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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.