The Push for More Women on Corporate Boards of Directors
Based on the most recent survey numbers available, Canada ranks sixth among the top 20 industrialized countries when it comes to having women on corporate boards of directors. There continues to be a profound interest in more pronounced gender diversity for boards among business leaders with the belief it leads to more constructive, less confrontational meetings and entirely new ideas coming to the table from the other 50 per cent of the population.
Advocates for the inclusion of more women on boards say there’s no time like now to set an example for other countries to follow. Two of those spearheading the crusade to have more women on boards are Deborah Gillis, chief operating officer of Catalyst Inc., a group dedicated to expanding opportunities for businesswomen and Bill Downe, president and CEO of BMO Financial Group. Both spoke to a breakfast business group at the Toronto Region Board of Trade about their ideas on the subject.
“Boards are viewed as very powerful within society,” Downe states. “Being on the inside of something you perceive as powerful is enormously gratifying even if the power is mostly symbolic.”
Downe agrees there is a changing of the tide in the approach to how business executives perceive enterprise and the challenges of today are much different than the past.
“Something has really changed in the way we think about capital, whether it’s financial or human capital,” he says. “A board of directors has a responsibility to do work. It isn’t an affiliation and you don’t recruit directors in order to raise the social status of the board. You recruit directors who will help management make better decisions and act more swiftly to grow the company faster and take share aware from competitors and to have better products and services – that’s really what the intent is.”
An open, transparent process in selecting the best group of individuals based on expertise and industry knowledge is what will enhance an enterprise’s hopes for succeeding, as Downe notes.
“If we have a legacy where there is bias in the selection process as the result of selfishness, to me that is irrelevant,” he says. “I’m not even going to go so far as to say that is the case; if you’re frustrated I think you could express it that way but you really want to have a conversation about is in order for companies to be successful, what are the necessary ingredients. One of the necessary ingredients is a clear understanding around opportunity for the best talent from the top of the corporation to the bottom. I’ve moved beyond trying to figure out why there’s been a gap, it’s time for solutions.”
Gillis focused much of her keynote address on the supply myth and a second myth that a person must have had experience as a chief executive officer in order to provide meaningful benefit to a board. Research shows less than 40 per cent of directors at major Canadian public companies have had any CEO experience. In speaking with Gillis in a one-on-one interview afterwards, she expanded on those statements.
“We often hear the argument that their aren’t women who are available and ready to serve on boards and that’s why we see 46 per cent of FP500 public companies have no women on their boards,” she remarks.
In fact, there’s been hardly any noticeable progress at all over the past 10 years in getting more women into the boardroom. From 2003 to 2011, the representation of women on FP500 public company boards increased by only 1.3 per cent. The percentage of women serving on public boards within Canadian companies has remained static at about 10 per cent for many years now.
“There are 800 women, senior officers in Canada, leading large businesses with key skills to contribute to board diversity or governance,” Gillis continues. “It’s really about how do you look beyond the usual suspects to a broader pool of candidates to fill those seats.”
Gillis doesn’t skirt the issue that one of the main barriers continues to be the old-boys’ club mentality but it goes even deeper than that.
“There’s clearly an issue in the sense of who you know often becomes a critical factor in who ultimately gets chosen to sit on a board,” Gillis says. “What often happens when there’s a vacancy is people asking ‘who knows someone?’. It’s why we’ve created the Catalyst Accord, which encourages companies to set voluntary goals for increasing the representation of women on their board. In return for setting that goal, we’re providing them access to a list of women that members of the Catalyst Canada Advisory Board have nominated as being board ready.”
As example, someone like Bill Downe has nominated four women to that list. What Downe is then able to do is to speak on a peer to peer basis with a colleague to say I know this woman and here’s what she can contribute, which helps to break down that barrier of women not usually being in that network.
Gillis says boards rarely, if ever, come up with any valid reasons why they don’t have women other than the usual tired responses such as not being able to find anyone with the expertise that we’re looking for. When pushed on what that expertise is, many seem to get lost in a haze of incoherency. Truth is that many enterprises just aren’t looking very hard.
“If you really look at the corporate officer pool in Canada there are hundreds of women who have skills and experience to support working as a member of the board of directors,” Gillis replies. “The key issue then becomes let’s move beyond who we know to the skills and competencies that we need to effectively support our board.
What’s even more frustrating to people like Gillis is seeing how Canada lags behind other industrialized nations in this regard.
“There are countries that are far ahead of us in terms of the representation of women on boards,” Gillis frowns. “But there are others that are not doing so well. We would look most closely at the U.S., and we are falling behind them. We shouldn’t have to tell you why you need a woman on your board. You should be telling us why not.”
Despite the slow movement of having women take key roles on boards, Gillis does give credit to a number of men who have been helpful in supporting the initiative for change.
“Absolutely,” she says. “It was why for us having leaders from the Catalyst Canada Advisory Board, including Bill Downe, they’re really stepping forward as champions talking about why having diverse representation in their leadership teams and their boards of directors is an important business issue. That’s the key message.
It boils down to the competitiveness of Canadian businesses. A report by Janet McFarland in The Globe & Mail reveals Ontario is now in the process of drafting new guidelines that would prompt public companies to set targeted numbers for women in senior positions within an organization, including targets for them serving as members of boards of directors. If companies don’t meet the new targeted guidelines within a given timeframe, they’ll be asked why not. It will be interesting to see the extent to which private companies opt to follow suit.
“In 2013, if you’re leaving half the brains of the country out of the room, you’re missing an opportunity to drive value and innovation in your company,” Gillis remarks.
It’s not a women’s issue – it’s a business issue.
For more information about the Catalyst Accord, go to www.Catalyst.org.