Here’s a riddle. What typically has between 5 and 8 people, rarely more than 15, is vitally important to a company, and is 80% male?
If you answered “the average Canadian board of directors in 2016,” you would unfortunately be right.
Last November, prime minister Justin Trudeau enthusiastically announced his new cabinet, which was balanced with more than 50% women. His explanation of the decision spurred the media’s attention around the world: “Because it’s 2015”! If the government, the most influential decision-making body in the country, can make diversity a priority in 2016, why haven’t all companies yet?
New policies are helping, but with limited impact
According to a Canadian Board Diversity Council report published in November 2015, only 19.5% of board members from the 500 largest companies in Canada (according to Financial Post rankings) are women, compared to 17.2% in 2014.
This small but significant rise is in part due to a new policy introduced by the last Conservative government, requiring all publicly traded companies to “comply or explain” with regards to the number of women on their boards of directors. Despite the extensive literature and clear recommendations, making progress still seems to be slow-going for Canada’s top businenesses. In fact, in 2015, most large companies in question chose to “explain” rather than comply.
Goal setting for gender balance
What goals should we set for large corporations? In 2006, Norway introduced a 40% direct quota for public corporations, which, if not met, can lead to expulsion from the stock market. In Quebec in 2013, the Council on the Status of Women unveiled its voluntary targets: 30% 10 years from now, and 40% in 15 years. This level of gender parity is quite possible, as some large Canadian corporations have already shown, such as Hewitt (50%), La Capitale (46%), and Groupe Jean Coutu (43%), according to a Catalyst report published in 2014.
Startups and SMBs are also in need of board member diversity. Venture capital firms have very few female investment associates in both Canada and the United States. Businesswomen backed by these venture capitalists are also a minority, typically making up only 10 to 20% of portfolios. It’s hard to reach the board of directors when this is the case, both for female entrepreneurs and investors. More women on startup boards is especially important, as they represent the future of our economy.
It is also worth noting that the diversity challenges faced by our boards of directors aren’t limited to women, affecting two other demographics in particular: young people and minorities.
Finding solutions and rallying support
So how do we fix this? Firstly: let’s not lower the bar for the quality of candidates. Companies must continue to hire the best. Appointments must be made purely based on merit and without compromise. We should never have to make the choice between “fully qualified” and “member of a particular demographic group.” We need to instead dig deeper and find more candidates who fulfill both conditions.
The partners, employees, and other stakeholders of these companies are becoming more diverse — their boards should reflect this too. Important business decisions will not truly reflect our society until then.
Why should a young male entrepreneur care about this issue? Because diversity is everyone’s problem. Recently, I followed the evolution of Effet A, a Quebec-based movement led by notable businesswoman Isabelle Hudon. One of the key messages: “Change is only possible if men are key players in the conversation.” So I am listening and ready to help. I want to improve the gender balance in my own startup, and hope to see similar change on a larger scale. I invite others to strive towards this balance.
Broader success will require a combination of personal commitment and institutional support. There are many big economic players in Quebec and Canada that are well-positioned to take the lead on this issue. Banks, investment funds, funds of funds, para-governmental organizations, associations, and of course large corporations. Funds could, for example, set the tone by raising awareness among the companies in their portfolios. So, who will lead the charge in 2016? In the meantime, the business community must keep beating the drum.
[Note: This article was originally published in La Presse.]