Inequitable representation of women cheats boards and shareholders
The latest report by Catalyst Canada, based on 2003 data, shows that women hold just over 11 per cent of seats on the boards of companies on the Financial Post 500 list. Just over half of these boards have no women members at all.
The public sector does a better job. Almost 24 per cent of Crown corporation board members are women, compared with only nine per cent in FP 500 publicly traded companies and 10 per cent in private companies. Despite a 10-per-cent turnover of board members on companies listed in the Toronto Stock Exchange (TSX), the representation of women on TSX composite companies has stood still at 9.4 per cent for the last three years, according to Tim Rowley of the Rotman School of Business at the University of Toronto.
Boards lacking equitable representation of women are cheating themselves and their shareholders. Women have consumer and economic clout, a fact that deserves more recognition. Employed women in Canada earn $120 billion a year. In five to 10 years, women in Canada and the United States will own half the wealth in North America.
There are many women with senior management or executive experience, some of whom are recent retirees. There is a cadre of capable women available for board appointments.
Women should be even more recognized for their human capital. A board without women is one without representation of more than half of the population and 46 per cent of the labour force. Moreover, many companies have significant customer or client bases composed of women, and can benefit from insight into their customers.
Most boards will experience a rise in retirement in four or five years. This will create the opportunity for boards to change their membership, and smart boards will take advantage of this. In addition, with the focus on good governance, boards will be looking for members who are lawyers, accountants, auditors and corporate secretaries — all professions with better-than-average representation of women.
So what should boards do to get more female membership?
Set goals: Norway recently enacted legislation requiring that at least 40 per cent of board members be women. I don’t think that we should necessarily go that way in Canada. Depending on the business they’re in, some boards should have far more than 40 per cent women.
However, I do think that boards should set a goal for female representation and make the nominating committee responsible for meeting it. As Susan Black of Catalyst Canada says, “We act on things we set as goals, things we measure.”
Boards should avoid having only one woman on the board. Having more than one woman board member not only makes the board more comfortable for women but also avoids creating a situation where a sole woman is seen to represent half of the population.
Reach out to find talented women: Recruitment is an exercise in target marketing. Boards that want to find the best women need to set out to find terrific women, not just new board members. The social networks of current board members include too few women with the kind of expertise boards need, and too often those qualified are the same women who end up on several boards. The result is the cadre of experienced female board members is not expanding as fast as it could.
So boards need a recruitment strategy to identify the right women, not a one-hit wonder assignment to an executive recruitment firm.
Look to non-traditional sources: Many women with executive experience come from the public sector or from fields where professional women predominate, such as education, health care and community and social services. Women with senior experience in these fields have had accountability for strategic planning, for large numbers of staff, a huge budget, community and public relations and union relations. Many women have significant board experience in the not-for-profit sector. These organizations have exemplary governance practices, something boards are seeking. These women are well-qualified for corporate boards but are often overlooked.
Develop an inventory: Although corporations can develop their own inventories, David Beatty, managing director of the Toronto-based Canadian Coalition for Good Governance, favours the establishment of a shared inventory of potential women directors. This list of nominees would be composed of women supported by a CEO as having the requisites for the job. However, it would be important not to limit the list to those nominated by private-sector companies. Otherwise, many qualified women are omitted.
Getting more of the right women on the boards of corporate Canada is not rocket science but it does require boards getting out of their current comfort zone of relying on people they know and trust. Shareholders, clients and consumers would be well-served by this.
Lynne Sullivan is president of Lynne Sullivan & Associates Inc., a human resource consulting firm specializing in diversity and employment equity. She can be reached at (416) 306-2243 or [email protected].
The public sector does a better job. Almost 24 per cent of Crown corporation board members are women, compared with only nine per cent in FP 500 publicly traded companies and 10 per cent in private companies. Despite a 10-per-cent turnover of board members on companies listed in the Toronto Stock Exchange (TSX), the representation of women on TSX composite companies has stood still at 9.4 per cent for the last three years, according to Tim Rowley of the Rotman School of Business at the University of Toronto.
Boards lacking equitable representation of women are cheating themselves and their shareholders. Women have consumer and economic clout, a fact that deserves more recognition. Employed women in Canada earn $120 billion a year. In five to 10 years, women in Canada and the United States will own half the wealth in North America.
There are many women with senior management or executive experience, some of whom are recent retirees. There is a cadre of capable women available for board appointments.
Women should be even more recognized for their human capital. A board without women is one without representation of more than half of the population and 46 per cent of the labour force. Moreover, many companies have significant customer or client bases composed of women, and can benefit from insight into their customers.
Most boards will experience a rise in retirement in four or five years. This will create the opportunity for boards to change their membership, and smart boards will take advantage of this. In addition, with the focus on good governance, boards will be looking for members who are lawyers, accountants, auditors and corporate secretaries — all professions with better-than-average representation of women.
So what should boards do to get more female membership?
Set goals: Norway recently enacted legislation requiring that at least 40 per cent of board members be women. I don’t think that we should necessarily go that way in Canada. Depending on the business they’re in, some boards should have far more than 40 per cent women.
However, I do think that boards should set a goal for female representation and make the nominating committee responsible for meeting it. As Susan Black of Catalyst Canada says, “We act on things we set as goals, things we measure.”
Boards should avoid having only one woman on the board. Having more than one woman board member not only makes the board more comfortable for women but also avoids creating a situation where a sole woman is seen to represent half of the population.
Reach out to find talented women: Recruitment is an exercise in target marketing. Boards that want to find the best women need to set out to find terrific women, not just new board members. The social networks of current board members include too few women with the kind of expertise boards need, and too often those qualified are the same women who end up on several boards. The result is the cadre of experienced female board members is not expanding as fast as it could.
So boards need a recruitment strategy to identify the right women, not a one-hit wonder assignment to an executive recruitment firm.
Look to non-traditional sources: Many women with executive experience come from the public sector or from fields where professional women predominate, such as education, health care and community and social services. Women with senior experience in these fields have had accountability for strategic planning, for large numbers of staff, a huge budget, community and public relations and union relations. Many women have significant board experience in the not-for-profit sector. These organizations have exemplary governance practices, something boards are seeking. These women are well-qualified for corporate boards but are often overlooked.
Develop an inventory: Although corporations can develop their own inventories, David Beatty, managing director of the Toronto-based Canadian Coalition for Good Governance, favours the establishment of a shared inventory of potential women directors. This list of nominees would be composed of women supported by a CEO as having the requisites for the job. However, it would be important not to limit the list to those nominated by private-sector companies. Otherwise, many qualified women are omitted.
Getting more of the right women on the boards of corporate Canada is not rocket science but it does require boards getting out of their current comfort zone of relying on people they know and trust. Shareholders, clients and consumers would be well-served by this.
Lynne Sullivan is president of Lynne Sullivan & Associates Inc., a human resource consulting firm specializing in diversity and employment equity. She can be reached at (416) 306-2243 or [email protected].
