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A Strategic Approach to Filling Board Positions Is Critical — Regardless of Your Gender

 

Written by:
Debbie Stojanovic,
CEO, Nealon Consulting
& Deborah Rosati, Founder & CEO, Women Get On Board

Diversity, and gender diversity in particular, is a top agenda item in boardrooms today — as it should be. It’s a priority not only because there are now legislative and regulatory changes that require it, but also because it’s just good business practice.

Research shows that the right board composition can enhance decision-making processes and augment an organization’s performance and market reputation. 1  Can an improperly composed board pose a reputational risk for your organization? You bet.

Today, we can’t open a newspaper, attend a meeting/event or have a general conversation without touching on some aspect of diversity. And that’s a good thing. From a board perspective, the conversation is shifting from why we need more women at the table to how we can accelerate progress. In light of this, it will be interesting to see what transpires over the next few months as many public company AGMs take place. The board and management can and should expect questions from shareholders and the public-at-large about their views on diversity and the company’s plan to ensure its people are reflective of the communities in which we live. 2

Case in point this year’s TD Bank AGM. Throughout the meeting, there were several queries about diversity. In fact, a number of shareholders wanted to know two things: (i) what TD has and is doing to increase the number of women on its board — currently at 38% and (ii) what the is bank doing about women in leadership, which is the root cause of this issue. 3  “It’s a major priority,” said Bharat Masrani — the bank’s CEO.

An example where the pace of change is very slow is Constellation Software. A year ago, a shareholder resolution calling for diversity on its all-male board garnered 42% of votes, this year’s vote moved to 49% support—but in the end—it still failed. Despite the outcome, this is another example of the shifting views in corporate Canada about the importance and value of diversity on boards of directors and in executive suites.

The corporate view of recruiting more women on boards is changing and it helps to have input and support from organizations, such as ISS and Glass Lewis. By releasing updates to their voting guidelines for Canada and the US, these organizations are helping to move the dial forward. In fact, according to the guidelines, they will recommend a “withhold” vote for the chair of the nominating committee (or chair of the board, in absence of a nominating committee) where a company has not disclosed a formal written gender diversity policy and/or where there are no women directors on the board. Similarly, others are having their say too—the New York State Retirement Fund, for instance, announced that it will oppose re-election of directors at hundreds of public companies that do not have any women on their boards. At home on our own soil, the Government of Canada brought transparency and diversity to boardrooms with the recent assent of Bill C-25 — legislation that advances gender equality and diversity in Canada’s corporations. It’s unacceptable that women make up 48% of the workforce, but hold an estimated 14% of all Canadian board seats and approximately 22% of the board seats in Financial Post 500 companies.

The train has clearly left the station and companies that have done the work and identified gaps should be recognized as leaders. That said, board recruitment is not always easy — it takes time to find the right person for the job. That is why companies need to be strategic in their approach — which includes identifying the skills required before the board search begins. More information about purposeful board composition can be found in the Canadian Gender and Good Governance Alliance’s Directors’ Playbook.

There are a number of organizations that are dedicated and focused on helping companies find experienced, knowledgeable and qualified women corporate directors to join boards and fill gaps in skills.

Women Get On Board — as an example — is a member-based company that connects, promotes and empowers women to corporate boards. Finding the right organization to assist you with your board search is critical as they should have extensive experience matching qualified women corporate directors with the right board. It’s not just about finding a female candidate to fill a board position, it’s about finding the right woman with the right experience, knowledge, skill set and personality to work with the company’s existing board. It’s about setting both the company and the selected board member up for long-term success.


Debbie Stojanovic is the CEO of Nealon Consulting and sits on the Advisory Board of Women Get On Board. She is a leading marketing, communications and business development executive who has extensive board experience.

Deborah Rosati is a leading and serving corporate director and, founder and CEO of Women Get On Board.

Thank you to Paul Gryglewicz, Senior Partner of Global Governance Advisors who also contributed to this article.

 

Why a Diverse Board Makes Good Business Sense

There is a lot of focus currently on the topic of diversity on boards. The underlying premise for diverse boards is no longer about good corporate citizenship but rather about contributing value to a business, and that makes good business sense.

Top 5 Business Reasons for Diverse Boards

  1. Improve corporate financial performance. Studies have shown that companies with more diversity on their board have had higher financial performance in three important measures: Return on Equity, Return on Sales, and Return on Invested Capital.
  2. Enhance decision-making quality. Diversity of thought comes from, race, gender and ethnicity and extends to age, culture, personality, skills/expertise, educational background and life experiences. More diversity on boards helps avoid ‘group-think’ and increases independence, which can enhance the quality of decision making on the board.
  3. Broaden networks to tap into for board renewal. Board members should ask themselves:
    ~Does the composition of the board represent the employee base, the customer base or business partners/competitors?
    ~What skills or perspectives do we need to broaden that is not currently on the board?
    ~What is our diversity mandate and what steps have we taken to increase board diversity? (For more information on diversity mandates, please read my related post: Are you advancing your Board Diversity mandate?)
  4. Foster innovation and creative thinking. Functionally diverse teams are more innovative, set clearer strategies, are more likely to react to competition, and are quicker to adapt to organizational changes.
  5. Enhance board effectiveness. Boards need to be accountable for their own actions and this begins with evaluating their own performance through annual board assessments.

If you are building a diverse board because it makes good business sense and are seeking qualified diverse board candidates, please email connect@womengetonboard.ca.

Are You Advancing Your Board Diversity Mandate?

It still surprises me that in the 21st century Canada’s boardrooms are not more diverse. In fact, I often get asked to consider a board opportunity because the company is looking to add diversity to their board. As of January 2015, the Ontario Securities Commission’s (OSC) implemented disclosure rules for TSX-listed companies to “comply or explain” in regards to their board diversity. It is hopeful that this will lead to positive changes ahead in how corporate boards recruit new board members.

Be an Agent of Change
As a corporate director, I believe that the OSC “comply or explain” disclosure rules present an opportunity to build stronger boards through change. There is research to support that more women on boards brings better financial performance including higher return on sales and better stock growth. As well, non-financial performance, like bringing diverse viewpoints, skills and experience, can improve overall decision making, enhance a company’s capacity to build a pipeline of potential future women executives and encourage innovation.

So, how can you be an Agent of Change in making board diversity a strategic opportunity for board-building? The first step is to ask yourself these 10 questions to help advance your Board diversity mandate.

10 Board Diversity Mandate Questions

  1. Do you perform an annual board assessment of your current board composition, and do you have diversity of thought, skills, experience, gender, age, industry and geographic?
  2. Have you defined what board diversity means to your company in terms of the commitment and needs?
  3. Do you have set term limits and/or age limits for your current board?
  4. Do you have a board diversity policy that sets out targets for women representation on your board?
  5. Do you go outside your current network when looking for new board talent?
  6. Do you have an internal diversity champion?
  7. Do you perform an annual board performance evaluation for board renewal?
  8. Do you keep an evergreen list of diverse board candidates for board renewal?
  9. Do you have a board succession planning process?
  10. Do you ensure there are diverse board candidates in the board search process? (Do you know about Women Get On Board and our directory that we are building of qualified women corporate directors?)

Diverse boards enhance a company’s financial and non-financial performance. So, let’s all step up today and collectively be Agents of Change in advancing board diversity in Canada. Together, we can make a difference in advancing diversity as a strategic opportunity for board-building.

Agents of Change

On February 11th, I participated as a panellist for the Strategic Capability Network’s ‘New OSC Board Diversity Policy: A Strategic Opportunity for Board-Building’ event (bit.ly/scnetworkfeb11event). My topic: How can we be agents of change in making diversity a strategic opportunity? With the new OSC rules surrounding board diversity there will be many changes ahead in how corporate boards recruit their new board members. As a corporate director, I believe that this is an opportunity to build stronger boards.

Leadership Development

A crucial step in making board diversity a strategic opportunity is for HR executives to identify leaders and engage in leadership development. This can be done through supporting executives to complete governance educational programs such as the ICD Director’s Education Program or the Directors College. Board development programs help executives learn how to be more effective in working with their boards. The opportunity for executives to serve on a board helps them round out their skills by having a Board frame of reference, which also helps them in their presentations to the Board.

HR executives should take the time to get to know their current Board members —if they serve on other Boards, perhaps there may be potential board opportunities for members of their executive team.

Should HR executives play a role in helping their Governance Committee decide on board composition issues?

HR executives can help the Board develop their Board skills matrix. They can work with the Chair of the Governance Committee or the Corporate Secretary to help recruit potential Board members from inside and outside of the company. They can keep an evergreen list of potential Board members, lead the conversation on age diversity and help put age limit policy in place.

I am an Agent of Change.

As a sitting Corporate Director, I have been approached quite often by other women asking me how I got on Boards. So over time, I would speak about it on panels, or have follow-up telephone calls, coffee, or lunch meetings. Then, last May I engaged a digital branding firm to work with me on my online branding, and I started developing my thought leadership around women on boards and governance. Shortly after that, my call to action came and I joined forces with my co-founder, Susan Varty, to launch Women Get On Board—a member based forum to connect and promote women to corporate boards through roundtable events and promoting on-line their expertise. Last week we had our first roundtable event, Be Visible, speak up and Stand out, with guest speaker Beverly Topping. If you are interested in learning more about Women Get On Board, you can go to, womengetonboard.ca or email us at connect (at) womengetonboard (dot) ca.

So let’s all step up today and collectively be Agents of Change. We can make a difference in making diversity a strategic opportunity for board-building.