Background

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About 230 public sector organizations deliver important services, programs and infrastructure for the people of British Columbia. Approximately 2,000 appointed board chairs and directors govern public sector organizations.

Public sector organizations range in size and complexity. They include Crown corporations, post-secondary institutions, and health authorities. They also include advisory boards and tribunals.

Public sector boards are appointed by and accountable to government (through the minister responsible for the organization). Boards oversee their organization’s performance and compliance with policies and legislation.

Board chairs are the main links between the organization and government. They are responsible for helping board members understand and implement government priorities and directions. They are also responsible for assessing the board’s needs (in terms of its composition), member performance, and managing conflicts of interest, if they arise, involving board members. Boards are collectively responsible for overseeing the organization in a manner consistent with its mandate.

The Crown Agencies Secretariat (CAS) supports public sector organizations and boards. The Crown Agencies and Board Resourcing Office (CABRO), part of CAS, recommends public sector board appointments. Part of their role is to ensure that boards are represented by people who are qualified, dedicated, and reflect the province’s diversity. CABRO also provides orientation training, resources, and professional development for board members.

CABRO works closely with boards and ministries during the appointment process. The process usually begins either when CABRO reaches out to the board before a board vacancy, or if ministries or boards themselves identify upcoming vacancies (see the flow chart on the following page). CABRO expects boards to identify their needs (e.g., financial expertise, regional representation, etc.) prior to recruitment, with CABRO’s support. CABRO, boards, and their responsible ministries work to identify candidates who meet the board’s needs.

Once candidates have been found, CABRO undertakes due diligence checks. At this stage CABRO also expects candidates to declare any conflicts of interest. CABRO then makes an appointment recommendation to the minister responsible for the organization. The last step is for the minister or cabinet (depending on the board) to approve the appointment. The process can vary depending on the nature of the board.

In 2023, CABRO oversaw 956 board appointments and reappointments for B.C. public sector organizations.

Identifying boards’ competency and diversity needs

Public sector boards require members with certain competencies, attributes, and diversity to effectively provide oversight and stewardship of their organization’s programs and services.

The Crown Agencies and Board Resourcing Office (CABRO) is responsible for working with boards and ministries to recruit and recommend candidates for appointment and reappointment to public sector boards. The process includes boards assessing the current competencies and diversity of their membership and identifying what they need to meet the future goals of the organization.

Before CABRO makes recommendations for appointments or reappointments, it’s responsible for ensuring that boards and ministries identify their needs. CABRO is also expected to ensure that boards reflect the province’s diversity.

CABRO had processes in place to identify and assess board needs, with some gaps

What we looked for

We examined whether CABRO developed good-practice guidance and worked with ministries and boards to assess competency and diversity needs. We also examined whether needs were documented for those making decisions about board appointments and reappointments.

Learn more about the audit criteria.

Of the 51 appointments and reappointments we reviewed, 37 were relevant to assessing competency and diversity needs. Of the 37 we reviewed, 17 were appointments and 20 were reappointments. Fourteen were not applicable to our review because of the types of board positions (e.g., where board positions are part of an elected official’s duties).

What we found

CABRO developed competency assessment guidance for boards, but diversity guidance lacked clarity

We found that CABRO developed good-practice guidance, with some exceptions.

CABRO developed a competency matrix and accompanying guide as an optional tool for boards. They provided examples of competencies, attributes, and diversity, including financial, environmental, and regional representation as well as ethno-cultural background, gender expression and/or identity, and Indigenous identity. Other forms provided guidance to boards to identify and communicate their needs to CABRO, including the request for appointment and performance assessment forms.

One component of the board’s needs assessment process relates to the diversity of board membership. We found that CABRO’s definition of diversity aligned with that of the Public Service Agency and included legally protected differences (e.g., ethnicity, gender, disability) and non-visible categories (e.g., diversity of thought and perspectives, education, socio-economic status, and life experiences).

However, the guidance did not explain how boards should obtain information on diversity from their members. This could partially explain why we also found that CABRO received competency assessments from most boards but received limited information about board diversity.

CABRO received competency assessments from boards, with some exceptions

CABRO provides oversight of the appointment process, which includes reviewing board needs assessments. While CABRO developed the competency matrix as an optional tool for boards to assess their needs, we expected that CABRO would receive a needs assessment (in some form) from each board.

We reviewed the competency assessments that boards and responsible ministries provided to CABRO to support 37 appointment and reappointment recommendations. We found that the majority provided thorough assessments, with some exceptions:

• 27 thoroughly assessed the competencies needed;
• Seven partially assessed competency needs (e.g., for some reappointments, boards indicated candidate competencies met future organization needs, but didn’t explain how); and
• Three did not indicate the competencies needed by the board.

While the needs assessment is the responsibility of the board, CABRO’s review of these assessments helps to provide assurance that they are recommending the appropriate person for appointment or reappointment.

CABRO received limited diversity information from boards

We reviewed the diversity information provided to CABRO for 37 appointments and reappointments. We found that nearly all boards provided information on non-visible categories of diversity, such as education and experience. However, boards rarely included information on legally protected differences, such as disability or ethnicity.

Why this matters

CABRO provided guidance and forms to help boards identify their needs and appoint suitable candidates. However, unclear expectations and incomplete needs assessments created a risk that boards had competency and diversity gaps that could limit their ability to provide effective stewardship of their organizations.

Recommendation

1. We recommend that the Crown Agencies and Board Resourcing Office work with boards and ministries to ensure that appointments and reappointments are consistently supported by an assessment of board needs related to competencies and diversity.

See the response from the auditee.

Conflicts of interest

Conflicts of interest can occur if personal or private interests (financial, professional, social) influence a board member’s judgment and actions on the board. Conflicts may become known during the appointment process or they may arise after an appointment has been made.

Conflicts of interest can be:

• real – judgment and actions are affected by personal or private interests;
• potential – a conflict of interest has the potential to arise in the future; or
• perceived – it could appear to a reasonable person, with all relevant facts, that a conflict of interest exists.

It’s important for conflicts of interest to be disclosed during the appointment process so that boards and CABRO can decide if the candidate is suitable for the role and so that the board can plan to mitigate any risks associated with the conflict, should the appointment proceed.

CABRO ensured candidates declared conflicts of interest, but it didn’t confirm if mitigation strategies were in place

What we looked for

We examined whether CABRO:

• undertook due diligence reviews of candidates before they were recommended for appointment;
• ensured that candidates declared any conflict of interest prior to appointment; and
• ensured boards had plans to mitigate any conflict of interest prior to appointment.

Learn more about the audit criteria.

Of the 25 appointments we reviewed, 17 were relevant to due diligence checks. We didn’t assess seven of the appointments because they fell within CABRO’s policy to delete due diligence data after one year. One appointment wasn’t assessed because the check was done by another entity. All 25 appointments we reviewed were relevant to declarations of conflicts of interest.

What we found

We found that CABRO did due diligence reviews and ensured candidates declared conflicts of interest before they were recommended for appointment. CABRO did not ensure that boards had plans to mitigate conflicts of interest (either real, potential, or perceived).

Due diligence checks completed

CABRO completed due diligence checks to verify information declared by candidates and to identify any activities that could suggest the candidate was not suitable for the position.

These checks were done by CABRO portfolio leads or other delegated staff and included scans of social media, court documents, and other public information.

In our review of appointment documentation, CABRO completed a due diligence review for every candidate where it was appropriate to do so.

Conflicts of interest declared

CABRO provided candidates with a form for them to declare any real, potential, or perceived conflicts of interest with the organization. The form asked them to disclose any obligations, commitments, relationships, or interests that might conflict, or be perceived to conflict, with their duty to or interest in the organization. It also provided examples of conflicts of interest. Candidates included information about their background and credentials. They gave CABRO permission to verify all relevant information and to obtain personal information.

In all 25 appointments we reviewed, candidates completed the conflict of interest form before they were appointed.

Mitigation strategies not documented

Boards are responsible for developing mitigation strategies for any declared conflicts of interest. However, CABRO’s oversight of the process is crucial to ensure they have full confidence in their appointment recommendations. Where candidates declared a conflict of interest, we expected to see that CABRO – before recommending the appointment – had confirmed that the board had a mitigation strategy in place.

CABRO informed us that they discussed declared conflicts of interest with boards and ministries during the appointment process. However, we found that CABRO generally didn’t have documentation to confirm whether it had discussed any conflicts of interest with the board and/or the responsible ministry prior to candidate appointment, or whether the board had a plan to mitigate the conflict.

Of the 25 appointments we reviewed, 11 had declared either real, potential, or perceived conflicts of interest. Of the 11, just one board provided a mitigation strategy in the appointment documents it gave to CABRO.

Why this matters

CABRO completed due diligence checks, which allowed them to gauge candidate’s suitability for a board. CABRO also ensured that board candidates declared any conflicts of interest, helping to ensure that board members act in the best interest of the organization. However, because CABRO didn’t confirm that boards had mitigation plans in place, there was a risk that the conflict would not be managed appropriately. Confirming mitigation strategies is an important final step in ensuring that any competing interests do not influence a board’s decisions.

Recommendation

2. We recommend that the Crown Agencies and Board Resourcing Office confirms with the board or the ministry responsible that the board has a plan to mitigate any declared conflicts of interest prior to the appointment of board members.

See the response from the auditee.

Performance assessment

Performance assessments enable the board to assess a board member’s contributions and value to the board, their attendance record, nature of committee work, and whether the member’s competencies fit the future needs of the organization. CABRO required boards to complete a performance assessment for board members who sought reappointment.

CABRO ensured boards assessed member performance before reappointment

What we looked for

We examined whether CABRO:

• provided good-practice guidance on performance assessment to the boards; and
• ensured boards assessed the performance of board members before recommending reappointment.

Learn more about the audit criteria.

Of the 26 reappointments we reviewed, 20 were relevant to assessing board member performance. Performance assessments weren’t expected for six of the reappointments because of their unique nature (e.g., board membership is a requirement of certain government positions).

What we found

CABRO provided guidance for boards to assess the performance of board members seeking reappointment. CABRO also ensured boards assessed the performance of board members prior to reappointment.

CABRO provided guidance to boards in several ways, including through its guidance for board chairs, and the performance assessment form available on the CABRO website. The form asked boards to assess factors such as attendance, participation and contributions, and commitment to the organizational mandate.

CABRO expected boards to submit a completed performance assessment form with each request for reappointment.

In our review of reappointment documentation, performance assessments were completed and returned to CABRO for the 20 reappointment candidates.

CABRO used the completed performance assessment forms to ensure that boards assessed the performance of individual board members who were recommended for reappointment. CABRO worked with boards and ministries to determine the suitability of candidates for reappointment.

Why this matters

By providing guidance and ensuring boards assessed the performance of members recommended for reappointment, CABRO helped ensure boards retained members whose contributions and value to the board fit the future governance needs of public sector organizations.

Recommendation

We had no recommendations in this area.

Timely appointments

CABRO’s role includes working with boards and ministries to ensure timely appointments and reappointments. A timely appointment or reappointment occurs when a position is filled before it becomes vacant so that a board is not left with a vacancy that affects its ability to govern.

Delayed appointments or reappointments, or prolonged vacancies on boards, could negatively impact the board’s effectiveness and the operations of the organization it oversees. This can particularly affect smaller boards or pose additional risks when key positions, such as the chair, remain unfilled.

CABRO made critical appointment recommendations in a timely manner

What we looked for

We examined whether CABRO:

• informed boards about when and how to notify about upcoming vacancies;
• had a risk-based approach to identify and prioritize upcoming vacancies; and
• recommended candidates for appointment or reappointment before critical positions became vacant.

Learn more about the audit criteria.

Of the 51 appointments and reappointments we reviewed, 45 were relevant to assessing whether critical appointments were made in a timely manner. Of the 45 we reviewed, 23 were appointments and 22 were reappointments. Six were not applicable to our review because of the nature of the appointments (e.g., a new position where a vacancy did not previously exist).

What we found

CABRO informed boards about when and how to notify it of upcoming vacancies. It had a risk-based approach to prioritize upcoming vacancies. It also worked with ministries and boards to try to ensure that appointments and reappointments, including critical ones, were made before positions became vacant.

Guidance made available to boards

CABRO provided online appointment and reappointment forms and instructions for boards. They included details on how and when to submit the forms to CABRO (at least six months prior to an expected vacancy). In some sectors, such as health, the ministry responsible may notify CABRO of upcoming vacancies.

Vacancies were prioritized

We found that CABRO took steps to prioritize critical vacancies that, if unfilled, would likely affect how the board functions.
CABRO had a process to monitor upcoming vacancies and the timing of expiring terms. We found it considered several factors when prioritizing appointments and reappointments, including:

• the relative importance of chair and member positions;
• board quorum;
• legislated membership requirements (e.g., board size, professional requirements); and
• board size and the number of vacancies.

Most appointments and reappointments were made before positions became vacant

With some exceptions, CABRO recommended candidates for appointment or reappointment before positions, including critical ones, became vacant.

In our review, 34 of the 45 applicable appointments and reappointments were made before positions became vacant or they were filled in a timely manner, given constraints around board membership (e.g., a board made up of elected officials would result in temporary vacancies during an election period).

The remaining 11 appointments and reappointments were made after they became vacant. Three of the 11 were potentially critical positions due to board size and the role of the position:

• One case was delayed by approximately six months after an unexpected resignation.
• One case was delayed eight months and one was delayed 20 months. CABRO staff attributed these delays to the challenges of finding candidates with the right skills and experience in specific regions.

The remaining eight non-critical appointments and reappointments were delayed because of factors that included:

• recruitment challenges (e.g., finding highly skilled candidates in rural or remote areas); and
• board size (e.g., some larger boards can comfortably operate below their maximum membership and can batch together multiple appointments).

Why this matters

Timely appointments and reappointments help ensure boards function well and meet their legislated requirements.

Recommendation

We had no recommendations in this area.