How Boards Can Change: Use Diversity as a Catalyst

• About 39% have no women.
• Only 11% have three or more females.
• Four out of five companies have no term or age limits for directors.
• And just 26% of open board seats last year were filled by women.

Despite years of advocacy, persuasion and occasional browbeating, Canada’s record on gender diversity and boards remains a slow crawl.

The diversity group Catalyst, at its annual Canada Honours Conference in Toronto this week, tried to tackle the problem. Here are some of the highlights:

Persistence Matters

Justin Trudeau made headlines around the world for his appointment of a gender-balanced cabinet in 2015. The real work actually began in 2012, when he was in third place and recruiting candidates. Katie Telford, the Prime Minister’s chief of staff, said it was a slog, not least because women tend to turn down offers a lot more than men do. She said Chrystia Freeland, now foreign minister, said “no” about a dozen times before throwing her hat in the ring. “Diversity doesn’t happen by accident,” Telford noted. “These things have to be intentional. There has to be a plan around it.” A lesson for corporate boards: If at first you don’t succeed …

Process Matters

It’s not just board selection; women are screened for jobs, loans and investment capital with questions designed by and for men. We shouldn’t be surprised by the results. “Women get asked preventive questions. Men get asked promotional questions,” argued Annette Verschuren, the business executive who’s on the board of four major companies, and three registered charities. Telford pointed to the word “experience” as a barrier in many selection processes, arguing it can be designed by the recruiter with a prototypical director in mind. “Too often,” Telford argued, “experience is a proxy for something else.”

Economics Matter

Too many business leaders feel the need to add women to their boards (and executive teams) for social or compliance reasons, rather than economic gain. In a knowledge-driven economy that thrives on teams and diverse thinking, gender balance is increasingly a smart business investment, and needs to be portrayed as such. “New ideas require new ways of thinking. It’s diversity-enabled innovation”, said Rahul Bhardwaj, president and CEO of the Institute of Corporate Directors.

Genders Matter

Gender diversity on boards is more than a women’s issue. Which is why men are being encouraged to do much more. They can start by finding more ways to help develop women for key operating roles, as those are the best springboards to board seats. Sponsorship is also key. Interestingly, Catalyst finds men who were sponsored early in their careers by women tend to promote diversity on their own teams later. And yet, despite many campaigns to increase sponsorship, Verschuren sees a key barrier, “Men are reluctant to sponsor women. It’s a trust issue. Business is built upon relationships, upon trust.”

Accountability Matters

In government, Telford has noticed how much change is driven just by the Prime Minister’s questions. Trudeau regularly chairs “stocktake” meetings with the federal bureaucracy to ask about progress in diversity. The county’s top civil servants are now showing up with plans. The same effect can work with boards, through ‘comply or explain’ rules. Trouble is, the social and economic cost of poor performance is not yet seen as significant in Canada. To help bend that, Trudeau is looking to speak out more — positively and critically — about Canadian companies and their progress (or lack thereof). The Liberals have also introduced legislation to require federally incorporated companies to explain their diversity policy to shareholders.

Inclusion Matters

Whether it’s in the board room or the lunch room, not enough corporate leaders talk openly about inclusion, and how to get a wide range of people leaning into conversations. “It’s not just about diversity,” argued Candice Morgan, Pinterest’s head of diversity and inclusion. She noted a New York consulting firm that achieved gender balance in its partnership ranks only to discover, in a survey, that half its female partners were ready to leave. They felt excluded from key decisions, including how the office operated and how the partners shared workloads. She said more boards and management teams need to talk about their differences, and what each person needs to contribute. “Talking about our differences is less comfortable than talking about what we have in common,” she said.

Action Matters

Ottawa and the provinces may be running out of patience. They’ve studied quota-based approaches to boards, most notably in Norway. The federal government would prefer to use moral suasion, in part because its legal powers are limited. It also knows smaller companies, largely in the resources sector, could move to the U.S. or elsewhere if rules are seen as too restrictive. But there are softer options, such as pushing boards to institute term and age limits. “We have left the door open to doing more,” Telford said.

John Stackhouse is a nationally bestselling author and one of Canada's leading voices on innovation and economic disruption. He is senior vice-president in the office of the CEO at Royal Bank of Canada, leading the organization's research and thought leadership on economic, technological and social change. Previously, he was editor-in-chief of the Globe and Mail and editor of Report on Business. He is a senior fellow at the C.D. Howe Institute and the Munk School of Global Affairs and Public Policy. His latest book is Planet Canada: How Our Expats Are Shaping the Future, which explores the untapped resource of the millions of Canadians who don't live here but exert their influence from afar.

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