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From Four Seasons CEO to RBC’s Chair of the Board

A Conversation with Kathleen Taylor on Leadership, Talent and the Power of Resilience

LISA HEIDMAN LL.B.
SENIOR CLIENT PARTNER, THE BEDFORD CONSULTING GROUP,
NORTH AMERICAN DIRECTOR OF BEDFORD LEGAL

On August 30, 2013, Kathleen Taylor, the former President and CEO of Four Seasons Hotels & Resorts Inc. was named the new Chair designate of the board of the Royal Bank of Canada (“RBC”). On October 3, 2013, Finance Minister Jim Flaherty also announced that Ms. Taylor had been appointed to the Canada Pension Plan Investment Board (“CPPIB”) that is responsible for investing and managing approximately $192 billion on behalf of the Canada Pension Plan (“CPP”). Beginning her new role as Chair of RBC’s board as of January 1, 2014, Ms. Taylor is the first woman in Canadian history to lead the board of a major chartered bank. RBC is Canada’s biggest bank as measured by market capitalization and currently employs approximately 79,000 full and part-time employees, who serve more than 15 million clients through offices in Canada, the U.S. and 44 other countries.

Without question, the combined appointments of RBC and CPPIB define Kathleen Taylor as one the most influential and powerful people, male or female, within corporate Canada, at a time when the federal government, provincial regulators and the business community are collectively placing more scrutiny and focus on boardroom diversity. During Ms. Taylor’s 12 year tenure on the RBC board, she has witnessed RBC increase its representation of women throughout the bank’s corporate and board ranks, with 5 women of 18 directors now on RBC’s board, constituting 28% representation. This number is significant in that approximately 10% of directors on Canadian public company boards are women, and 43% of these companies have absolutely no women on their boards, according to Catalyst Canada. Further, Bloomberg found that women serve as Chair of only 3.5% of the 226 publicly traded Canadian companies with a market value of $1 billion or more.

Prior to these board appointments, Kathleen Taylor, widely known as Katie, was the President and Chief Executive Officer of Four Seasons Hotels and Resorts, having served in a variety of progressively senior leadership roles in her 24 year career with the company. Katie joined the luxury hotelier as Corporate Counsel in 1989, was promoted to Vice President, General Counsel in 1992, Executive Vice President, Corporate Planning and Development in 1997, President of Worldwide Business Operations in 1999, President and Chief Operating Officer in 2007, and from 2010 to 2013, served as Four Season’s President and Chief Executive Officer. As CEO, Ms. Taylor was responsible for overseeing all aspects of the company’s global operations and growth, including 90 luxury hotels and resorts, with development plans underway for another 50 plus hotels at the time of her departure, while leading close to 40,000 employees in 38 countries.

Among her numerous business and board achievements, Ms. Taylor has received multiple accolades throughout her career including the Cornell University Hospitality Innovator Award, the Canadian General Counsel Award for Business Achievement, the Schulich School of Business Award for Outstanding Executive Leadership and the inaugural Medal for Career Achievement from the Hennick Centre for Business and Law at York University. As one of the world’s leading hotel executives, she was also the first woman to receive the Corporate Hotelier of the World Award.

In addition to her RBC Chair and CPPIB board appointments, Ms. Taylor has been an independent director of RBC for over 12 years. Joining the RBC board in 2001, she served on the Audit, Risk and Human Resources Committees and was appointed Chair of its Human Resources Committee in 2010. Since 2004, she has been a director of SickKids Foundation, is currently one of three Vice Chairs and serves as Chair of its Compensation and Resource Management Committee. Katie has also been an active board member and volunteer with the United Way of Greater Toronto where she has served as Chair of the United Way’s Endowment Fund and was a member of its Major Individual Giving Cabinet for over a decade.

Ms. Taylor graduated from the University of Toronto with an Honours Degree in Political Science and Economics in 1980, and earned her JD/MBA at the Joint Law and Business Program at Osgoode Hall Law School and the Schulich School of Business in 1984. She practiced securities and competition law at Goodmans LLP from 1984 to 1989 as a corporate securities associate. Katie is married to Neil Harris, senior tax counsel at Goodmans LLP, has 3 children and lives in Toronto, Canada.

LISA: First of all, congratulations Katie on your important and historic appointment as Chair of RBC’s board of directors. There are many of us in the business community who believe that RBC “got it right” when they appointed you and we have been cheering you on! You’re the right person at the right time: A seasoned director and leader with global operational, financial services and public company experience, with a keen focus and understanding of corporate governance, leadership, customer service and what it takes to inspire, attract and retain top talent, globally. That you are also the first woman in this role in Canada sends a powerful message to boards and executive teams across the country, at a time when the business case for diversity is really gaining momentum. What do you think this “first” means for Canadian women in business and the next generation of up-and-coming talent?

KATIE: Thank you for the cheering, it means a lot. I think what my appointment means first and foremost, is that I have been on the RBC board for a long time and have devoted significant attention to this role. I believe my experience as a CEO and as a long-term independent director will add value to my role as Chair and that my committee leadership style will do the same. Also, my interests have always been around learning, strategy, leadership and inspiring top talent, which is core to RBC’s culture and very consistent with my own values. At its essence, to achieve a role leading a sophisticated and experienced board of directors is about much hard work, over many years. It truly is a great honour. The fact that I am a woman is interesting I suppose, but it is not the reason I was chosen. That said, I am very proud of RBC’s leadership on diversity and I appreciate that firsts do matter. They matter because they are a powerful signal to many people of the art of the possible. I am a big believer in the need for leadership role models at a variety of levels. If people see it, they understand that they can do it. It’s a simple but powerful concept.

I do think that my appointment may have focused more discussion on the business case for diversity, and the value of, and need for, diversity of thought around the board table, and that’s a good thing. I hope it encourages other boards to seek out the many talented, competent and capable women leaders for upcoming board appointments. Also meaningful to me though, is that it might inspire even one young person to strive further and seek the art of the possible for themselves. I have had much positive support in the business community since the announcement, but the most touching was a letter that was written from a grandfather to his granddaughter, with my appointment announcement attached to his note. The message was that she should know that she can do absolutely anything in this life. Here is a man who was a businessman when there were few women in the workforce, but he has a tremendous interest in the future possibilities ahead for his granddaughter. I won’t forget that letter in my lifetime.

LISA: How did the opportunity come about to work for Four Seasons? What were the steps to the CEO’s office?

KATIE: While doing my JD/MBA I spent my summers in business jobs, initially at General Motors studying workers compensation and then for two summers at the US equities desk at Manulife. After graduation, I joined Goodmans LLP where I was exposed to tax, litigation, bankruptcy and corporate securities during my time at the firm. What interested me the most was corporate securities and its pragmatic business focus. During my years at Goodmans, I had an opportunity to go on a secondment to the Ontario Securities Commission (“OSC”), where I learned the ins and outs of policy development. It was something brand new for me where I got to not only interpret the law, but also in some cases, create and help draft OSC policy.

While I was at the OSC, I got a call from David Mongeau, who had been a terrific mentor of mine at Goodmans. David had left the firm to become the new General Counsel at Four Seasons, and shortly after he joined, he called me and said, “I’m looking for a number two, are you interested?” At the time, I thought this was a great opportunity to transition from the practice of law to a business, working with a person I really enjoyed. I have a theory about people and about jobs, and believe that most people will really go the extra mile for a boss that they like and that they believe in. It wasn’t the draw to the Four Seasons or to the industry, it was really about working with David and what I saw as a good learning opportunity for the next few years. I could never have foreseen at the time that my job as Corporate Counsel would lead to a nearly 25 year career with Four Seasons, or that I would someday be its CEO.

It was quite an organic career path for the first 10 years when I was in a series of expanding executive positions. I started in the law department, and then took over development, administration and corporate human resources. I became Co-President in 1999, with Wolf Hengst for a number of years. We worked brilliantly together side-by-side as he was an expert in hotel operations and I was strong on the business side. When Wolf retired in 2006, I was appointed to the Chief Operating Officer role where the entire company reported to me and I reported to the founder, Isadore “Issy” Sharp. Issy called that role “CEO-in-training”. In 2010, I became the CEO of the company and the rest is history.

LISA: How did mentors and sponsors guide your career or open doors and new opportunities for you?

KATIE: I’ve had many mentors and would never be here without their guidance, confidence and sponsorship. David Mongeau, Roger Garland, Wolf Hengst and Issy Sharp were each important. I can’t say enough about how key it is to develop these senior relationships throughout your career, within and external to your company.

David brought me into Four Seasons as his second-in-command and after three years he left the hotel to become a successful investment banker. That was another turning point and one of those great career defining moments. Issy Sharp and Roger Garland, who later became Vice-Chairman, were my bosses at the time. I was young, I had just had my first child, but they both took a big leap and gave me David’s job as General Counsel. They put a lot of trust in me at the time and really gave me an opportunity to grow.

LISA: That trust and stretch opportunity that was given to you is very important and is one I often see in the careers of top leaders. Someone believed in you early on and was willing to give you a shot and open a door for you. Equally important though Katie is that you had the confidence then to take that opportunity and run with it.

KATIE: Each of my mentors believed in me. What’s also true is that when given an opportunity, I did run with it, no question. Fortunately for me, Four Seasons in those days was a rapidly growing internationally focused company. There was so much work to do and so few people to do it. The projects we were developing were brand new for everyone and no one was really an expert, so the landscape for learning, exploring and then capitalizing on opportunities was endless. I was a self-starter and got up everyday thinking, what else could I do today to build, grow, execute and accomplish? Four Seasons was absolutely the perfect environment for that. I also became the first woman to sit at the Management Committee table. It was a terrific opportunity because that was the business strategy and policy making group that ran the global enterprise. Having a place at the decision making table was a huge expanse of both my mindset and experience at a time when the business was growing at a rapid pace and the economy was booming.

LISA: The late 1990’s was just an incredibly exciting time for business globally. I remember it well when I was doing M&A in the US– it was just deal after deal…

KATIE: Oh it was! Every month there was a new country, a new deal, a new set of business partners. We were a public company and eventually we listed on the NYSE, so working with Bay and Wall Street also became my mandate. As I moved into the corporate planning and development role, I became the point person for dealing with the investment community, our shareholders, as well as analysts and the banks. My corporate securities and business background was a big help. The most exciting part was the global exposure and the varied and complex nature of the business relationships in countries and at a time when few North American companies were doing business in those places. We were breaking new ground daily. There was nothing you could do in Budapest that you could pick up and do in Baku, so everything was really a start-up. When I began at Four Seasons in 1989, we operated in 3 countries, when I left in 2013, we were operating in 38 countries.

LISA: An entrepreneurial spirit at every level is a key quality to Four Seasons culture and transferring its unique culture across countries is clearly one of the keys to its success.

KATIE: Yes it is. The company was extremely entrepreneurial because we were always in start-up mode somewhere. Although we had a formula for how we thought about talent, products, profitability, policies and procedures, every time you took it on the road, there were a massive amount of adjustments that needed to be made. Even though you have all these ideas in your head, when you open a new hotel, you typically hire between 400-600 employees, to staff and take care of guests, and the vast majority of those are hired from the local community. On one level, there was seamless continuity because senior leaders were being transferred to open and run the new locations, which included bringing the Four Seasons training and culture to life in these different cities. But you had to be extremely entrepreneurial at every level to be successful.

LISA: What amazes me about Four Seasons – and I speak about it often as an example of exceptional company culture, is the extraordinary level of customer service you receive at each and every one of the hotels, combined with the high level of engagement and long standing loyalty of its employees. The culture of the company is palpable in every interaction you have as a customer. If they could bottle this, and sell it…well, there certainly are lessons to teach on leadership and how to effectively attract, engage and retain top talent globally.

KATIE: Yes there are. In the early 1980’s we believed that culture is really important to drive business success. We understood that a satisfied customer could only be created if they were being served by a satisfied employee. We realized that the most important factor in the employee/customer relationship is the attitude of the employee. If you don’t have a happy, engaged, passionate and enthusiastic employee the chances of exceptional customer service are nothing short of zero.

The notion was that we would treat our guests the way they would want to be treated, and in order to get there, we treated our employees in the same manner. It was a really simple concept but hard to implement if you think about that philosophy being the basis for absolutely everything we did. It was a culture focused on employee engagement and satisfaction and customer service to its core. Each of the policies and investments we made in our employee-focused initiatives sent an important message to each and every employee.

LISA: That they were valued. Each a key and essential part of the team, to your brand, and to your company’s continued growth and success.

KATIE: Exactly right. When a company invests in its employees and they feel valued, they will invest back in larger measure than they would have otherwise – it’s the great secret of an engaged and loyal team. We also always hired for attitude before skill. The most important measure of your ability to work for Four Seasons was always attitude driven. We believed that you can teach someone to make a bed, but you cannot teach someone to care about others or to go the extra mile for your customers – it’s not a skill, it’s a quality. Four Seasons screens people to this day on a whole variety of factors focusing on attitudes towards customer service.

LISA: A focus on exceptional customer service and the power of courage and resilience are a few of the key qualities I regularly see in successful senior leaders and specifically look for in those that I recommend for hire or work with on my team. How have these qualities helped you move forward? What other key leadership qualities do you think are invaluable to succeed in business that you could share with up-and-coming talent?

KATIE: Resilience and courage are essential leadership qualities. The expression “nothing ventured, nothing gained”, is true, but sometimes things ventured don’t work out as you planned them and you know what? So what? You have to get over yourself and you must venture out again. I learned this lesson very early on and have carried it with me throughout my life. In high school, I didn’t make the junior basketball team, and was devastated about it. I tried again the following year and got it. The learning for me wasn’t that I didn’t make it, it was that I went on to make the team the following year, then made the volleyball team, became captain of both teams, was athlete of the year, outstanding player on both teams, and then went on to play varsity volleyball at UofT. It’s the knowledge that just because it didn’t happen the first time, it doesn’t mean it won’t happen again or with a much better result. But you have to have the courage to pick yourself up and the resiliency to go out there and do it again.

Life and business do not always work the way you want them to, but if you are confident in your abilities and in yourself, and you work hard, you will succeed. You do have to be purposeful about how you advance yourself and you do need to be very proactive about your own career. You must also be a planner and have more than one idea of yourself and your future, and more than one notion of what you might be, both personally and professionally. When things don’t work out, you have to have a Plan B and move forward.

LISA: When you look at Four Seasons and RBC, there are many similarities between their visions, values and business cultures…

KATIE: Yes, that’s absolutely true. When I first became a director at RBC, I was asked to speak to the board and senior management about why I had been selected. I had watched RBC become one of Canada’s greatest companies, and one of the things that I spoke about in that first address was the strength of the value proposition represented by RBC’s culture. Their values, vision and mission were expressed differently, than the Four Seasons, but at the heart of it, RBC’s values included an incredible focus on integrity and teamwork. Although they were completely different businesses, they shared the same focus on attracting and retaining the very best talent, globally. RBC understands well that one of their greatest assets is their exceptional people. You simply can’t do what RBC does so well without having the very best people interacting with their customers. The notion of being involved in some way with both companies was incredibly exciting at the time, and I am proud to be Chair of the board 12 years later.

LISA: You joined the RBC board in 2001. What prepared you for this board experience and how did your committee work ultimately prepare you to become incoming Chair?

KATIE: I had some previous private and not-for-profit board experience but nothing like the size, shape and complexity of RBC. The learning curve as a young director was huge. I was 44 when I joined the board, the same age as Gord Nixon, and it was shortly after he had become CEO. I was a huge fan of his and liked the integrity and leadership that he displayed. RBC was involved at that time in a lot of expansion outside of Canada, so there were new things going on and I felt it would be a great experience for me and also a good fit for them. I was a busy executive when I joined the Audit Committee, which is one of the toughest committees in general to cut your teeth on. Since then, I also served on the HR and Risk Committees, and was Chair of the HR Committee for the past 3 years. Each step was excellent training for the role of Chair and was great exposure for understanding and stewarding the business on behalf of our shareholders.

LISA: How important do you think networking is for one’s career and for attaining board appointments? What do you think is the best way for executives to get on boards?

KATIE: Networking is incredibly important for your career and for creating the opportunity to serve on boards. My transition from Four Seasons has actually reinforced for me the importance of building and investing in those relationships. An easy start for executives seeking board experience is by volunteering in the not-for-profit sector, which is crying out for the kind of business expertise that experienced managers can bring. Volunteering your time and expertise is a wonderful way to make a difference to so many. I also think it sends a good tone around service mentality, that you are essentially there to serve and contribute on behalf of others. Community service and board involvement are important parts of executive development, and present a wonderful opportunity for future leaders.

LISA: It’s been well established that having more women at the senior executive and board tables is just smart financial business for corporations, globally. In addition to the bottom line, why do you think it makes a difference to have more women on boards?

KATIE: Diversity in all its definitions simply drives better business decisions. Everyday I was doing business with someone from another country. Each came with different perspectives. The exercise was always to take all of that diversity of thought and develop the best possible hotel that could stand up to world-class scrutiny. It was always clear to me that we did better work when there were diverse voices in the room. We had better information, different angles to view similar problems, different experiences to draw on and the ability to bring increased insight and sensitivity to certain issues. All of it contributed to better business decisions and to driving a better business result. If you believe that diversity is good for business, by definition it has to be good for boards, because they are the stewards of the business.

LISA: There has been much thought given to determining effective strategies to solve the diversity issue at both the board and executive tables. These include ensuring CEO and board leadership commitment to the issue; setting formalized targets; creating focused diversity councils; developing mentoring and sponsorship programs to create a pipeline of talent; and establishing board appointment and senior executive recruitment policies that embrace diversity and ensure that recruitment is competency based and goes beyond traditional networks, as just a few key solutions… What do you think Katie it’s going to take to get more women on boards in North America? What diversity strategies should boards and organizations instill and put into place?

KATIE: All of these strategies are required and important to ensure change. Very clearly, the first issue is leadership, the tone at the top, set by the CEO and the board Chair. Gord Nixon and RBC’s senior management team have shown incredible leadership on the diversity front. A focus on diversity and inclusion has to be a clearly communicated priority. There are a lot of different ways that organizations can promote diversity in the executive ranks and there is no single solution – it all takes time, attention and leadership.

Achieving diversity requires organizations to simultaneously seek the best candidates while ensuring that selections are made from a diverse list. External search consultants like you Lisa are also becoming more important in this area, not only because of your extensive network and reach beyond those who are known, but also because of the development and application of a competency based process and approach. There is a real need for this at both board and executive levels.

LISA: How do you feel about the proposed OSC “comply and explain” rule that would require companies to report annually on their progress getting more women on their boards and into senior management roles?

KATIE: I believe that the “comply and explain” proposal is a good start for Canada. I’m absolutely comfortable with it. There is nothing wrong with a structure that brings transparency to issues, and to ask public companies to explain their approaches to particular issues, be it board composition, experience, competencies or renewal – all of which are important to shareholders. The OSC’s focus on diversity and its proposed solutions for increasing the participation of women on boards and in senior management is very important at this moment in time, and I believe it’s a positive development and a balanced approach.

LISA: What are the opportunities and challenges as incoming Chair of the board?

KATIE: This is a time of great promise for RBC, as it is a leader on virtually every level. The board’s role, and my job in leading the board, is to make sure that we continue to succeed on all measures and build strength in the stewardship of the organization on behalf of our shareholders. All in, it’s a great time of both renewal and continuity for RBC, as Gord Nixon passes leadership to Dave McKay who becomes RBC’s new CEO on August 1st, 2014. It’s a very exciting time for the business, and for me personally and professionally.

LISA: Thank you for sharing your story with us Katie and for making your mark. Your accomplishments are inspirational. We look forward to watching you succeed in your new role as Chair of the board.

Lisa Heidman, LL.B. Senior Client Partner, The Bedford Consulting Group, North American Director of Bedford Legal, brings over 15 years of Legal, Board and Executive Search experience working with Boards and their Senior Leadership Teams, placing Board, CEO and C-Suite Executives across functions globally. Lisa is also President and CEO of Three Degrees: Board and Executive NetworkTM, an alliance partner of Women of Influence and The Bedford Consulting Group. Appointed to the Board of Directors of Women of Influence in 2009. Lisa can be reached at [email protected].