Biases hurting companies
“It’s very important for organizations to embrace gender diversity”
Unconscious biases against women in the workplace are keeping many of them from taking their rightful places on corporate boards — and that’s hurting companies, says the chairwoman of 30% Club Canada’s steering committee.
“It is stereotypes and biases,” said Dr. Beatrix Dart, who is also a professor of management strategy at the Rotman School of Management at the University of Toronto, in an interview.
“A woman may have just had a second child and the assumption will be made that she may not want to travel (for work) and she might not even be asked,” said Dart. “She may be thought to not be tough enough for the job.”
The 30% Club, which also has chapters in Australia, Hong Kong, the Middle Eastern countries of the Gulf Cooperation Council, Ireland, Italy, Malaysia, South Africa, Turkey, the United Kingdom and the United States, is working to change those perceptions.
The advocacy organization wants to see 30 per cent of senior-level executive committee positions and corporate board directorships in Canada held by women by 2019.
Certainly, the club counts heavy hitters among its ranks. Victor Dodig, CIBC president and chief executive officer, is the organization’s chairman in Canada. Dodig shared his thoughts during an event at Saint Mary’s University recently on how best to ensure an equal representation of men and women on corporate boards and in senior management positions.
“It’s very important for organizations to embrace gender diversity,” said Dodig in an interview. “Having a gender-diverse team more accurately reflects the world we live in. When women are well represented at all levels, you’re encouraging diversity of thought within the organization, improving collaboration, cultivating innovation, building stronger leadership and creating overall a much more successful business.”
Lydia Bugden, chief executive officer and managing partner of the legal firm of Stewart McKelvey, is another strong supporter of the idea.
Although women comprise about half of all law school graduates, Bugden said many drop out of the profession early in their careers. Among Stewart McKelvey’s complement of lawyers, 33 per cent are women.
“By the time they make partner, only 25 per cent are women,” she said.
But University of Toronto professor Jordan B. Peterson disputes the suggestion that unconscious bias in the workplace is keeping women out of the nation’s boardrooms.
“We don’t know enough about unconscious bias, its degree or anything, to know how it applies to differences in equity outcomes,” said Peterson.
“There’s no reliable test for unconscious bias.”
Women are just as capable as men when it comes to taking on these high-pressure positions but tend to make different career choices, said Peterson.
There is considerable dispute over why, what it means and what should be done about it.
According to Budgen, it is widely recognized that women take more parental leave when children are born and that takes these women out of the workforce for that period of time. “That leads to a compensation gap,” she said. “You tend to get compensated based on your work . . . What that means is you have to come roaring back to work to get back to where you were.”
Daycares will typically not take infants under two months of age and that usually forces one of the parents to stay home. Often, that parent is the mother.
“Women still do the majority of the caregiving . . . There are a whole host of systemic issues,” said Bugden. “As we allow these systemic issues to eat at our labour pool, we end up with far fewer candidates at the higher levels.”
According to Dart, the Swedish model of requiring that both parents take parental leave has been a great equalizer.
“There is no stigma for a man to take a parental leave there,” she said. “Here, we have an optional parental leave but for a man it is often career suicide.”
According to the 30% Club, women comprise less than five per cent of chief executive officers, less than 20 per cent of chief strategy execs, and only 19 per cent of board seats of the roughly 250 companies included in the S&P/TSX Composite Index.
There are many more women than that with the credentials to take their place in corporate boardrooms, said Dart.
At the Institute of Corporate Directors, an organization which provides accreditation for board members, 31 per cent of the 3,794 graduates of that organization’s accreditation program — or 1,179 — are women.
Even though there are undoubtedly many women who can serve on corporate boards, Peterson said the percentage of people who actually want to do this job for any considerable length of time is minuscule. The question isn’t why there are so few women at the top of the career ladder, but why there is anyone there at all, he said. “They don’t get much sleep. They aren’t interested in leisure. They’re like machines. And most of them happen to be men.”
The 30% Club claims corporate boards with at least three women tend to have better economic performance.
That’s borne out by a study published in February last year — Is Gender Diversity Profitable? — with evidence from a global survey which noted there is a correlation between the number of women companies have on their boards and their bottom line.
“The results suggest that the presence of women on corporate boards and in the (most senior executive positions) may contribute to firm performance,” the report’s authors noted. “The impact is greatest for female executive shares, followed by female board shares; the presence of female CEOs has no noticeable effect.
“The estimated magnitudes of these correlations are not small: For profitable firms, a move from no female leaders to 30 per cent representation is associated with a 15 per cent increase in the net revenue margin,” states the report.
Despite this conclusion, that same report also notes other researchers have had different results. A 2011 study of German companies found no relationship between female board membership and, for example, stock performance. Another study of 2,000 firms found no evidence that adding women to boards enhances corporate performance.
At the 30% Club, Dart is satisfied with the studies showing a positive correlation between more women on corporate boards and economic performance.
“I have not seen a study where you can conclusively show causality because it is far too complex an issue,” she said. “There are too many factors and variables. It is impossible to do.”
But the lack of such a conclusive study should not deter businesspeople from taking action, said Dart.
“Most business decisions are made based on correlation and not causation,” she said. “There are contradictory studies on just about every subject that matters.”