Boardrooms Ignore Gender Diversity at their Peril

Globe and Mail, Friday August 6, 2010

Written by Chris Bart
Principal and lead professor of the Directors College, McMaster University, Hamilton.

Why aren’t more women on Canadian boards?

According to the 2009 Catalyst Census, women hold only 10 per cent of the seats on the boards of all Canadian public companies and only 14 per cent of the directorships in our 500 largest organizations. The most recent annual Report on Business Board Games survey of corporate governance also found, incredibly, that 41 per cent of companies in the S&P/TSX composite index have no women on their boards at all. When the rate of women’s progress on scoring board appointments is perceptually slower than global warming, you really have to wonder why.

Barbara Stymiest, chief operating officer of Royal Bank of Canada, once told a reporter that one reason women are markedly absent from the highest reaches of Canadian business is self-selection. Women are too often inclined to avoid tree houses where there are signs saying, “No girls allowed.”

Ms. Stymiest had a point, but there are many other reasons women are under-represented in the corner offices and boardrooms of Canada, starting with a host of worn stereotypes about women’s attitudes and skills compared with those of men (women are nurturers, men are tough deciders; women have to balance careers and child rearing, something that apparently eludes men; and so on).

Statistically, what it boils down to is that women have generally found it torturous to make headway in corporate management. In the two decades to 2006, the percentage of women in senior positions rose only slightly, to 26 per cent from 21 per cent. As of 2009, women led only 19 of Canada’s 500 largest organizations – and seven of those were public sector entities. As we all know, one of the surest routes to a board nomination is to occupy a CEO’s chair.

But dwelling on why women aren’t in positions of influence, or why it’s taking them so long to crack all these glass ceilings, misses a more crucial argument. The under-representation of women in Canadian boardrooms amounts to a vast waste of talent that will increasingly undermine the ability of companies to service their markets and enjoy sustainable profitability.

Consider this: Women appear to be gradually taking control of the economy. As of June, women accounted for nearly 48 per cent of Canada’s employed labour force and very likely controlled more than half of household spending (in the United States, recent figures indicate women control about 70 per cent of household spending). Women are also fast outstripping men in academic achievement (witness their increasingly higher enrolment rates in postsecondary education compared with men). And there’s plenty of research to suggest that we don’t lack for boardroom-ready female candidates.

The number of women enrolled in Canada’s business schools in recent years has ranged from 25 to 50 per cent of the total. (Our experience at the Directors College is that 22 per cent of our graduates have been women.) In the 21st century, a woman’s place should be in the corner office.

So, what is to be done? We could let nature take its course and wait for the inevitable tide of skilled, educated women to demand precedence and presence in the boardroom. We could try to legislate change, say, by adopting quotas (as has been done in Norway), but that would probably provoke outrage or at least intense resistance. And just how do you legislate merit?

Women not currently on boards must become much more vocal in discounting stereotypes and accelerate their efforts to make themselves board-ready. And the women who hold directors’ seats need to ensure the boardroom door hasn’t been slammed shut and bolted behind them once the “board diversity” box has been ticked.

Women need to more aggressively adopt the philosophy of doing whatever it takes to try to influence companies – through individual shareholdings, or showing up en masse at general meetings, or by pressuring institutional shareholders such as pension plans – to see not only the justice of their cause, but also the economic virtue of having more women in the boardroom.

Nor can men escape responsibility for promoting change, especially when the case for more female directors is so powerful. Canada’s leading corporations also need to publicly state their commitment to having more gender-balanced boards. It’s obvious that smarter, more profitable companies will result.

It’s also a necessity. How can we ignore a huge talent pool and expect to succeed in our global economy? It comes down to having the best and the brightest – of both genders – guiding companies that are really in tune with what’s happening in the market and the broader economy. In 2010, that means far more than 14 per cent of Canadian directors should be women.

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