12 February 2018By Khrystina McMillan
I think I was in high school when I first heard the story about a contest held by NASA offering a hefty cash prize to anyone who could invent an anti-gravity pen for use in outer space. While many of the country’s greatest minds set out to design such a “space pen”, pouring millions of dollars and countless hours into the task, according to legend the contest was won by a young child who simply wrote: “Why not use a pencil?”
A quick internet search reveals that this story (and a number of variations of it) is false. Why, then, have I wasted your time with an anecdote that I know to be false? Like the child responding to the NASA contest, I offer a simple commonsensical suggestion that sadly appears to have gotten lost in the details.
My suggestion is this: How can there still be any debate over the merit of adopting measures to encourage businesses to include women in their management?
In its third annual Staff Review of Women on Boards and in Executive Officer Positions, released October 2017 (the “Review”), the Canadian Securities Administrators found that three years after adopting National Instrument 58-101 Disclosure of Corporate Governance Practices, for the 660 issuers sampled: only 14% of board seats were occupied by women and, of the board seats that were vacated during the year surveyed, just 26% were filled by women. In fact, the Review revealed little, if any, improvement in the representation of women at the board and executive level over the past three years. These results have been editorially described as “disappointing”, “slow” progress, and demonstrating a “lack of movement on the part of Canadian corporations”.
Amidst the various “disappointments” the Review highlights, I was particularly disheartened by the statistics surrounding targets for the representation of women on businesses’ boards, or in executive officer positions. Just 11% of issuers reported having set targets for the representation of women on their boards and formal targets for the representation of women in executive officer positions were set by a meagre 3% of issuers. That is less than twenty of the 660 firms surveyed. Of those that have targets relating to the percentage of women on their boards, 90% set a target of 25% or greater (only half of equal representation).
Think about that for a second. A whopping 97% of the participating firms have no targets for women executives at all, and nearly 90% have no such targets for their boards (which is to say nothing about targets for other types of diversity in business leadership).
When asked why they have not set targets for women at the executive level, the overwhelming response related to allowing meritocracy to govern recruitment and hiring. Other common answers were that targets would not be effective or are arbitrary, or that it would not be in the issuer’s or its shareholders’ best interests to adopt targets.
I have nothing new to say in response to such concerns. The literature is out there, the studies have been done, and the results are clear (and have been for many years now). Unconscious bias is real and alive, rendering the idea of pure meritocracy more like a utopian ideal.
On the other hand, taking steps to ensure a more diverse leadership puts companies in stronger positions to grow and innovate. Indeed, diversity is widely regarded as being one the best ways to attract top industry talent. The business case for diversity targets doesn’t stop there; it can also be an authentic and meaningful way to connect with customers and clients. The benefits are not purely academic. According to a 2007 McKinsey report based on numerous studies (yes, you read that right, a 2007 report – data that is over a decade old), companies with a higher proportion of women on their management committees have the best performance. Ten years later, these results hold true.
While I thankfully and happily acknowledge that initiatives do exist that take other steps to address the gender disparity in corporate leadership (special shout out to the amazing #GoSponsorHer movement conceived by Megan Anderson and Laura McGee, a law school classmate of mine), the Review plainly shows that disclosure requirements alone are clearly not enough. Market forces do not appear to be ready or willing to address this issue on their own.
Therefore, while this author continues to monitor with interest the progress of Bill C-25 (which would introduce diversity tracking and reporting requirements for companies governed by the Canada Business Corporations Act), I remain hopeful that more will be done. My ideal would see Canadian jurisdictions follow the footsteps of numerous other countries (such as France, Germany, Belgium and Italy) that have already adopted quota requirements for boards.
While I’ll admit that the competitive woman in me regrets that other nations have beaten us to the punch, what irks me more is that Canadian (and perhaps, more broadly, North American) discourse appears stuck in an obsolete thought process, one that asks “why should we?” instead of “why wouldn’t we?” Targets for women in corporate leadership is my pencil in space – too bad no one is offering me a lofty cash prize for stating the obvious.