Excerpts from: The Ultimate Power Seat

Scarlett ~ Premier Issue ~ May/June, 2003

The corporate director’s chair is a powerful place, so why aren’t more women sitting on boards?

by Harvey Schachter

Throughout her 40-year career, Dr. Libby Burnham has found joy in mentoring women, helping them to surpass obstacles and make it to the top in business, community services, law and politics. But although she is extremely well connected, there’s one thing the counsel at Morrison Brown Sosnovitch, a boutique law firm in Toronto, has found herself unable to accomplish: Help women get appointed to corporate boards of directors.

She’ll pass along resumés, make introductions, and talk up the candidate’s abilities. But they get shuffled off - nothing is said, it’s not personal, but they aren’t named to the boards. Even female ex-cabinet ministers generally fail to land board appointments, while men who held the same or similar posts federally are snapped up.

Times are supposed to be changing - we are in a new millennium after all - and there is by all accounts a bit of a fashion to name women to boards.

In fact, they show some progress - but very slight. Catalyst, the research and advocacy group working to advance women in business, found in 2001 that women held 9.8 per cent of all board seats in Financial Post 500 companies, up a meagre percentage point a year from the 1998 level of 6.2 per cent. In the United States, by comparison, women hold 12.4 per cent of Fortune 500 board seats - a showing 2.6 percentage points better than Canada.

A recent study by Spencer Stuart Canada was slightly more optimistic, finding that at the largest 39 Canadian firms the number of women directors is the same as in comparable U.S. firms. As well, 74 per cent of its broader sample of 100 top companies have a woman director. But only 38 per cent of those companies had two or more female directors. That means nearly two-thirds of Canada’s top companies - 62 per cent - had no female directors or only one, even though the average board has 12 directors. “It’s shocking,” says Carole Taylor, the 57-year-old chairperson of the CBC. “I’m always surprised at how slow cultural change is.”

In the late 1980s, some companies - particularly those that sold consumer goods to women - decided it would be useful to have women on boards, reflecting the changing role of women in society and the fact that having some directors who understood their primary consumers better might be a good thing. In the last year, however, another powerful argument has arisen that could totally transform the tendency to appoint CEOs, keeping men holding a stranglehold on board positions.

Even before the scandals, boards had been realizing that the way they selected board members wasn’t highly professional, and have been increasingly turning to search firms to help them find the best people with the appropriate skills needed for board work. About half of Canada’s top companies are now using search firms - compared to maybe five per cent a decade ago - and even those that aren’t understand they must be more deliberate in their approach. “They think of the actual job and define the roles and key selection criteria. That takes down all gender barriers.

But barriers still block women’s accession to the boardroom, some obvious and others less obvious. The first is the belief that senior corporate leaders remain the best-equipped for the job. If CEOs are too busy, that turns attention to retired CEOs, who are invariably male, and senior executives within companies, only 14 per cent of whom are female, according to Catalyst. “Until women break the glass ceiling at the executive level they won’t break the glass ceiling in boards,” says Dimma.

But Susan Black, 42, vice-president of Catalyst in Toronto, insists there are still plenty of top-calibre women available. Of the 353 women who sit on the boards of Financial Post companies today, only 51 sat on more than one company. That leaves 300 experienced directors who could sit on a second or third board - as well as the over 700 corporate officers who are female. “There are lots of women out there. But you have to look for them and you have to want to find them,” she says.

Ron Burke, a professor of organizational behaviour, adds that while women directors he interviewed felt it’s prejudice and stereotypes keeping females off boards, men felt women hadn’t paid their dues yet. “They haven’t been in the trenches long enough,” says the 56-year-old. “The men see the judgment of women as lacking credibility. If you have more grey hairs, you are more credible.”

For most boards, the feeling is that the best person should already have board experience. “There seems to be a reluctance to take a risk on somebody who is very good, is not a CEO, and hasn’t sat on a board. They don’t want a ‘newbie,’ ” says Stella Thompson, who runs Governance West, a consulting practice on board governance issues.

But Black calls that “the pipeline myth” - yes, there are many women in the pipeline, for senior management and boards, but companies have to want to appoint them and must recognize the hidden barriers they face.

Plastic or glass, the ceiling is clearly there. Directors stress that boardrooms are not places where revolutions occur. Change is always evolutionary. And since boards have been reluctant to edge out directors who seem to be doing a good job (or even aren’t doing a good job), turnover can be glacial in many boardrooms. But a convergence of factors - heightened governance concerns, the aging of current directors, and the surge of women into business, law and accounting - suggests that we could finally be on the cusp of major, if still slow, change.

10 Steps to Get on Boards

1. Do your own job very well. Make sure you play a leadership role and that people understand how effective you are. Get on various committees at work that will give you a broader view of business affairs; stay away from being narrowly focused.

2. Join public or philanthropic boards, and be an active member. Pick ones that are in the spotlight and might get media attention, such as a hospital or school board. Pay attention to who sits on the board you are considering, since you want at least some members to be in a position to help you make the leap to a corporate board if they like your work.

3. Find a mentor on that board who can guide you through the intricacies of governance. And pay attention to your style of asking questions. As a director, you have to ask questions that are intent on learning, without appearing to be in-your-face or cross-examining staff of the company.

4. Become a leader in your field. Give speeches on professional or business issues, or teach, showing yourself as knowledgeable and articulate.

5. Keep abreast of governance issues by reading books and magazines. Join the Institute of Corporate Directors and attend their breakfast meetings or occasional conferences, where you will be mixing with directors and CEOs. Subscribe to publications such as: The Journal of Corporate Governance, Corporate Board Member, or Corporate Governance: An International Review.

6. Research it. Find a topic of governance that intrigues you, and submit an article to a specialty journal like The Institute’s magazine, Director, or a publication like the Globe and Mail, which might be read by the people who choose directors.

7. Network, network, network. Many of the women currently on boards can trace their first nomination to somebody they knew, who championed their cause.

8. Avoid making unusual career leaps. Anne Fawcett, managing partner of The Caldwell Partners, warns that logical career progressions are valued by boards: “Career adventurers don’t give comfort. Boards are conservative in weighing candidates.”

9. Make your interest in boards known to search firms. But be careful beyond that. Bill Dimma, who has probably sat on more boards than anybody else in this country, says “it’s the kiss of death to ask outright.”

10. If asked to sit on a board, don’t agree immediately. Ask questions about why you were chosen, what you are expected to contribute, and what the time requirements are.

Good Boards, Bad Boards - Keeping tabs on directors’ decisions.

A study by two University of Toronto professors suggests that good corporate governance matters - and one of the indicators might well be the number of new female directors.

Tim Rowley and David Beatty of the Rotman School of Management in Toronto studied over 450 major Canadian companies, rating them on six governance factors. Governance generally refers to how well a board is managed. The top two companies were Manulife Financial and Potash of Saskatchewan Inc., which drew perfect scores for their governance. The country’s banks also fared very well.

In contrast, some of Canada’s best-known corporations - such as Nortel, Bombardier, ATI Technologies and Air Canada - fall well below the governance leaders. “A great board doesn’t guarantee solid financial performance,” says Rowley. “But in our study it’s interesting that many firms that did poorly in our rating system experienced substantial stock devaluation in the past year.”

While female directors aren’t specifically mentioned and the focus on previous board experience seems to work against new female directors, there’s a large pool of qualified Canadian women boards could draw on. That isn’t happening, says Rowley, because those women aren’t part of the “old boys’ network” used to staff boards. As such, the professor insists boards that are actively recruiting women have likely adopted superior nominating processes that improve independence and investor confidence. “If they are looking for women that means they are looking away from the people they know, who are often related directors, and getting truly independent board members,” he says.


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