External shock needed to increase women in corporate leadership, says RIA Conference panelist
Latest survey shows investors want more women in corporate leadership roles, but progress remains slow
There is a growing body of research showing the value of having women in corporate leadership positions. But Canadian companies have remained slow to change.
“We have been disappointed in the pace of change. It has been slow,” said Sandra Heldman of the Ontario Securities Commission (OSC) speaking during a plenary discussion on women in leadership and gender pay equity sponsored by OceanRock Investments at the 2017 RIA Conference in Vancouver. “Over 300 companies [in Canada] don’t have women on boards.”
In 2014, securities regulators from 10 provinces including Ontario and Quebec implemented amendments of disclosure requirements that required non-venture public companies to disclose its status and activities relating to women on boards and in executive officer positions. If companies don’t have any policies or targets around the representation of women in corporate leadership, it is required to explain why. Two years after the disclosure amendments, the pace of change has been limited. A report released in September 2016 found that only 12% of board seats of Canadian companies were occupied by women, up 1% from a year earlier. While two-thirds of issuers consider the representation of women in their board decision-making process, only 55% have at least one woman on their board, and only 21% had adopted policies relating to the identification and nomination of women directors. Less than 10% have a target from women representation on their board.
This slow progress is despite the fact that the vast majority of Canadian investors believe that women should be better represented on corporate boards and executive leadership. According to RIA Canada’s latest survey sponsored by OceanRock Investments Inc., 82% of investors surveyed agree that there should be more women in corporate leadership roles in Canada. The survey released June 1 suggests that companies with significant underrepresentation of women in leadership roles may be exposed to reputational risks. Nearly three-quarters of those surveyed disapproved of companies with zero or very few women on their boards.
While company leaders have cited many reasons for the slow pace of change, Beatrix Dart, Executive Director for the Initiative for Women in Business, said the lack of qualified women remains the biggest myth in the corporate world.
“It’s a myth. Full myth,” she said, referencing the 4,000 members of the Institute of Corporate Directors who are women. “You just haven’t looked hard enough if that’s your argument.”
One of the main challenges to increasing women in corporate leadership remains a mindset issue, said Ms. Dart. While there are CEOs who are committed to improving the number of women on boards and leadership – and those who want to do something, but don’t know how – there are still a significant proportion of CEOs that “don’t care” because it is not a business priority.
Ms. Dart noted at the conference, “If you really want to change society, I think you actually need some external shocks – like change of legislation. It will be a shock to society that changes mindsets.”
She cited the experience in Scandinavia where governments changed the rules around parental leave such that both parents were required to take an equal amount of leave in order for them to be eligible for government benefits. As soon as employers realized both parents would be taking parental leave, the hiring bias against women in those countries went away.
While many countries have implemented different methods of inducing progress, Ms. Heldman suggested that the use of targets in Canada was the most effective way to encourage companies to boost the number and proportion of women in leadership roles. She noted the importance of looking at the issue of from the perspective of tapping the necessary diversity of skillsets needed on corporate boards.
“You want diversity around the board table,” she said. “As soon as people start to embrace having diversity at the table in skillsets, I think then they can open up to the population and all the talent that is out there in 50% of the population.”
The panelists also noted the need for more basic policy changes at the company level. The lack of director term limits and board renewal policies were cited as significant barriers to advancing the number of women in corporate leadership.
“In Canada, board renewal is key,” said Aaron Bennett, Senior Research Analyst and Partner at Jarislowsky Fraser Limited. “The more we have term limits, the faster we have change.”