The pace is just too slow. Numbers may vary slightly, depending on the metrics, but the basic message is clear — women do not take up enough spots on corporate boards.
In Canada, it has taken women 17 years to move from six per cent of the total directors of the largest companies to 10 per cent, according to executive search firm Korn/Ferry in partnership with board governance consultancy firm Patrick O’Callaghan and Associates.
At this rate, it would take 45 years to achieve 25 per cent, according to Patrick O’Callaghan, managing partner at the Vancouver-based firm.
“It’s a very, very slow dial that’s got to be ratcheted up.”
The proportion of women on Canadian boards rose only one-half a percentage point between 2009 and 2011, according to Catalyst Canada, which works to expand opportunities for women in the workplace. Women hold just 14.5 per cent of board seats at Financial Post 500 companies and 10.3 per cent at public companies, while nearly 40 per cent of FP500 companies and more than 46 per cent of public FP500 companies have zero women serving on their boards.
“We’re really seeing huge stagnation at public companies in particular,” said Liz Mulligan-Ferry, senior associate of research at Catalyst in New York.
However, the momentum for change seems to be building, through a variety of tactics.
Catalyst Canada calls for action
In March, Catalyst Canada issued a call to action for Canadian corporations to increase the overall proportion of FP500 board seats held by women to 25 per cent by 2017. Participating companies must pledge to the agreed objective and submit interim goals to Catalyst.
“We wanted to put on the table a constructive proposal to accelerate the pace of change and to really motivate the business community in Canada to respond to the compelling business case that tells us that more women on boards is good for organizations,” said Deborah Gillis, senior vice-president of membership and global operations at Catalyst in Toronto.
Interventions are needed to move the needle, she said.
“We’ve chosen to take a voluntary approach because we believe the business case is compelling, that Canada is a country that values diversity, that we increasingly see organizations in this country understand how important it is to leverage diverse talent. So, this approach allows businesses in this country to step up and show leadership on that issue.”
Catalyst will publish a census every two years that lists companies with zero women board directors and with 25 per cent or more female board directors. It will also work with corporate search firms to develop a voluntary code of conduct regarding searches for women who are qualified for board positions and recognize firms committed to this cause.
“Whenever you get a bit of healthy competition around these things and it’s the ‘in’ thing to do, people see it as the right thing to do,” said Elizabeth Watson, founder of governance firm Watson in Vancouver, who has served on boards herself.
Recruitment has to be done differently as too often it’s a matter of filling a vacancy with someone you know, she said.
“We’re not often going outside our comfort zone of the traditional search firm model, a low-risk model,” said Watson. “They’re not looking to put someone in there who is untested.”
Europe considers legislation
Since 2003, the share of women on boards at the largest publicly listed companies in European Union (EU) member states has gone from 8.5 per cent to 13.7 per cent, according to the 2011 Women in Economic Decision-making in the EU: Progress Report from the European Commission (EC). So, last month, the commission announced it would hold consultations on gender imbalance on EU corporate boards and consider a legislative initiative to improve the situation.
“The EU cannot afford to permit systematic gender imbalance at the top level of economic decision-making any longer,” it said, adding member states such as France and Italy have resorted to legislative measures establishing quotas or targets for gender representation on company boards.
But quotas are not supported by O’Callaghan, who is the chair of Women on Board, which promotes the appointment of women to boards.
“We don’t believe that it’s in the best interests of women or the best interests of the companies to work on the basis of legislated quotas for gender balance,” he said. “Many of the women that I’ve talked to said they don’t want to be there because of some arbitrary quota.”
What’s good for Bank of Montreal might not be good for, say, Joe’s Meteorological Services, said O’Callaghan.
“I’m much more comfortable with a careful, strategic assessment of what’s required on the board and over what period of time, knowing that there is that diversity agenda as part of that strategy.”
Instead, O’Callaghan cites an approach taken in the United Kingdom. In 2011, a report by Lord Davies of Abersoch recommended listed companies in the FTSE 100 aim for at least 25 per cent female board member representation by 2015.
The government also encouraged all FTSE 350 companies to set out the percentage of women they aim to have on the boards in 2013 and 2015.
“We would hope to see sort of soft targets set, not quotas, but soft targets set which companies are working carefully over time to try to achieve,” said O’Callaghan.
And a followup report from Davies released in March showed “an unprecedented pace of change in the boardrooms” as women make up 15.6 per cent of all directorships, up from 12.5 per cent in 2010.
The report shows there are many steps that can be taken before governments resort to extreme measures such as quotas, said Thea Miller, managing director of Vancouver-based Women on Board.
“People go to (quotas) because it’s easy to understand and they think it’s easy to do, maybe. But the fact is there’s so many other things that can be done.”
Mentoring and sponsorships
Mentoring is one approach Women on Board started back in 2007, largely because of the misperception there weren’t enough women out there to serve on boards, said Miller. The program builds up a pool of women who are qualified to serve on boards.
“We’re identifying potential women who are board-ready and able to serve on boards, but we’re also engaging their mentors,” said O’Callaghan. “They’re high-profile, important business executives who are demonstrating, by becoming mentors, that this is a significant issue in Canada that needs to be addressed.”
The Canadian Board Diversity Council is also launching Diversity 50 in the spring of 2012, a sponsor-driven initiative involving 10 CEOs and chairs meant to increase the speed at which a qualified director of a diverse background is elected to a corporate board, with a list of 50 candidates.
“The issue is how to find potential new directors in a rigorous and transparent recruitment and nominating process that searches beyond the board’s network,” said the council.
Any effort to get women better-known in the circles of power is a good thing, said Watson. But culture is an issue that’s more troublesome, she said.
“Despite people’s best efforts… there’s still a very clubby atmosphere on boards and, in some ways, the lack of women is reflective of the culture more than it’s just they don’t want women.”
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