be a larger national organization. It can be an industry association. The hospital and university boards, for example, are considered nonprofit and they’re a great experience for taking on a corporate board position.
I would love to be on a board, but maybe I’m not a CPA. I’m not an attorney. Is the demand for different skill sets starting to show up on boards other than legal and accounting? Are you seeing that?
I’m definitely seeing a demand for broader skill sets. When I stepped back and I looked at boards, the most effective boards are those that sit back and say, “What is the composition on our board and what do we need?” I will give you an example of being on a timber board. Obviously, you need some level of timber experience on that board. You also need experience in areas such as executive compensation. How do you set executive compensation? How do you simply manage governance well? How do you set up your compliance, your policies internally? There’s always a need for people that simply have strong managerial backgrounds and understand how to run a company. How should a company be run? It’s a mixture. I do think it’s important for a board to not simply say who’s the next best person out there, but what is it that we need to complete us and to make us an effective board?
That’s important. The research shows that CEOs are still the number one requested skill set and CFOs, but one of the things that we talk about in the Corporate Boardbound program, that’s great if you are a CEO. If you’re not, have you been in the C-Suite? Have you reported to a CEO? Have you had interaction with the board? Have you managed operations? Do you know how to look at your profit and loss statement the way that the shareholders would to ask the right questions? Other things that people are looking for is cybersecurity, digital marketing. As Mary says, trying to complete that skill set for what’s important for that company to succeed.
Jo Lynne hit on one of the great reasons why it’s good to start this early on, which is if you start this early on, you have the time to think about what your skills and expertise are and where your gaps are. What can you do to fill those out? If someone doesn’t have the financial experience or someone doesn’t have the comp experience, they can start working and develop those skills over this timeframe and understand a lot of that. I also think the other point on learning corporate governance is key. How should a corporate board work? What is the role of the board? What is the role of the committees? What is the role of the CEO? I do think that if you’re not at a place where you’re getting that through your corporate organization through interaction with your board, working with a nonprofit is a great place to get that experience.
I was thinking about the resource. Board governance, a terminology that we’re familiar with. I don’t know that it’s widely understood as far as the term. For some of the younger people that are interested in progressing, in getting more influential, more on boards, and more evolved, that’s where Boardbound can come in. Even if you’re not going to go on a board. If you were looking at an employee who says, “These are my skill sets but I’ve been through Boardbound to understand how to function on a board, so I understand the company better.” What would be your reaction if you knew someone had already done that?
I would think it was great. Even if I would go back to my old role where I was managing an organization. If I had employees further down the ranks that had done that, I would think it would be marvelous because they would understand much better what was the role of our board. When you get to the top, to the C-Suite, you’re obviously interacting with the board all the time. You’re making presentations. You understand what the board is, how they work, where their dynamics are. Further down the organization, people typically don’t understand that. Just in your day-to-day career, it’s great to have that knowledge. I remember back in my junior years, the board was a black box you hear about. You don’t know much about them. You don’t see them a lot. They may speak to the employees once a year or so. That’s very important to understand corporate governance.
There’s a gap between trying to build your career and having a family. You’re trying to devote your time to the things that are important, and you look at an organization and you go, “There’s a board.” I don’t think that the typical employee has one clue why it’s important to understand. I wonder from the board side looking down to the employees if they have a similar understanding of how far down their guidance doesn’t go.
It’s fascinating that you bring that up. After our board meeting, which we meet in the office, typically we come in and we go into the office, a few of the employees come in and meet with us. We said, “We’re going to meet with all the employees.” When I’m going to meet with them, we’re going to have lunch and we’re going to move out and sit with them and talk to them. It was an amazing day both from what I heard from the staff and from the board because you get such a better feel for the organization by doing that. This is an organization that does not have a thousand employees, so it was easy enough to do. But it’s critical that boards understand what is the tone and the culture in the organization that goes beyond the top of the management team that they work with. And, employees understand what the role of the board is too and how the board feels about things.
For a long time, there was a thought that the board should be a handoff from management because you did trust the CEO and the management team to operate the company. The board is to ask the great questions to be sure that the company is thinking about the future, thinking about the risk, thinking about what needs to be done. Boards are needing to get more hands-on, especially because of this point you made about culture. If you think about it, a large part of a company’s value in the stock market has to do with intangibles. It used to be that you can add up the book assets, the buildings, the manufacturing plant, the inventory and you had pretty much the value of the corporation. If you think of Uber, Facebook, many of the companies, the reputation can make a huge difference in what their value is and that reputation goes back to culture. Is it the right culture that is innovative and creative, supportive of the employees and free of all the things you want to avoid?
You can do that without subordinating or going around the CEO and the management team. They’re different roles. When the board is involved, just meeting with the staff and all of them, it’s not that you’re going around the CEO. You’re developing relationships there and getting a feel into what the organization is.
A couple of things came to mind. I functioned in the military and worked with the general officer. We’d go out to the training site and the general would pass all the officers. He’d go find the lowest ranking soldier you find. He goes, “Why are you here? What’s your uniform? When was the last time you had a warm meal?” Just trying to see if it came through. Second thought, when you’re out with the employees as a board member and you’re a woman out there, I am sure there’s a fair quantity of women going like, “You’re on the board?” I would think as a role model that there would be a great transmission of what’s possible.
We picked two board members to speak to the staff and the board asked me to be one of them because I was a woman and they said, “The women in this organization need a role model. Would you mind speaking to them?” That was very nice from my perspective. You’re absolutely right. It’s very important.
How long have you been with that board?
Learning corporate governance is key.
I’ve been on the board about a year and a half.
When you first arrived on the board, preconceived notion to what you think, what’s the difference between before you got there and now that you’ve been there for a while?
I don’t know if it’s a difference, but how I feel now is it’s a congenial, good working group that’s very transparent. The things that I’ve learned from being there are the importance of board trust, and board and management trust. You always know those are there, but it becomes paramount when you’re on board. They’re only five of us independent directors and the CEO is the other director. Having trust amongst the group, being willing to be transparent, being open is absolutely critical.
Mary, how did you find out about that part? How did that opportunity come to you?
They had been a customer of mine. The real way I found out about it was that the person who’s the CFO, and the president at the time had worked for me many years ago. We remained in touch. He reached out to me.
I think about what a very interesting thing to have happened because you look at the culture you are trying to transmit when he was working for you. You come back in on the board position, did you recognize some of the things that you were teaching back then?
He’s very much open, transparent, gives a lot of feedback, all of those things that are very important. I would say I wasn’t always good at that. You ask about things you would have done differently. I look back in my career and I say, “What are some of the things I would have done differently?” Giving and receiving feedback is something that took me a while as a manager and as an employee to get accustomed to and to accept the way I should. Those are the growth steps we all go through at various stages, but that’s something for me that was a change.
Constructive criticisms are rarely appreciated.
No, it certainly isn’t. What I learned over time and the thing that taught me the most about this was that I learned when I had employees that were not successful in their positions that allowing them to stay was harming them because there are very few people who can’t be successful somewhere. The sooner you helped them go find somewhere where they could be successful, the better off they’re going to be. That was something that was impactful for me. I know we’ve all said whenever we’re moving someone into a different position, “I wish I’d done that sooner.” They probably feel in many ways they wished they had known that sooner too.
You get the notification, “Please come on the board.” I’d be interested in what you were thinking when you got the notification. What was the homework that you did before you went into the first meeting?
Before I went to the interview, I read every SEC filing. I read every financial statement. I knew absolutely everything I could possibly know publicly about the company financially. They did not ask me one financial question. The focus was on fit. The focus was on who are you? How do you make decisions? How do you behave under pressure? What will happen if someone makes you angry? Are you willing to speak up? It was very much of a behavioral interview. It was interesting to me from that standpoint because I had in my mind, this was going to be very much, “Is our debt to ratio right and what would you do about this?” It was much more about fit. That’s how I prepared for the interview. Now, how I prepared for the first board meeting was similar. I read absolutely everything. I was extremely well-prepared. I would say that I was judicious in how I managed the first board meeting and the fact that I wanted to ensure that I contributed. I also wanted to ensure that I listened. I read the dynamics of the group and understood how the process works and how they were handled.
I think about that and because it’s a common term for you. I was judicious. What does that mean? How do you go in and make a good impression and still say something? What was on your mind? I’m going to go to the meeting. I did all my math and they didn’t ask me any of my math. They want to know how you’re going to react. You’re in the board meeting. Do you recollect some of the stuff that you did to contribute in the first meeting?
I asked questions. I did contribute comments where I had comments to make. I would say that what I’ve tended to do successfully in these meetings is if there’s a lot of chatter...
