Is board gender parity a pipe dream?

Many dislike idea of quotas to encourage female appointees
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 01/13/2014

When the board of directors at Intact Financial opened a search for a talented new member, it easily found Janet Da Silva.

She was among several candidates listed on Diversity 50, a collection of board-ready candidates who are women, minorities and Aboriginal Peoples, compiled by the Canadian Board Diversity Council (CBDC).

Intact has used the list in looking for specific competencies that match the needs of its board, now and in the future, said Claude Dussault, chairman of Intact’s board and president of ACVA Investing in Quebec City.

“It has been really of help because of the current environment where the natural network, especially at the board level, is built on the base of males,” he said.

“If you look at the education system, who’s coming out of universities, it’s certainly not restricted to one category. But within organizations, we need to find ways of adapting to that and be more creative in finding the best talent available.”

Representation creeping higher

The percentage of women on FP500 boards is creeping up very slowly — even backtracking at times — going from 10.9 per cent in 2001, 12.9 per cent in 2007, 14.6 per cent in 2011 and 14.4 per cent in 2012 to, most recently, 15.6 per cent in 2013, according to the CBDC’s annual report card.

If the current rate of change stays the same, at 4.7 percentage points over 12 years, gender parity (48.5 per cent) will not be achieved until roughly 2097, it said.

“The pool of diverse board candidates is large and only growing, but there seems to be a lack of demand or leaders willing to take the first steps to identify directors beyond their own networks who aren’t necessarily CEOs,” said Pamela Jeffery, founder of the CBDC.

Out of 11 directors on its board, Intact has four women, said Dussault.

“Our objective is to have the best talent available on our board, so the whole idea of diversity is to ensure that we are tapping into the broadest talent pool available,” he said.

“So obviously if you are focusing on white men, your pool will be less than 40 per cent of the population of talent available out there.”

No excuses

Lists such as Diversity 50 and Women on Board Source from Catalyst Canada are helping to make qualified women more visible for board opportunities.

“This takes away the excuse… no more excuses,” said Jeffery, adding six candidates on Diversity 50 were elected to a FP500 board and one to a Fortune 500 board this past year.

“The list is needed to make it easy for boards to look at candidates who are beyond their own network.”

This kind of database helps highlight the issue and is an immediate rebuttal to those who say they can’t find any qualified women, said Julie Jai, chair of the Aboriginal law section at the Ontario Bar Association.

A candidate on Diversity 50, she was recently elected to the board of St. Joseph’s Health Centre in Toronto.

“It’s evidence there are in fact qualified women and making them and their profiles widely available on a database just simplifies the search process for corporations who are genuinely interested in seeking women board members,” she said.

Research shows 80 per cent of board seats are held by directors who have been recruited to the boards through existing directors’ networks, said Jeffery.

“A typical board would be mostly male and mostly white male, and so they typically search for new directors within their own largely white male networks.”

One of the challenges is people tend to hire people they know and people who are like them — they’re just more comfortable with that, said Jai.

“That will change because, for example, as more women become members of corporate boards, then they will be among the group of people who are asked, ‘Is there somebody who you know who will be a good fit for this board?’” she said.

“Boardrooms have been dominated by men for a long time and it will just take a while, but I guess the issue is how long will it take if we wait for this sort of gradual approach where every few years there’s a few more women — or is there a way to accelerate that?”

Many corporate boards also look for candidates who have been prominent CEOs, but that mandate rules out 98 per cent of women, said Jeffery.

“We’re calling on directors to change the criteria so that it is skills-focused, as it always has been, but not positionally focused on ‘former CEO’ as a lead criteria,” she said.

“Given the complexities of business in today’s world, boards are looking through a skills-based lens when they’re looking for new directors.”

Credentialism can become a barrier to a larger pool of people, said Jai.

“You need to think seriously about what competencies or credentials or experiences truly are necessary to provide the right mix of skills amongst your board members. Not every board member needs to have all the skills.”

Comply or explain

In looking at ways to boost the number of women on corporate boards, the Ontario Securities Commission is considering a “comply or explain” model of disclosure where companies would be required to comply with recommended practices for gender diversity or explain why they have not complied.

More than one-half (54 per cent) of 357 respondents to a CBDC survey approve of such a requirement, while 38 per cent said no change is needed and just eight per cent prefer quotas.

But the Ontario Teachers’ Pension Plan, responding to the OSC proposal, said the comply-or-explain regime is ineffective in achieving a measurable increase in female directors. Instead, companies should be required to appoint at least three female directors, with sanctions for non-compliance, it said, along with having “a robust and transparent director recruitment process.”

But mandated diversity is too heavy-handed, said Jai, who supports the voluntary comply-or-explain model.

“It forces every organization to think about it, to make a conscious decision because they do have to report on it,” she said. “It opens up an opportunity for dialogue about the issue of diversity which they may have not had on their agenda otherwise.”

The path of greater disclosure is also the preferred path for Dussault.

“If you have to explain what’s your view on diversity, why you’re doing it or not doing it, I think it will lead to a deeper thinking about what you’re doing within the organization,” he said.

“I would be concerned that mandated diversity might lead to just meeting the numbers and not doing the real changes that are required… greater disclosure is the smarter way to approach it.”

Add Comment

  • *
  • *
  • *
  • *