Talent On Board: To Increase Board Diversity Requires a Shift in Recruitment Attitudes and Practices
Evidence shareholders are being short-changed by traditional board composition is mounting with every research report linking the participation of women in senior management and on boards to positive business outcomes. In Canada, diversity is being given an extra push by the Ontario Securities Commission’s ‘comply or explain’ policy. Companies will need to publicly release information about how they are promoting and actively managing gender diversity. Board diversity is more than just about rectifying bad optics. It is about getting the best talent around the table. To do that will require more than good, heartfelt intent, which I believe we have a lot of in corporate Canada. Underlying the existing board composition patterns are a set of beliefs and attitudes that drive board recruitment and selection decisions. To change the outcome requires some fundamental shifts in how we think about and recruit board members.
Board Recruitment Attitudes and Practices Help Maintain the Status Quo
Historically, board members have been drawn from the pool of retired CEOs, COOs and CFOs with experience in a similar or related industry and often with a connection to one or more influential members of the board. Board recruitment was, and in many cases still is, informal and personal. The introduction of recruiters to the process has broadened the search, but the ideal candidate profile has remained relatively consistent. The traditional recruitment model poses a number of challenges when the goal is to diversify.
Diversity as a Strategy to Build Talent on the Board
Increasing diversity is more than just good PR. It helps boards and organizations better address key business and governance issues. There is tremendous breadth and increasing complexity in the issues facing organizations today. For example, according to Deloitte, the top board concerns for 2014 included: enterprise risk management, executive compensation, corporate strategy, shareholder activism and sustainability. The Conference Board (2014) identified the top five challenges for CEOs as: human capital, customer relationships, innovation, operational excellence and corporate brand and reputation. While former CEOs will continue to form the nucleus of corporate governance, boards made up of members who bring deep and diverse expertise are probably better equipped to help organizations anticipate, tackle and solve their most pressing problems. Diverse boards bring a more comprehensive collective view, are more attuned to risks and opportunities, and are in a better position to provide guidance and oversight to the organization. When talented people across multiple domains with diverse experience and perspective come together in the pursuit a common objective, good things can happen.
Spencer Stuart Board Index. Spencer Stuart, 2013.
Governance Trends Shaping the Board of the Future: Board Performance and Diversity. Annual Corporate Directors Survey, PwC, 2014.
The CS Gender 3000: Women in Senior Management. Credit Suisse, 2014.
Deloitte Center for Corporate Governance, 2014. www.corpgov.deloitte.com/site/us/board-governance/.
The Conference Board CEO Challenge® 2014: People and Performance. Conference Board of Canada, 2014.