In the last few years, Jennifer Mondoux has noticed a trend among mid-market private companies. More than ever, founders and executives are curious about governance, and looking for ways to strategically build up their boards.
“We noticed in our executive search practice, I’d say in the last maybe two years, that our clients were starting to talk about governance, and starting to ask us for help in that space,” Mondoux told OBJ. “Our normal course of action would be to maybe help them find a CFO, but now those founders were saying, hey, I’m thinking about adding an independent director to our board.”
Mondoux is managing partner and CEO of Ottawa-based executive search and recruitment firm MondouxRollins Partners, which advises private companies across Canada and the U.S.
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In light of the trending interest towards governance, MondouxRollins decided to try something new. Last fall, it opened nominations for its new awards program, Canada’s Best Private Boards, also known as The Boardies.
“We saw an opportunity to build an awards program that would recognize the impact of great governance on the performance of these private companies,” said Mondoux. “We said let’s look at the Canadian marketplace among mid-market companies and see who’s got a story worth telling.”
Among private mid-market companies, especially mature and family-owned operations, Mondoux said there has long been resistance to bringing outside voices in.
“Traditionally, private companies have been kind of allergic to governance,” she said. “Especially family businesses. It’s like, I don’t want anybody telling me how to run my business. There’s been a lot of talk about boards and governance, but it’s really been the domain of the big publicly traded companies or not-for-profits. So for private companies to be talking about it, that really piqued our interest.”
The recent mindset change spurring the trend of the conversation is twofold, according to Mondoux.
On the part of older companies, governance has been raised as a possible way to ease businesses through transitions and find new growth paths. That’s especially important for companies with aging founders turning their attention to succession planning.
“We have a lot of founder owner-operators who are trying to figure that piece out,” she said. “They’re trying to figure out, when they finally retire, what’s coming behind me? Governance can really help figure that out and build a structure and process around that.”
On the other end of the spectrum, startups and their younger founders seem to be building governance into their strategy from the beginning.
Ottawa cybersecurity company Quantropi, which was founded in 2018, is one of those companies.
“Right out of the gate, even though they’re a very new business in an incredibly complex and technical field, their vision was to professionalize the business,” she said. “They had the foresight to think, I’m going to build this fiduciary board and add significant weight and build this network of experts, many of them local. It’s really impressive for a startup putting so much attention on their board. It’s really helped them figure out a lot of really heavy technical, strategic, weighty issues.”
Quantropi was one of the four inaugural winners for the 2024 Canada’s Best Private Boards, receiving recognition as Best Fiduciary Board – other/unrelated shareholder’s ownership.
According to co-founder and CEO James Nguyen, governance has always been top-of-mind.
“We always operated as though we were a public (company), because we had a large investor base,” said Nguyen. “I think that’s what differentiates us from the other categories. Me and my co-founder we’re going to build a company with a global vision. We need to look at somebody who has that kind of governance experience, who has done that before.”
In the last few years, Quantropi has brought on board members with a broad range of expertise and experience across multiple different roles, companies and industries. Members include Jeff York, former co-CEO of Farm Boy and current CEO of Altea Active, and Sacha Gera, CEO of JSI and a former division president at Calian.
The company also brought on Marco Pagani, a former president at Nortel and former president and CEO of the Ottawa Community Foundation, as board chairman.
According to Nguyen, each member brought something different to the table.
“All these individuals have been great mentors to us,” he said. “I think the important thing is finding people that have a diversity of perspective and approach, so that we’re always looking at each other’s blind spots, but also people that bring different things to the table. We’re not working against each other. We’re working together – we complement each other and leverage each other’s strengths.”
What makes a good board?
According to Mondoux, the awards program has given her firm the opportunity to learn more about what makes a successful board and how to help clients build theirs.
“There are two reasons behind the awards,” she said. “One is to recognize the impact of governance on the performance of these private companies, and two is to create a national culture of best-practice sharing among private company leaders. I hear from leaders regularly asking, where do I start? We want to be able to provide them with examples and templates – a playbook, if you will.”
Mondoux said companies need to understand that it’s OK to start small.
“It sounds like this big, overwhelming thing,” she said. “But what the leaders and winners have shown us in their stories is that you can start with a two-person advisory board and build on it over time. You can turn it into a juggernaut of performance.”
When it comes to bringing in external perspectives, Mondoux said they noticed most successful boards had independent directors, who brought experience and expertise with them.
“The reality is that by bringing in external perspectives, you’re actually minimizing your risk to the business,” she said. “Putting that type of voice on your board is really instrumental to your overall strategy and growth for the business.”
Finally, a good board holds the company and its executives accountable to the overarching vision and mission, while also pushing them in new directions.
“Longtime founders of organizations will say, this is how we’ve always done it and we’ve always been in this lane,” said Mondoux. “Have a board challenge their mindset, that is a big thing a lot of them told us about in their stories. Having the board say, what about this, have you thought about that, why are you staying in your lane when you could do this … the change in mindset is noticeable.”
For founders, Nguyen said the right attitude is needed to ensure a good board has the tools to help the company succeed.
“You need to be humble enough to leave your ego at the door,” he said. “We have to do what’s best for all shareholders, employees, customers, everyone. You need good transparency, impeccable accountability and good communication.”
A good board, he said, helps the company achieve those things. And in an industry like tech, where it’s easy to get caught in the weeds, a strong board with outsider voices can help keep the company on track with its messaging.
“Having aligned core values is so important,” said Nguyen. “Market conditions and circumstances can bring out a roller-coaster and there’s a lot of emotions at play. Having a strong board helps you regulate and ensure that no matter what the situation, you don’t sway away from your core values. They make sure you don’t stray away from doing what’s right.”
