Sherry Cooper: Women face Catch-22 to get on corporate boards, Financial Post
Sherry Cooper is former executive vice-president and chief economist of BMO Financial Group. Obscure and unwritten rules make it difficult for women to be appointed to — or to apply for — their first board positions The Ontario Securities Commission newly released “comply or explain” regulation, which goes into effect next year, is a promising step toward uncloaking the secrecy surrounding the board selection process. With less than 15% representation of females on public company boards, the OSC and seven other provinces, are requiring companies to publish their diversity goals and to either comply with those goals in subsequent years or explain why not. Importantly, in addition, firms are obligated to explain their term limit policy. Most companies do not have term limits, which reduces the opportunities for change. Unlike some European countries, Canada has opted to refrain from imposing quotas or penalties. This is a healthy approach with the appropriate mix of private business decision making and regulatory support. I’ve been pursuing corporate board appointments since retiring as BMO’s chief economist, have excelled in the directors’ education courses and been pre-screened for lists of qualified women, and yet I’m still waiting for a real opportunity.
The catch-22 is that the appearance of being a board wannabe automatically reduces your chances for consideration
As a practical matter, I have encountered an obtuse, catch-22 process with unwritten rules that make it difficult for a woman to be appointed to her first board, particularly if she lacks CEO experience. The reality is that one does not apply for board openings and board resumes look nothing like the standard ones. There is no list of upcoming board positions, most companies have either no term limits or very long ones, and most board searches do not go through executive search firms. While that is likely changing, it is still a “who do you know” process, with a relatively small number of women filling multiple board positions. I have discussed my board aspirations with many relevant advisors and, consistently, I am advised to select the companies to which I might add value and find a way to let it be known to the chairs of their boards or CEOs that I am interested in their company without actually appearing to be “applying.” In other words, find someone who knows someone on the board to spread the word or if I approach them directly, pretend to be asking for advice of a more general nature. This advice to network overlooks the fact that contact information for board decision makers is not publicly available and is very hard to get. Moreover, most of these people have gate keepers who filter their emails and phone calls to protect them from networkers. The catch-22 is that the appearance of being a board wannabe automatically reduces your chances for consideration. Current best practice is for the nominating committees to use a “skills/experience matrix” — outlining the set of skills and experience of the sitting board members and choosing replacements to fill the gaps. These matrices, however, emphasize measurable skills, giving shorter shrift to perspective, judgment and personal leadership qualities. Good directors need to be independent thinkers, willing to ask the tough questions, while still being constructive, cordial team players. The OSC’s move is part of a larger wave of governance improvements. With comply or explain, we should see recruitment moving from “who do you know” to “what skills, expertise and experience do we need in our next board member, and how do we go beyond our personal networks to find the best person”? These are still early days, but the implementation of comply or explain should move us along more quickly. The policy is already triggering diversity discussions in board rooms where it has never been on the agenda before. Many of the activists on this issue feel we have now hit a tipping point and that momentum is building. Hopefully, the rules of engagement will become a lot more transparent. Sherry Cooper is TMX Professor of financial economics at the DeGroote School of Business, McMaster University as well as chief economic counsel to MDC Partners Corporation. She retired as executive vice-president and chief economist of BMO Financial Group in early 2013.