Q&A: Why Leader Character is The Strategic Advantage for Canadian Boards

By Bill Furlong, Executive-in-Residence, Ivey Business School, and Board Chair, Echelon Insurance

Q: Why is character increasingly recognized as a strategic asset in corporate governance?

A: Boards today face heightened expectations, greater complexity, and a public that is asking tougher questions about judgment, trust, and accountability. While boards typically appoint directors based on competence and subject matter expertise (SME), when directors are dismissed (or not reappointed) the reason is usually rooted in poor character. This reveals three flawed assumptions: that character is less important than competence, that it’s too subjective to assess, and that it’s static and unchangeable. New research and practice prove these assumptions are mistaken - character is critical to judgment, is observable and measurable, and can be developed, just like any habit.

Q: How is character different from politeness, likability, or morality?

A: Character goes far beyond being nice or ethical. Drawing from Aristotle and positive psychology, character is about virtuous behaviours—like courage, humility, and temperance—that drive decision-making, performance, and well-being. These are not abstract ideals; they are habits of behaviour that can be cultivated and are essential for effective leadership.

Q: Why should directors care about character as much as competence?

A: Competence is critical, and character determines how you use your competence. For example, a highly skilled lawyer who lacks humility will be slow to see weaknesses in their own legal position, and not appreciate strengths in opposing positions, which will impair their decisions, professional judgment, and outcomes. In the boardroom, a director’s character is foundational as it shapes their judgment, decision-making, and ultimately, board outcomes. Boards that focus only on directors’ technical skills and SME risk missing the bigger picture.

Q: What evidence links character to outcomes like trust, culture, resilience, and long-term value?

A: The data is compelling. Fred Kiel’s “Return on Character” study found that companies led by character-driven leaders achieved five times the return on assets compared to those led by self-focused leaders. Research from the Ivey Business School shows that character-driven leadership is highly correlated with psychological safety, resilience and well-being. Trust, culture, and resilience all have their roots in character, and organizations with strong character among their leadership see measurable benefits.

Q: How does character influence board decisions during periods of uncertainty or crisis?

A: Character is what keeps your best judgment “online” under pressure and uncertainty – the hallmarks of today’s environment. When stakes are high, it’s the habits you’ve cultivated - courage, temperance, humility—that guide your decisions and actions. Character is built in the micro-moments of everyday life and revealed in big moments, such as a difficult board conversation. Boards that rely only on minimum standards, like “no conflict of interest,” miss the opportunity for excellence and value creation. To be clear – most directors of Canadian organizations are not of “weak” character but rather are likely to have imbalances of character (e.g. excess in Courage, deficiency in Temperance) that lead to sub-optimal decisioning under pressure.

For example, when Boards over-privilege a behaviour like collaboration they risk “groupthink’; when they over-index on accountability they risk unhelpful board interference; and when they lack courage, they risk sweeping issues under the rug that fester. These poor outcomes have nothing to do with a director’s competence but are rather character-centric issues that can be identified, addressed and resolved. Intelligently and intentionally strengthening each director’s character will result in more effective boards, with less governance risk and improved organization outcomes.

Q: How can boards embed character into strategy, culture, and leadership expectations?

A: The board’s primary leverage is in CEO selection and assessment. By making character central to CEO evaluation, selection and development, boards create a virtuous “waterfall effect” throughout the organization. This isn’t about radical change, but about augmenting existing practices with workshops, assessments, and ongoing character development.

Q: Once a board accepts that character matters, how do they screen for it?

A: There are well-established processes for assessing character, used by organizations across various sectors including the public service, education, financial services and sports. The key is to prepare by developing your own character, observing clusters of strengths and weaknesses, which allows you to more skillfully observe and identify it in others. Character-based interviews are guided conversations that reveal who a person is. This approach goes far beyond gut feel or personality tests.

Q: Should character be included on the board matrix? What does that look like in practice?

A: Absolutely. The board chair should put character on the agenda, with the Governance and Nominating Committee investigating and recommending practices. Character awareness, development, and selection should be layered into the governance framework, institutionalizing character as a recruitment advantage and improving oversight, judgment, and decision-making under conditions of imperfect and incomplete information, and time pressure.

Q: Looking ahead, what shift should Canadian boards make to strengthen character in governance?

A: Start with yourself—embark on your own character journey. Put character on the board agenda, engage with resources and accreditations, and recognize that character is built by training virtuous habits and behaviours. With advancements in assessment and development, boards can intentionally cultivate character, benefiting themselves and their organizations. In this way, Canada can place itself at the forefront of corporate governance, creating enormous value throughout Canadian organizations, communities and the country.

Conclusion:

Canada and Canadian boards are at a pivotal moment. By elevating character alongside competence, directors can unlock sustainable competitive advantage, drive strong trust and effective culture, and lead the world in the future of corporate governance. There is a massive, Canadian-made, opportunity to be explored and exploited for the benefit of all Canadians. The time to act is now.