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Jun 09, 2015

Diversity at the top in Canada

Unconscious bias training for HR and managers can help people at a company learn to root out their own assumptions about women and leadership

Under new rules, public companies must disclose their plans for getting women into power positions, explains Nicole Guillot

It’s long been known that not enough women have roles in senior leadership or on the boards of public companies in Canada. As that may not be good for business, or for society, eight provinces and territories have put in place new rules that insist boards be more transparent about who’s making the decisions at the top. These came into effect on December 31, 2014, and they affect most boards in Canada. Here’s an overview of what the board diversity guidelines say, how companies can comply and what issues are still unresolved in diversity and corporate governance.

In January 2014 the Ontario Securities Commission (OSC) announced that companies on Toronto Stock Exchange (TSX) would have to start talking about diversity or risk being de-listed. Companies must detail the representation of women on their boards and in executive officer positions, as well as disclose any plans to boost their numbers. This ‘comply or explain’ approach is not a quota, but a system designed to increase women’s leadership roles over time.

Over the course of 2014, the regulatory bodies in Quebec, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador, Nunavut and Northwest Territories all agreed to adopt these rules, too. All boards affected must disclose this information in their proxy circulars in advance of their annual shareholders meeting.

These diversity rules have their origins in 2013, when Ontario Premier Kathleen Wynne asked the OSC to look into the issue of corporate leadership and women. The OSC developed a consultation paper for public comment, held a roundtable and surveyed 1,000 TSX companies. The federal government, via the Advisory Council for Promoting Women on Boards, then published a report in 2014 that offered a business case for board diversity, and encouraged Canadian companies to dramatically increase their numbers. It recommended that Canadian companies aim for 30 percent women on their boards by 2019. These actions are predated by organizations such as the Canadian Board Diversity Council (CBDC) advocating for change over the last several years.

The hope with this more transparent approach is that companies will start implementing policies that will, in time, lead to more women in leadership roles. Some techniques companies have found effective include:

- Using a search firm – when company executives hire from their own personal networks, diversity stalls. ‘You get the same people,’ explains Pamela Jeffery, founder of the CBDC. A search firm will cast a wider net to find talent, which leads to more women, minorities and leaders in different fields joining a company and bringing in new viewpoints

- Carrying out training – unconscious bias training for HR and managers can help people at a company learn to root out their own assumptions about women and leadership. These training programs often trigger more diverse hiring later.

Some of those advocating for change wanted the new rules to be about more than just disclosure and be motivated by quotas, such as those used in European nations. In Norway, for example, the law dictates that 40 percent of a company’s directors must be women. The Ontario Teachers’ Pension Plan, meanwhile, has suggested companies should have at least three board members by 2020, or be de-listed.

Most advocates on this subject would like to see diversity defined more broadly, and include ethnic background, sexual orientation and disability. Currently, despite the fact that one in five Canadians is from a minority, just 2 percent of board seats in our large companies are held by minorities, and only 0.8 percent of those are Aboriginal people.

‘Ideally, we need to look beyond women, but I don’t see that on the agenda at this point in time,’ says Anita Anand, a professor with the Faculty of Law at the University of Toronto who has studied corporate governance. She adds that true leadership diversity is essential for running viable companies, both for their operations here and their partners abroad, but that any kind of change at the top is good for the economy. ‘This is a good first step,’ she concludes.

Nicole Guillot is president and CEO of CNW Group

This article appeared in the summer 2015 print issue of IR Magazine