The Canadian Banks Have Got It Right

Global leaders through financial uncertainty. Innovative industry leaders of diversity initiatives. Why promoting and supporting senior executive women is smart financial business.

By: Lisa Heidman, LL.B.

In the midst of the worst financial crisis since the Depression, the World Economic Forum rankedCanadaas “the soundest banking system in the world”. How our Canadian banks not only survived but thrived within and through the recession is both a testament to strategic leadership and our distinctly Canadian business culture. Certainly our Canadian conservative approach to risk management, well developed lending standards, a coordinated regulatory system and a vast and stable domestic retail base were also assets.

Colleen Johnston, Group Head Finance and CFO, TD Bank Group attributes the Canadian banks ability to effectively navigate and lead their way through the financial crisis to “strong balance sheets, good capital and better business models.” In the case of TD Bank’s own success, Ed Clark, Group President and CEO, TD Bank Group, heaps praise onJohnston’s visionary leadership, specifically noting her financial savvy and deep expertise in risk management “in helping the bank not only successfully navigate the recent financial turmoil, but to grow at a time when many businesses were failing”.

Colleen Johnston is a glowing example of Canadian banks “getting it right”. A financial and strategic business right hand to Ed Clark, who along with Teri Currie, Group Head Marketing, Corporate & People Strategies, is one of two Women of Influence on TD’s Senior Executive Team, Johnston has been credited for helping TD Bank avoid pitfalls like the subprime mortgage lending in the US, for facilitating TD’s aggressive expansion into the US retail banking market and contributing to its credible branding with investors as “the first truly North American bank” which has also helped TD increase its buying power.

Clearly having Johnstonon TD’s Executive team is smart financial business for the company. As head of TD Bank’s 1,000 person strong global finance team,Johnston’s significant business and financial contributions are evidenced by TD’s consistent financial results, most recently including TD’s impressive 2011 first quarter.

Named top CFO by Canadian Business magazine last year and recognized as one of the 25 Most Powerful Women in Banking inNorth America, Colleen also serves as one of the key members of TD’s Diversity Leadership Council and Chairs TD’s Women in Leadership Committee. Ed Clark calls Johnston“a visionary leader who is instrumental in TD’s overall success,” noting that Colleen’s business and financial savvy is matched by her persistence and balanced approach, and marked by her passionate commitment to make a difference on the issue of diversity and to significantly expand leadership opportunities for all women at the bank.

An advocate for Senior Executive Women and their place at both the Board and Senior Executive table,Colleen joined TD in 2004, when the Executive ranks of Vice Presidents and higher was sitting at just about 20 percent. Since then, representation of women at the Vice President, Senior Vice President and Executive Vice President levels has grown more than 50%, currently making up approximately a third of TD’s senior leadership group. Further, underJohnston’s stewardship TD’s Women in Leadership Network, a group that facilitates critical networking, mentoring and career planning opportunities for women has now evolved to over 2,500 women strong with 14 chapters across the country.

Teri Currie, Group Head Marketing, Corporate & People Strategies, is another recognized Woman of Influence and exceptional member of TD’s Senior Executive Team. Currie is responsible for the bank’s talent management strategies, government and regulatory affairs, as well as the protection and enhancement of TD’s brand and reputation. An active member of TD’s Diversity Leadership Council, Teri plays a critical role in determining the organization’s strategic direction, in developing and achieving TD’s performance targets and significantly contributes to effectively implementing TD’s numerous diversity initiatives across the organization. These include mentoring programs, employee resource groups, recruitment and outreach initiatives as well as supplier diversity programs. TD, like each of the Canadian banks that are driving these diversity initiatives, understands that these programs provide companies an opportunity to reach the broadest talent pool and build workforces reflective of the communities in which they operate and the customer base to which they serve.

To be clear, the Canadian banks aren’t just implementing diversity initiatives, they are our visionary corporate leaders driving them, North American wide. To give you a sense of just how far ahead as leaders of industry the Canadian banks are on diversity issues, let me provide some relevant context. As the Executive Search Partner that leads my firm’s Diversity and Board practices, I am often asked by clients and senior leaders about diversity as a strategic business issue, about best in class diversity policies, practices and programs and at the Board level, about the potential business implications of diversity as a component of proper Board governance and effectiveness. Whereas some of the banks have been leading these diversity programs for the last 20+ years, with all of the Canadian banks increasingly dedicated to these initiatives in the last 5+ years, I am regularly confronted with a hunger for guidance on how to even begin facilitating and integrating these programs into an organization.

Further, when I raise the issue of diversity for discussion with corporate clients, I more often than one would expect, still get the occasional blank face or push back as to the benefits or value of diversity on a Company’s business or Board’s governance strategies at all. Compare this state of Canadian corporate affairs with our Canadian banks leading these discussions themselves, actively advocating for more corporate champions of diversity to join the cause, and publicly announcing diversity, as not only core to their mission and values but to the very implementation of their business strategy. Compare this with our Canadian banks, which, as a core component of their own procurement practices, ask and require their own third party suppliers to demonstrate their own diversity policies and programs, as a prerequisite of doing business with the banks… this is innovative corporate leadership on diversity, and leadership all Canadians can be incredibly proud of.

In 2005,Clarkformed TD’s Diversity Leadership Council making diversity a clear strategic business imperative for TD’s operations on both sides of the border. Ed Clark’s strategic actions and effective implementation of diversity initiatives were based on clear business principles, a simple and compelling business case and the fundamental and committed belief that “TD Bank’s commitment to diversity is not only the right thing to do, but that it is critical to achieving our mission to be a leading North American bank.”

It started out as a very simple idea. “We wanted TD Bank to hire the best and to make people their best.”Clarkshares. “What we learned along the way is that you had to understand the barriers and make removing them a priority of the organization. You had to be willing to see that the senior leadership team cared about these issues and you had to drive home the core concept that this was not about favouring one group over another, its about removing explicit and implicit barriers and leveling the playing field so that everybody gets to play, and to play at their best.”

Honoured throughout his career for his vision, integrity and strong leadership, Ed was appointed in 2010 to the Order ofCanadafor his contributions toCanada’s banking and financial industry, was named Canada’s CEO of the Year and was recognized by CatalystCanadafor his “outstanding contributions to advancing women in business.” There is no question that Ed Clark is a leader, amongst leaders. The good news is that when it comes to advocating for the business case for diversity,Clarkis in excellent Canadian company. Indeed, 2 out of 3 of CatalystCanada’s Corporate 2010 inaugural recipients of the Catalyst Canada Honours award were members of the Canadian banks, once again underscoring that our Canadian banks are industry leaders in the diversity field.

Scotiabank’s dynamo leader and diversity advocate Sylvia Chrominska, Group Head, Global Human Resources and Communications, was recognized by CatalystCanadafor having been instrumental in championing Scotiabank’s diversity and inclusion strategy, and as an avid mentor, champion and founder of Scotiabank’s Advancement of Women (AOW) strategy. Sylvia herself acknowledges that making meaningful, sustainable change at Scotiabank has taken “time, a lot of heavy lifting, perseverance, and the dedication of both men and women at the bank. In documenting Scotiabank’s successful journey of diversity, Sylvia elaborates: “We knew that to be successful, we needed to engage all business leaders by speaking in terms that resonated with them. So we started with a solid business case that articulated the value of diversity and advancing women based on three fundamental objectives: improving business performance; maintaining our competitive position in the war for talent; and leveraging the existing talent pool.”

Chrominska continues “We also knew, based on Catalyst’s own research, that organizations with diverse management teams experienced better financial performance. We knew that employee satisfaction leads to customer satisfaction, which leads to better business results, and we understood that for Scotiabank, improving the status of women, and ultimately all employees, regardless of gender, race or religion makes good business sense. The end game is not simply improving the representation of women, its about improving business results”.

Deborah Gillis, SVP, Membership & Global Operations, Catalyst, has publicly recognized both William Downe, President and CEO of BMO Financial Group and Ed Clark’s leadership as significant leadership from the top, for all industries. Gillis notes that “By really stepping forward and publicly talking about the importance of women and diversity to the success of their organizations (these CEOs) are sending messages to other business leaders in the country.”

William Downe has impressively built on more than 20 years of BMO’s leadership in the diversity arena which began with Tony Comper, BMO’s former formidable CEO’s ground breaking Task Force Report on the Advancement of Women in 1990. Indeed, Downe graciously served as Dinner Chair for the Catalyst Canada Awards, recognizing his peer and direct competitors in the industry for each of their banks diversity initiatives. Ed Clark appropriately opened his comments by observing “While we compete with each other (as bankers) ferociously, and have fun (doing it), one of the things we don’t compete about is our shared dedication to making a betterCanada.”

Despite the healthy business competition between them, understanding the core value of diversity to their businesses, and their bottom line, is the one thing these banks have in common, and it is both heart warming and promising to see the banks pull together, recognize and genuinely celebrate each others successes in the diversity arena. Bill Downe, CEO of BMO concurs. “It’s important that all banks inCanada, especially because we areCanada’s biggest employers, take responsibility together and show leadership. This is not an issue we can be complacent on. It is about many of your key employees, your customers, and in the end it is all about good business.”

That the Canadian banks have so impressively championed diversity initiatives is truly a story about sound financial strategy and tremendous business opportunity for all of the Canadian banks.

Indeed the collective Canadian power and recognized clear consensus by each of the banks, that a strategic focus on diversity is simply smart business, is in itself, a powerful and unique competitive business advantage for the country, and the Canadian banking industry as a whole.

Rick Waugh, Scotiabank’s President and CEO has observed growth even within the banking sector inCanadanoting that when it comes to diversity initiatives, and the empowerment and advancement of women “there has been a noticeable shift and a remarkable change in the banking industry inCanada. Whereas the focus used to solely be on quotas and metrics, the discussion has meaningfully shifted to strategic business results and an opportunity for competitive advantage”.

Gordon Nixon, President and Chief Executive Officer, RBC, a passionate and outspoken advocate on diversity issues for the last decade, makes a clear and compelling business case for diversity and regularly encourages other businesses to get with the diversity program. In Nixon’s view “To ignore the value offered by huge parts of the workforce and potential client base is a missed business opportunity. We have clients who are new immigrants and it makes sense to have employees that share their background, their language and their perspective. We are also a global company and we benefit greatly from the international experience of Canadians. We believe that to succeed we must harness everyone’s talents and energy and apply them to achieving our common goals. When our employees, our clients and our communities achieve their full potential, RBC wins too. It’s the right thing to do and it’s just smart business.”

Nixon continues: “By giving everyone a seat at the table, we have expanded our collective brain trust and we have driven innovation, growth and competitive advantage. Through the hard work of our leaders and our people we have embedded diversity throughout our business and the results have changed the look of our leadership. Forty percent of our executives are now women, 14% are visible minorities. As business leaders, we all know that markets are changing, and we intuitively understand that “to best serve the market we must hire the market.” Adds Zabeen Hirji, RBC’s Chief Human Resources Officer “When clients and employees look at us, we want them to see themselves.”

In March 2010, RBC won coveted international recognition for their diversity initiatives, with Catalyst acknowledging RBC’s innovative approach with women’s markets, multicultural communities and new immigrants on an international stage. Carolyn Lawrence, CEO of Women of Influence and I, sat proudly amongst 1600 attendees at the Waldorf Astoria’s black tie gala inNew York City, (loudly cheering!), as incredibly proud Canadians when Gord Nixon alongside Zabeen Hirji, Chief Human Resources Officer at RBC accepted the Catalyst award. RBC was rightly applauded for “truly becoming a model for diversity and inclusion both inside and outside the workplace, and emerging as an industry leader, by tying the unique perspectives of diverse groups directly to its global business strategy.” This was a win for RBC to be certain, but it also felt like a tremendous recognition forCanada, and for Canadian business. This can also be said for Nixon’s exceptional acknowledgement in March 2011, when Barron’s named our own Gord Nixon one of the 30 “Best CEOs in the World.”

Other examples of innovative diversity leaders include CIBC, who in February 2011, was recognized as one of Canada’s Best Diversity Employers for their exceptional inclusiveness and diversity programs within the bank and for attracting, engaging and retaining a work force that better reflects its customer base. CIBC was also recognized as one of the Best Employers for New Canadians in 2010 and for its innovative programs to support new Canadian immigrants. Working with the YMCA of Greater Toronto, CIBC launched CIBC’s Connection to Employment program, which assists new Canadians seeking jobs in the financial services sector.

“For more than two decades, we have made great achievements in creating and fostering a fair and inclusive work environment where all employees can reach their full potential,” said Richard Venn, Senior Executive Vice-President CIBC, Managing Director and Deputy Chair, CIBC World Markets and CIBC’s Diversity Champion. CIBC also has its own annual CIBC Diversity Award Program, an evening led by  Richard Venn and Gerry McCaughey, CIBC’s President and CEO, to celebrate and congratulate more than 60 employees annually for their commitment and achievement on fostering diversity, while recognizing employees’ contributions toward building a fair and inclusive workplace that reflects the communities and clients that CIBC so proudly serves.

At the Board level, Laurentian Bank has also taken bold and positive action with 5 of the banks 13 Directorships now held by Senior Executive Women. In so doing, Laurentian Bank now constitutes the strongest female representation at the Board of Directors level in all of the Canadian banking industry. Denis Desautels, Chairman of the Board enthusiastically notes that he is “very proud” of the strong female representation of women on Laurentian’s Board, adding “with the role of Boards becoming increasingly demanding, it is essential to attract the most able individuals. We are truly fortunate to be able to count on the tremendous diversity of talent that our Board members bring to the Bank.”

And then, there is of course, the incredible and inspirational story of the election of Monique Leroux, now Chair of the Board, President and Chief Executive Officer of Desjardins Group. Elected by an overwhelmingly male electoral college, on the platform of strategic growth, Leroux, in March 2008, became not only the most powerful woman in Canadian finance, but simultaneously, Desjardins became the largest company headed by a woman inCanada. By definition, Leroux’s pioneering success as a leader has already been proven, though one suspects her successes will continue to unfold exponentially. As an early example and not at all surprisingly, the percentage of women in Desjardins 125 Senior Executive Team has already increased to 30 percent under Leroux’s leadership.

At the end of the day, the diversity journey for each of these Canadian banks is really about the journey of leadership. How do you grow leaders? How do you actively make yourself better? How do you ensure your company’s financial success? Rick Waugh, CEO of Scotiabank believes that the answer to each of these questions lies with strong business principles. “Good businesses realize that when you draw from the deepest talent pools you have, you get the best talent. When you develop your best people, give them opportunities to grow in their career, and to develop, you get the best leaders. In turn, strong leaders result in business success. They become role models for others and that helps strengthen the entire process.”

While there is more work to be done, and successes to be attained, what’s known for certain, and what we can take great pride in as Canadians, is that the Canadian banks have clearly got it right. As demonstrated global leaders through the financial crisis and proven innovative industry leaders of diversity initiatives, our Canadian banks should be a source of tremendous pride for all of us. What we can be equally proud of is that our Canadian banks, though their tenacity and visionary leadership, have meaningfully opened the doors for many more of us, by persuasively demonstrating the business case for why promoting and supporting Senior Executive Women is simply smart financial business, for all businesses, globally.