A Women of Influence panel examining women on boards: The Catalyst Report and opportunities in the new economy.
By: Carol Park | Photography by: Erin Riley
Women have come a long way, but a gender gap still exists in the corporate world. An even greater gender divide is evident when it comes to women on boards.
In early March, as part of the Deloitte Women of Influence Luncheon Series, an Advancement Summit: “Women on Boards” took place at the Fairmount Royal York in Toronto.
At the luncheon, Deborah Gillis, Vice President of Catalyst North America, unveiled the findings of the Catalyst Census: Financial Post 500 Women Board Directors report.
The report found that there was no significant change from the rate of growth of women on boards from 2007 to 2009. The data stated that both in 2007 and 2009 less than one-fifth of companies had three or more women on their boards while 40 percent had no women directors.
Although the percentage of companies with three or more women directors increased to 17.6 percent in 2009 from 14.1 percent in 2007 and the percentage of companies with zero women directors dropped from 42.2 percent in 2007 to 41.9 percent in 2009, the change is surprisingly slow at a time when the World Economic Forum is seeing a shift in an increasingly more female workforce.
The Catalyst report also reveals that crown companies continue to have the highest representation of women at 29.1 percent in 2009 in comparison to the public sector, which appointed the fewest women directors at 10.3 percent in 2009.
At the same time, the largest rates of growth came from both private companies and cooperatives at 4 percent and 4.1 percent (respectively) in between 2007 and 2009.
A greater issue arises when considering the disproportionate representation of women on boards versus the women within the workforce of a company. Despite a substantial number of female employees, companies continue to have few women in top board or CEO positions .This is particularly noticeable in public companies where, at best, women’s share of board leadership positions in public companies is still under 10 percent.
The Catalyst Census is equally alarming as the statistics of women in senior positions in business. The World Economic Forum’s Corporate Gender Gap Report 2010 unfortunately reflected similar patterns of the Catalyst Census. With a broader scope of 20 different countries for the World Economic Forum’s report, it found that women still struggle to break into senior level management or board positions.
In the case of the United Kingdom, over 50 percent of women are university graduates, but only one in every ten Financial Times Stock Exchange company board directors is a woman. A significant number are trapped in entry- or mid-level positions.
In contrast, Catalyst also found that on average, Fortune 500 companies with a higher representation of female directors performed better financially in comparison to those with the lowest representation.
The companies with the highest female representation showed a return on equity at 53 percent higher, return on sales 42 percent higher and a return on invested capital 66 percent higher. With the belief that this is more than just a coincidence, this data presents a compelling argument that female board directors do shore up strong financial performance. Despite this, women still remain under-represented on corporate boards in Canada.
Recognizing both the positive influence of women on corporate boards and the dire under-representation of women on boards in comparison to the female workforce, Women on Boards brought Gillis to moderate the panel that included Beth Horowitz, Independent Director, HSBC Bank Canada; Carol Stephenson, Dean, Richard Ivey School of Business; and Beverly Topping, President and CEO, Institute of Corporate Directors to discuss the Catalyst findings and to speak of how women in senior level positions can align themselves for these coveted seats on boards.
The World Economic Forum’s report cited women mentioning a “lack of role models” when it came to progressing in business, but by bringing together this esteemed panel for the large luncheon audience to dish out advice and personal experience, Women of Influence is taking it upon itself to eliminate such an excuse.
“It’s a combination of just an unbelievably talented group of individuals that are passionate and want to make a difference in their organizations and are actively doing
so on a North American-wide basis. We are dedicated to changing the statistics, because we know that with the diversity of boards, it is simply smart business and we will do whatever we can to facilitate that further,” says Lisa Heidman, a member of Women of Influence’s board of directors.
Says Stephenson: “First of all, I am on several boards and as a senior leader I think it’s important that we go out and mentor, inspiring women who also want to go on boards. The second thing I think is important is to make sure this issue is well understood. I’ve been working at it for probably fifteen years, on how we get more women, both at senior and executive levels of business, on boards, and I think the more that we understand it, the more that we talk about it. The more it becomes a public issue, the more likely you are to see change.”
Some may also question if women are ambitious enough to seek out these board positions, but Stephenson believes, “It’s really more a question of exposure and leadership and a system that allows you to take on opportunities. I think sometimes there are preconceived ideas that need to be changed, but I don’t think it’s a lack of ambition on the part of women.”
When it comes to challenges of changing the board mentality, Heidman states, “I think there is still much of the same old, same old in terms of the ways Board members get appointed. There is tremendous opportunity for change but the model has been entrenched for many years in both the U.S. and Canada, and it takes time to make those changes. When companies, their CEO’s and boards understand and begin to realize that it’s in their business’ best interest from a financial, governance and risk management standpoint to do so, they soon will. And that’s the opportunity, as there is untold evidence that diverse views, functional back grounds, experience and perspectives get to the best decisions at both the board and executive tables.”
Pivotal to these changes are people and organizations such as Women of Influence and Catalyst to get people to start talking, discussing and clearly articulating to corporations the positive impact for businesses in having women sit on boards.
Despite the number of challenges that seem to exist for women, there are windows of opportunity to seek and obtain a spot on the board. “There are more boards now with mandatory retirement ages and by in large it’s the men who seem to be retiring, so I think those will create openings for potentially more women,” states Stephenson.
The recent economic downturn has left many wondering if the U.S. financial crisis would have been so bad if women were in the top positions leading the companies. When posed with the question if the recent recession was a blessing in disguise to provide opportunities that support women and diversity, Heidman responds, “With pain comes change and I always welcome that. I think it is a fantastic opportunity to evaluate if there is a better way to do business.”
“The recession has definitely done a shake-up. Those people there that thought they knew what they were doing, learned that they didn’t. There’s a marketing opportunity for women to say, or for anyone new to a board, to say, ‘I wasn’t there during the recession. I wasn’t part of this failed experience with this company. I can bring some new insight.” states Catherine Jackson, Former Manager, Corporate Governance and Proxy Voting for the Ontario Teachers’ Pension.
For those looking to take key steps in seeking out these board positions, Beverly Topping suggests, “You really have to work at getting to know the people who are going to make the decisions on who goes on the board. The really sad thing is most boards won’t bring somebody on who is new.”
Topping has had the fortune to get on boards where she may not have been particularly well-known, but found those boards to be a little ahead of their time and looking for a specific skill set.
“Women need to know who they are, what skills they bring to the table and they need to focus on that. Everybody has something that’s special but you need to focus on what that is and need to exhibit it,” she adds.
When on a board Topping places importance on, “Having the courage to speak up and be objective. Being a director you have to have courage, there’s no question about that, and that’s whether you’re a man or a woman.”
Beth Horowitz, also a former President and CEO of AMEX Bank of Canada, and former President and General Manager of AMEX Inc., shared her experience in search of a board seat.
“Due to my involvement with Catalyst, I’d say there was not a lot that surprised me,” she says. “I knew the statistics. I knew that it wasn’t going to be a slam dunk, even though I was told constantly that I had all the qualifications required. When I did begin my search, I realized that finding a corporate board seat was not going to be that difficult, but finding the right fit was going to be.”
There was an importance on meeting criteria that was important to Horowitz when selecting her first board seat, as she was advised that this would set the tone for what followed.
“The opportunities that were coming to me, however, were not meeting those criteria. The right fit wasn’t happening that quickly,” she says. While on her search, Horowitz took the Institute of Corporate Director’s course.
“Even though I sat for five years in a bank board room, I realized that as I was looking at board opportunities and as I was going through the course, there were a whole bunch of circumstances and situations that my board experience had not adequately prepared me for. So as you go through a search, you also have to think of the gaps you have to fill in your own background.”
Some countries, such as Finland and Norway, have more women in top positions due to legislation that makes it mandatory for public companies to have 40 percent of their boards be comprised of women. A general survey of the room at the luncheon showed opposition for such compulsory legislation in Canada. Topping agrees.
“I don’t believe in legislation,” she says. “I think we have to do this ourselves and there are steps we can take in presenting the business case for having diversity on a board.”
Despite an uphill battle for women gaining representation on board level positions, there still was a cautious optimism amongst the group that gathered in Toronto, when analyzing changing trends and windows of opportunity.
The challenges that face women do not restrict what they can do. As leaders come forward to mentor another group of professionals and open up dialogue on the issue, it is only a matter of time before changes occur.