There is no doubt that diversity – in skills, background, and thought – makes boardrooms more effective. In our ever-changing world, a diverse board is crucial to responding adequately to these changes, while representing its stakeholders. Diversity on a board can bring a range of perspectives, experiences, and expertise that can enhance decision-making and problem-solving. We know diversity is important, but how do we tangibly move forward to ensure that boards are diverse?
First, let’s look at board diversity statistics in Canada. Statistics vary depending on the industry and region, but here are selected general statistics:
Gender diversity: According to a 2022 study by the Canadian Securities Administrators, women hold 24% of board seats among issuers listed on the Toronto Stock Exchange (TSX). It is worth noting, the representation of women on boards has been increasing in recent years but there is still work to be done.
Racial/Ethnic diversity: The same study found that only 8% of board seats were held by visible minorities, despite visible minorities making up over 25% of the Canadian population.
Indigenous representation: According to a 2022 report by Osler, less than 1% of all directors on the boards of Corporations governed by the Canada Business Corporations Act (CBCA) with publicly traded securities are Indigenous, despite Indigenous peoples making up approximately 5% of the Canadian population.
Increasing board diversity in organizations involves a combination of strategies, including:
Goal-setting for diversity: Incorporating specific targets for increasing the representation of women, people of color, LGBTQ+ individuals, and other underrepresented groups can be part of an organization’s diversity and inclusion goals. Organizations can use data to track the diversity of their board and measure progress over time. This can help identify areas where the organization needs to improve and help hold board members accountable for making progress.
Develop a broader pool of candidates: To make changes to your board appointments, it is advantageous to change your sourcing strategy to modify the talent pool from which you are sourcing. It is possible for boards to expand the pool of candidates by reaching out to a more diverse pool of candidates, including those from underrepresented groups. This can involve working with executive search firms that specialize in diversity and inclusion, posting job openings in publications that cater to diverse groups, and networking with organizations that serve underrepresented communities.
With the help of an executive search firm, you can build a talent pipeline, so you have a pool of diverse candidates to evaluate when the time comes. Identifying high-quality candidates, and then interacting with them about future board roles allows you to build a relationship with candidates over time and assess fit for your board when it is time to fill a board position.
Pender & Howe is part of this talent development logic by supporting national initiatives such as the Excellence in Canadian Board Governance (ECBG) program, a collaboration between Women in Bio Greater Montreal, and the McGill Executive Institute. ECBG is a professional development program on board governance that aims to accelerate the process of enhancing board diversity by increasing leadership opportunities for women (C-suite/senior/foundational) in the life sciences and biotechnology sectors in Canada.
Train existing board members: Organizations can provide training for existing board members on diversity, equity, and inclusion topics. As a result, board members can become more aware of the challenges facing underrepresented groups and become better advocates for diversity.
Foster a culture of inclusivity: Organizations can foster a culture of inclusivity by providing a safe and supportive environment for diverse board members. This can include promoting open communication, celebrating diversity, and creating opportunities for all board members to contribute and be heard.
Diversity, equity, and inclusion are crucial considerations for boards of directors in order to promote a culture of fairness, respect, and opportunity for all members of the organization. The goal of DEI is to create a culture of inclusion and equity within the organization, which is a continuous effort that requires commitment and leadership from the board and management in order to succeed.