BC Business
It was a perfect summer storm. Arvind Gupta, a mathematician and professor of computer science, was 13 months into a five-year mandate as UBC’s president. Then, on August 7, a hot and sunny Friday, the university’s board of governors “regretfully announced” that Gupta had “resigned to return to the pursuit of his academic career.”
There was no further explanation for the departure—just the usual media relations bromides applauding Gupta’s “hard work, integrity, and dedication.” The board of governors pleaded nondisclosure, while Gupta, who will receive his $446,750 president’s salary next year on academic leave from UBC, also remained silent. The international executive search—which UBC public affairs says came in at $351,000 for Gupta, including the costs of the recruiting firm, travel, accommodation and advertising—would have to begin again.
Over at Telus, just three days after Gupta’s departure, B.C.’s corporate titan issued its own media release stating that, following “an extensive review” by its board of directors, CEO Joe Natale would be stepping down after slightly more than one year at the helm. The CEO, who earned $9.4 million last year but worked out of Telus’s Toronto office, “indicated that a move to Western Canada would not work for him and his family for several years,” according to the August 10 statement. Natale remains with the company as an executive officer until the end of next month; details of his departure package were not disclosed.
For some observers, it is difficult to interpret either Gupta’s or Natale’s exit as anything less than a failure. There are direct costs in packaging out a CEO, and UBC will have to shell out for another executive search. But the impact on reputation and branding–more difficult to quantify–may be higher. While no one wants to admit they erred in their leadership selection, organizations the size of Telus and UBC must still be held accountable to stakeholders for such decisions.
Mark Wexler, professor of management and organization studies at SFU, argues the wall of silence following Gupta’s parting isn’t acceptable from the public’s standpoint. “It seems to me that when a university spends that much money in a search that takes a long time, hires someone for five years then lets them go in 13 months—that requires a little more explanation, not just to the faculty but the taxpayer.” Wexler adds that much of the controversy could have been averted if Gupta and UBC board of governors chair John Montalbano had given a “sit-down” press conference together. This needn’t have contravened the nondis-closure agreement. “Even if only 30 per cent of what happened was revealed, most people would have said, ‘OK, there’s an explanation.’ It doesn’t have to be a hell of a lot of information—it has to be a handshake and a smile.”
As for Telus, Natale’s departure a year after being appointed CEO “raises questions of what’s going on” at Canada’s third-largest telecommunications company, according to Jim Hoggan, president of Vancouver PR firm Hoggan & Associates. This, in turn, creates uncertainty about the company’s governance capabilities. When change occurs, he says, stakeholders must be assured that “the situation is being managed well, and you want to be communicating this in a really clear way.”
To many boards, a CEO’s reluctance to move to head office would immediately signal a lack of commitment to the organization. But part of the blame also lies at the board’s feet, says Matt Fullbrook, manager of the Clarkson Centre for Board Effectiveness at UofT’s Rotman School of Management, who notes that sharing power with his former boss might have proven untenable for Natale. “Darren Entwistle’s position as executive chair immediately following his tenure as CEO is not common and presented a risk that the lines between his position and that of the new CEO could become blurry.”
Hoggan believes that Telus could have been more upfront about its misstep with Natale, admitting candidly what went wrong in order to alleviate uncertainties about the company’s succession planning. However, what ties a company’s hands in these cases are nondisclosure agreements, he notes. “When dealing with human relations issues, there are lots of sensitivities and privacy issues and things that you can’t talk about—even though you want to—and that can influence what is said publicly or not.”
Now, of course, both ships are in new hands—or rather, old-new hands: former UBC president Martha Piper (1997-2006) has regained control of Canada’s fourth-largest university for a one-year term as UBC’s board searches for a permanent placement, while at Telus, ex-CEO Darren Entwistle (2000-2014) is back in his old chair for what he promises is a “long-term basis,” quieting succession talk for the foreseeable future.
Wexler says that Entwistle’s return as CEO was the perfect antidote to any concerns Natale’s departure might have raised about company management. “Investors will love it,” he says. “In the midst of urgency, you want one decision maker.”
The challenge at UBC is greater. Julie Cafley, vice-president of the Public Policy Forum in Ottawa, who has studied public sector governance, says the university should take advantage of the year ahead to do a “significant governance review.”
At the end of its soul searching, UBC should be ready to ensure that the new president will have the strong backing of the board and executive in order to prevent another “derailment.” Perched at the top of the ivory tower, a president can get pretty lonely, says Cafley, and it’s in the interests of all stakeholders—the board of governors, executive, faculty and even ex-presidents—to ensure the leader doesn’t become even more isolated than he or she already is. And that, she says, is a lesson for any organization of UBC’s size.