The Ultimate Power Seat
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.

“If I have a dynamite woman I can help her with a lot of things but not a corporate board,” says the 64-year-old.

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. “It’s an asset to be a woman today. It never used to be but today it’s an advantage as boards want to improve,” says Bruna Giacomazzi, 56, an advisor to the president of HSBC Bank Canada. But all the apparent concern about the issue and attempts to make amends can sometimes seem illusory. Donna Soble Kaufman, 59, a professional director who has sat on a succession of high-profile boards over the past 15 years, says: “My sense is that we’re making progress but the statistics tell me we aren’t.”

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.”

Boards are important because they set strategy and policy for top companies and choose the CEO. Directors check that management has thought through its strategies, addressing the right opportunities in the right way. Kaufman compares that fiduciary responsibility to what is called “the wise parent” in civil law — doing the right thing, without self-interest, to enhance the value of the shareholders’ investment, while leaving management to actually run the operations.

Because of that role, traditionally directors have been prominent CEOs or ex-CEOs from other companies, along with a sprinkling of ex-politicians, top lawyers and accountants, and perhaps some noted academics. CEOs would sit on the boards of some friends and strategic allies, who might also sit on their boards. It was all quite cosy, with everybody trusting each other and helping each other out, while simultaneously benefiting from understanding better how other companies and industries worked. When it came time to replace a retiring director, it was quite easy to obtain suggestions of a prominent corporate leader to fill the vacancy, since everybody knew everybody else who counted (or so it seemed).

Since female CEOs were a rarity, the directors were invariably men. Bill Dimma, 72, who has sat on 50 corporate boards since joining his first one in 1963, recalls that during his first two decades as a director he never sat on a single board that had a woman on it. Boards are collegial places and Jalynn Bennett, a former senior executive at Manulife who sits on the CIBC, Sears Canada, and CanWest Global boards, points out “since they were made up only of men, when they looked for a new member they felt it needed ‘more people like me.’ Historically, ‘me’ didn’t include 50 per cent of the population.”

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.

The Enron scandal and other corporate imbroglios in the United States have highlighted the importance of good governance — and raised questions about whether CEOs can actually give the time required to sit on a host of other corporate boards, each demanding 20 days or more a year from conscientious directors. “CEOs would find it difficult to have the time to do the full work for a board,” says Kelly Butt, the former senior vice-president of information services for London Life Insurance, who sits on several corporate and non-corporate boards. “This has been a wake-up call for boards,” says the 54-year-old from London, Ont.

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. A financial expert, for example, is a financial expert, whether a man or a woman. It’s a merit process, rather than a who-do-you-know process,” says Anne Fawcett, managing partner at The Caldwell Partners International in Toronto.

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.

Moreover, 30 of the 88 women holding what Catalyst calls “clout” titles in Canadian businesses work in banks, which are unlikely to be eager to see all their senior women executives drafted for corporate board duty, even if asked. “It’s good training to sit on a board but some of that training when people hold big jobs can be achieved internally,” says Rose Patten, executive vice-president, human resources, head, Office of Strategic Management, at BMO Financial Group in Toronto. “From a practical standpoint, it wouldn’t be good if all your women were on boards.”

As well, senior executives in the financial services industry can find themselves facing conflict of interest situations on boards, because of the many links their own company might have to competitors or suppliers of the organization they direct. Similarly, another hot group of prospects — the many female lawyers and accountants in those two professions — are also running afoul of conflict of interest possibilities. Just as those professions are becoming more balanced by gender, greater concern about governance has become an impediment to their service on boards.

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.

Two York University professors who have held confidential interviews with directors for separate research studies say that some men on boards simply don’t want to find women directors. Richard LeBlanc, who teaches a course on boards at the university’s Schulich School of Business, says he was told that there aren’t enough qualified women to serve on boards. “One director in my study said there are only 20 women in Canada who are board-ready. That seems highly inaccurate, given my research,” says the 37-year-old.

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.”

But while such holdouts undoubtedly exist, female directors insist that their boards are actively trying to find female directors. “I don’t sit on any board where they aren’t asking for women for the board. But what they ask for first is a skill set,” says Carole Taylor. Donna Soble Kaufman echoes that: “We try to find women. Sometimes it doesn’t work out — just as with men. It can’t be artificial, just finding a woman. We need somebody who can fill the slot that is open on the board — we want the best person for that job.”

The skills tend to be geared to the person leaving the board. If it’s your financial whiz, that’s what you want. Somebody with excellent strategic and marketing instincts, or expertise in the industry, begs a similar replacement to prevent a vacuum. Leblanc says consideration is also given to the person’s style — are they a change agent, a challenger who tends to play devil’s advocate, or a conductor who helps to bring directors together and orchestrate them towards a goal.

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 some observers feel that’s blinkered or lazy. Plenty of women are learning governance on public boards that have significant budgets and huge complications, such as hospital or school boards, where often they are dealing with controversial issues in the public eye. Elizabeth Watson, 45, managing director of Board Resourcing and Development for the British Columbia government (www.fin.gov.bc.ca/abc), has been turning to women with that background as she finds board members for Crown corporations and other key public boards. “What enabled us to find qualified women was to expand our search beyond the historical places,” she says. “The quality of women we have are comparable to any board in the country.”

Many observers feel that companies will have to turn to such an approach — it’s called non-traditional recruitment — to right the gender balance and get the best directors. “You need to be as thorough as possible in the recruiting process and that will mean thinking more innovatively about non-traditional markets,” says Bennett. She also notes that there are an enormous number of women who joined businesses in the late 1970s and 1980s who are approaching the age at which they will be considered ready for boards.

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. Stereotypes still exist about women and their abilities or interests. “If managers harbour those stereotypes, consciously or unconsciously, it will show up in who gets ahead,” she says. Also, women tend to not be as likely as men to have mentors or access to networks of influence, because those informal mechanisms depend on the comfort level between individuals, and gender helps to determine comfort.

Stella Thompson got a better understanding of that comfort issue at last year’s Calgary Stampede, where at one point the hosts for three of the luxury boxes happened to be female senior executive vice-presidents of the oil industry. When she introduced them, sparks began to fly as they began chatting excitedly. But when a man started to approach them, she recalls, “there was an instant change — a clamming up.
I realized this is what happens when the guys are at the water cooler having an animated discussion and a woman approaches.”

Boardrooms depend on comfort and collegiality. But comfort can be double-edged. Sometimes it can be the company’s undoing if board members aren’t willing to ask tough questions and challenge management or fellow directors. But it’s also the comfort level between directors that allows such challenges to be made and the board to continue its work harmoniously afterward.

When names are put forth for board slots, the tendency still exists to check if anybody knows that person and whether they fit in. But again, that can be double-edged. Burke notes that many senior male directors are from a generation that didn’t have to deal with driven career women. “They don’t know what makes them tick,” he says.

The Norwegian government has shaken up its boardrooms by announcing that if 40 per cent of directors in public companies aren’t women by 2005 — the current level is 6.3 per cent — the government will pass legislation making that mandatory. Black is leery of that approach, saying it doesn’t fit our culture where anything that smacks of quotas is frowned upon.

But Burnham says “Corporate Canada has had long enough to make changes and they aren’t making it.” Indeed, she points to the Canadian Coalition for Good Governance headed by former Finance Minister Michael Wilson, which in April named an all-male board. She would like to see companies set goals for a much-improved gender balance on their boards that they would reach by a certain date. She also feels that women who own shares need to make their voices heard and the executives who control mutual funds and pension funds must also be more aggressive in pursuing change. “The talent is out there. So why aren’t we at 50 per cent in this country now?” she asks. “You have to push it. It won’t happen unless there’s more direct effort. It’s actually a plastic ceiling — you have to push.”

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.

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