The perfect storm (Executive Series)

OSC rule presents shining opportunity for boards amidst growing shareholder activism, global pressure for gender diversity
By Liz Bernier
|Canadian HR Reporter|Last Updated: 03/20/2015

Editor's note: 

Once a month, the Strategic Capability Network (SCNetwork) hosts a special seminar on a topic of interest to HR professionals and business leaders. Canadian HR Reporter covers these events for a special feature titled "Executive Series." The feature includes news coverage from one of our editors, plus commentary from SCNetwork's panel of thought leaders on strategic capability, leadership in action and organization effectiveness.

This web post contains all of these elements: 

Canadian HR Reporter's news coverage

Bridging the gender gap by Trish Maguire

Strategic opportunities By Barbara Kofman

The perfect storm

OSC rule presents shining opportunity for boards amidst growing shareholder activism, global pressure for gender diversity

By Liz Bernier

If you were to look around your company’s boardroom, you would likely find a table full of look-alikes: Educated white males — all with similar backgrounds, social circles and golf club memberships. Chances are good there is nary a woman to be found. 

More than 40 per cent of the companies listed on the Toronto Stock Exchange do not have a single woman on either the board of directors or on the senior management team, according to a recent Ontario Securities Commission (OSC) analysis.

There are even companies in the retail space that do not have a single woman on their board — yet they’re selling primarily to women, said Maureen Jensen, executive director and chief administrative officer at the OSC in Toronto.

“These are real problems,” she said. “We looked around and we saw that 50 per cent of the talent in Canada was not being utilized and not being harnessed… it was just such a wasted opportunity.”

That’s a central reason why the OSC published a rule amendment regarding board diversity in October of last year, which took effect Dec. 31, 2014. 

“We saw a lot of boards that were same-old, same-old — boards that had made a lot of mistakes… Financial business in Canada is a small town and we saw a lot of the same people on multiple boards, so we saw a lot of over-boarding,” said Jensen. 

“We wanted to have a graceful solution for Canada and we’re not comfortable with quotas.”

The OSC rule will require any company listed on the Toronto Stock Exchange to provide disclosure regarding director term limits, policies regarding the representation of women on their boards, their consideration of how they factor in female representation, any targets that they have around it, and the actual number of women on the board and women in executive officer positions, said Jensen. 

Mounting pressure systems

That rule amendment comes in the midst of a perfect storm for gender diversity on boards, said Beverly Behan, New York-based president of Board Advisor. 

It’s important to understand that storm —  the context and environment of the boardroom — in order to fully understand the importance of the OSC’s gender diversity rule, she said. 

Boards of directors — not the C-suite — are really the ones setting the tone at the very top of an organization, said Behan. 

“We hear a lot about tone at the top and how important that is to setting corporate culture. But the real tone at the top starts with the board of directors,” she said. “And you have to think about what kind of tone that you want the board to set. How do you want your executives to feel when they come in and work with the board? I would say number one, inspired, challenged — and in a good way.”

Boards add the most value when they stretch executives’ thinking, give them new insights and offer different perspectives they didn’t have before. 

“I have CFOs and CEOs who say to me, ‘I get so much value from the board because I know when I go to Bay Street and Wall Street, and stand up in front of the analysts, there is nothing that they’re going to throw at me that I didn’t hear at the board meetings.’ That’s tremendous value,” she said. 

And the crucial factor to creating a great board — a board with that “wow” factor — is the composition, said Behan. 

“Board composition is probably the single most important factor in board effectiveness,” she said. “If you don’t have the right board composition, you’re never going to have a great board.”

In essence, the real job of the board nominating committee is to put the best possible governance team around the table — but a number of things are getting in the way, said Behan. 

One obstacle is that once someone is appointed to the board, he will probably be re-nominated pretty routinely until he retires — barring some kind of problem or conflict of interest. 

“The other thing is a lot of boards have relied on their own Rolodexes — people they know, people they hang out with at the Mississauga golf club — in order to source board candidates, as opposed to the best possible governance team that they can find,” she said.

There have long been issues with director recruitment and, on top of that, shareholder activists are becoming very interested in board composition, said Behan. 

Shareholder activism is a trend growing around the world, said Jensen. 

“In Canada, we have a very shareholder-friendly regime, much more so than in the U.S., and we can see that if we don’t have strong, active, smart, engaged and thoughtful boards, we will have a hollowing-out of corporate Canada,” she said. 

There’s also mounting global pressure towards promoting women on boards that began in Norway in 2003, said Behan. Norway passed a law requiring Norwegian boards to be comprised of 40 per cent women. Companies had five years to comply or were delisted from the Norwegian stock exchange. 

“So we’ve seen this tsunami effect of many other countries adopting these quotas. (But) quotas are not popular in North America,” said Behan. “What the OSC put together was a graceful way for Canadian boards to address this tsunami.”

Hope on the horizon

Change may be on the way for Canadian boards, as the OSC begins to collect disclosures from TSX-listed companies, said Jensen. 

“We are starting now to get this disclosure in. Our job now will be to compile what we get and look at it for compliance. We will talk to companies who are not in compliance, but we will also be publishing reports on what we see,” she said, adding the Ontario government will likely be taking a close look at the numbers as well. 

There are two different ways Canadian boards might respond to the new rule, said Behan. 

“Number one is, ‘Hey, let’s try some boilerplate,’” she said. “(But) I don’t think boilerplate is going to get you that far… there’s a second option and it’s to actually capitalize on the opportunity that the OSC policy has given boards.”

The new rule is actually a wonderful opportunity to go and enhance the calibre of the board, she said. 

“We are going to see some recruiting for tokenism — ‘Give me a woman, any woman.’ That is going to be a nightmare because boards are bad at performance management. So that is the worst thing that could happen. But I’m optimistic that some of the best things will happen, which is to really bring some ‘wow-calibre’ directors onto Canadian boards,” said Behan. 

The OSC is itself an example of what can happen when boards embrace diversity, said Jensen. 

“We didn’t just do this as an academic exercise. We have a board that is 38 per cent women, we have a senior management team that is just over 60 per cent women. And what we found was, with a concerted effort to try to get gender diversity in our senior levels, the conversation has changed,” she said. 

“We have fantastic board members of both genders, but the board as a whole works very, very differently. It is a collegial board, but it’s filled with people who are bringing incredible background experience. 

“But just how they work together as a team and how they ask really tough questions, it really shows that if you get the gender balance right and you get true diversity — not just of gender but of thought — at the board level, it can really, really change the culture.”

Bridging the gender gap

By Trish Maguire

At last — the status quo at the most senior level of publicly traded corporations is being officially stirred up.  Effective December 2014, the Ontario Diversity Policy strongly encourages companies to promote more women to the boardroom and executive officer roles. Companies can either disclose or explain. In other words, they must publicly disclose a diversity policy that includes goals and provide a public assessment annually of their progress, or explain why there are no specific goals to bridge the gender gap. 

In a year’s time, I wonder how many more Canadian business leaders will walk the talk and recognize the value of a diverse workforce at every level of their organization. How many more companies will demonstrate that a diverse workforce is a strategic differentiator? 

There are many research reports validating that a diverse workforce improves a corporation’s ability to attract, retain and champion quality candidates with extensive expertise, skills, knowledge and background.

 How much longer will corporate Canada discount studies like the ones published from Catalyst Canada, Credit Suisse and McKinsey & Company that clearly substantiate gender diversity in corporate leadership improves both financial and non-financial results?  

Needless to say, it was no surprise that the Ontario Securities Commission’s research in 2014 confirmed that although women make up for almost one-half of our total workforce, only about 16 per cent of them are board members of Canada’s FP500 companies.  

Clearly, there is more to this gender gap than we realize. What are the systemic barriers within company policies and procedures that work against women being appointed to executive roles? Are there still business leaders who resolutely fail to appreciate the strategic benefit in choosing to leverage women’s innovative capabilities and positive relational abilities? 

Canada’s international ranking of gender diversity on corporate boards slid from sixth position to 11th over the past four years. Women make up only 11 per cent of directors on the S&P/TSX Composite Index, according to a Toronto-Dominion Bank report. 
Even more surprising is that nearly three-quarters of those companies have either no women on their board, or only one. 

The traditional belief that an effective leader needs to be masculine, forceful, confrontational or controlling is truly being superseded. There are plenty of highly talented women taking ownership of their aspirations, who know exactly what they want and where they want to focus their contributions. 

The question is — are they being heard? Aside from being our own champions, perhaps with the support of this legislation we can be far more vocal in defending diverse leadership as a strategic relational influence.

If business leaders are genuinely interested in building a competitive advantage and improving Canada’s economic future it’s going to take both genders to embrace this opportunity and start tapping into the total pool of capable talented people.  

Trish Maguire is a commentator for SCNetwork on leadership in action and founding principal of Synergyx Solutions in Nobleton, Ont., focused on high-potential leadership development coaching. She has held senior leadership roles in HR and OD in education, manufacturing and entrepreneurial firms. She can be reached at

Are we still talking about this?

By  Karen Gorsline

As a young woman in the 1970s, if someone had said the corporate board glass ceiling would still not be broken in the next century, I would have laughed — yet here we are. Why is the door still so often closed?

Women are not interested in these roles: Really? The women on this panel are living proof this is simply not true. We live in a world where women run countries, go into combat and hold the most senior executive positions. Of course, not all women are interested in being on a board, but not all men are either. When Beverly Behan reached out to her network to see who might be interested in  a director role, she had no difficulty finding senior women.

There is a scarcity of qualified candidates: The women who indicated interest to Behan held very senior roles and had proven track records. Do corporations and recruiters really try to reach outside their networks to find candidates other than the familiar list? Are women aware of opportunities? Boards are being challenged to put more effort and creativity into making themselves more representative by considering women. 

The status quo should be maintained: Even a casual review of boards in Canada will show it is a pretty small club. Board members know each other from other business dealings, social interactions and  sitting together on other boards. Although tough business questions may be raised and the company’s executive may be held accountable, conformity and status quo remain the operating model. We live in a very different world, far more diverse than 40 years ago, and effective boards must have exposure to diverse experience and thinking  by considering more women.

Karen Gorsline is SCNetwork’s lead commentator on strategic capability and leads HR Initiatives, a consulting practice focused on facilitation and tailored HR initiatives. Toronto-based, she has taught HR planning, held senior roles in strategy and policy, managed a large decentralized HR function and directed a small business. She can be reached at

Strategic opportunities

By Barbara Kofman

If the key aim of a board is to steward an organization on behalf of its stakeholders, then it’s common sense to reflect the makeup of this community. The creativity, oversight and purpose-driven approach described by Margie Parikh, chair of Mountain Equipment Co-op’s diverse, “elected” board, is a great example of this. Taking the best practices of HR, such as a skills gap analysis in sync with the co-op’s strategic plan, this board ensures its composition is right and all members are there to add value. The result? Productive decision-making and record profits.

In Canada, it was not until the 80s and the appearance of employment equity programs that there was a big push for companies to open things up for women in leadership roles and beyond. While slow progress was made in breaking through the systematic barriers that existed at that time, the idea of hiring women into key leadership roles gradually became a more common occurrence.  

But the hurdles that barred woman from being appointed to boards continued to be overlooked for decades. Consequently, ingrained practices such as relying on the small group of members in the old boys club remained unchecked — until now. There is plenty of evidence that suggests this omission proved to be costly. One wonders what the fate of Nortel and other doomed Canadian companies might have been had they broadened their boards’ gene pools to include a more women.

While the intention of this session was to throw a spotlight on the critical nature of revitalizing board recruitment practices, it also reminded us of the continued need for a review of all employee recruitment. As was suggested by Deborah Rosati, before HR leaps to the rescue offering all of its tools at the disposal of its board, HR leaders must first look within. 

In the words of the Canadian Board Diversity Council, “Imagine if Canada’s boardrooms look like Canada.” The council’s vision to have Canadian companies become globally competitive by appointing the most qualified directors to boards from a talent pool that reflects Canada’s diversity must also become the norm at organizations they oversee if they are to truly reach their potential. 

Barbara Kofman is SCNetwork’s lead commentator on organizational effectiveness and founding principal of CareerTrails, a strategic coaching and HR solutions organization committed to providing clients with the personalized processes and information they need, to achieve the individual and organizational outcomes they are seeking.  She has held senior roles in resourcing, strategy and outplacement, and taught at the university and college level. Barbara can be reached at

Add Comment

  • *
  • *
  • *
  • *