The view from the analyst and the expert.
In boardrooms and executive suites across the nation, distinguished, grey gentlemen make the decisions on what we buy and how we live. Who are “we”? Most likely not distinguished, grey gentlemen – 51 per cent of us are women, and almost one in five of us are foreign-born.
By ignoring this reality, by failing to tap the full potential of immigrants and women in the hiring process, employers are causing a personal income shortfall of $174 billion per year.
An RBC-commissioned study conducted in 2005 found that if women and immigrants had the same likelihood of employment at the same average income as men and people born in Canada, respectively, the result would be an extra 1.6 million employees and an extra $174 billion in personal income – a gain of 21 per cent compared to 2005 levels.
Can’t see the forest for the trees, indeed.
As a part of its annual Best 50 Corporate Citizens survey, Corporate Knights took a look at Canadian boards of directors and C-suites by examining the most recent financial and proxy statements available. Though boards are elected by shareholders and C-suites are hired, both represent a company’s overall philosophy towards diversity – that of the owners and that of the executives.
Corporate Knights examined companies in the TSX 60, Top 50 on the FP500 or ROB1000, on the Jantzi Social Index, Top 25 holdings of Ethical Canadian Stock Index Fund, and additional companies with significant operations in the communications, chemicals, utilities, retail, mining, oil & gas, finance, and forestry sectors.
The CK Leadership Diversity Index was determined from the companies with the greatest visible minority and female representation in both the boardroom and the C-suite. In the case of a subsidiary, the parent company’s data were used.
The findings failed to reflect Canada’s demographics. Of the 140 boards we surveyed, 75 per cent of boards of directors had no visible minorities, and 23 per cent had no women. There were no female CEOs in the Best 50 in fiscal 2006.
But change is afoot, and a promising branch of companies is leading the way.
The case for diversity
Doug Soo, a director of Vancouver City Credit Union, doesn’t mince words when speaking about the importance of diversity in doing business.
“If you ignore diversity nowadays, you don’t last,” he says. “It’s a natural part of the fabric of Canada at this juncture.”
Tamara Vrooman, CEO of Vancity, agrees.
“An organization can function as they have for decades without changing,” she says. “But they never really reach their full potential if they don’t have that diverse focus.”
Zabeen Hirji, Chief Human Resources Officer for Royal Bank of Canada, puts it this way.
“If you want to serve the market, you have to hire the market.”
Indeed, ensuring diversity is just good business practice, if you ask the senior executives of the firms in the Corporate Knights Leadership Diversity Index.
“When you represent the communities you serve, I think the company’s always seen in a much more favourable light,” says Laura Formusa, CEO of Hydro One.
And with more choices and information available than ever before, it’s even easier to refuse to patronize establishments that don’t meet our needs.
“If you’re blind to diversity, people aren’t coming through your doors,” says Soo.
And that doesn’t just mean the storefront doors. According to the 2005 RBC report, Canada faces a labour shortage of 2.75 million workers in the next 20 years over and above our population growth if current immigration patterns hold true.
As well, according to a 2007 study by Catalyst Canada and Ryerson University, Canada stands to lose on the front of competitive advantage as well. The report cautions that emerging economies could very well capture Canada’s best diverse talent if Canadian workplaces don’t become more inclusive.
And as for that $174 billion in lost income – well, if women and immigrants face barriers in integration into the workforce, then they face barriers in accessing the markets for housing, consumer spending, wealth management services, and related business investment opportunities, says the RBC report.
All of this adds up to a poor economic forecast for Canada.
But is workplace diversity still a seminal issue in today’s supposedly progressive times?
Undoubtedly, agree Canada’s top women.
“I still go into many meetings of 30 or 40 people and I’m the only woman,” says Vrooman. “You get used to it, but when I talk to older women, the pioneers who really laid the groundwork, they say, ‘I thought we’d be so much further along.’”
Anne McLellan, former deputy prime minister of Canada and Chair of the Liberal Taskforce on Women, echoes this sentiment.
“The greatest disappointment would have to be the fact that we have not significantly increased the number of women on our corporate boards in the past decade,” she says. “In this country we pride ourselves on our pluralism and our diversity. You want to have that reflected on your board and in your senior management.”
“The ideal for me would be when we aren’t required to focus on it,” agrees Hirji, who is often called upon to speak about diversity issues within and outside of RBC. After one such engagement, Hirji confided to her thirteen-year old son that she wasn’t sure if she wanted to be profiled as a diversity role model.
“He said, ‘Mom, it’s not about you – it’s about the impact it has on others.’”
What is it that makes a company a diversity champion? It’s often a synergy of a variety of initiatives from a variety of levels, say Top 10 executives.
To understand the makeup of their firms, many of the Top 10 conduct surveys to monitor the number of female, visible minority, aboriginal, and disabled staff. Employees can identify themselves as a member of one or more groups.
Vancity surveys its employees annually, explains Annika Loftstrand, Manager of Attraction and Recruitment.
From these surveys, companies can identify areas for improvement. Goal setting is another common thread.
“We’ve put in aspirational goals for 2010,” says April Taggart, Senior Vice President, Talent Management and Diversity at BMO Financial. “We are renewing our focus and making sure that over the next couple of years we are aggressively improving our leadership on diversity.”
“We’ve got a five-year plan in place to increase our diversity numbers,” says Formusa of Hydro One.
But none of these plans could work without the commitment of upper management.
“I don’t know that you can really make significant progress without having CEO commitment, as well as commitment from senior leaders,” says Hirji. “We have a diversity leadership council which is chaired by RBC’s CEO, Gord Nixon. We review the goals and the results every quarter, and members of the council are senior leaders from across the company.”
Nixon has often spoken publicly about the topic of diversity, further making RBC’s position clear.
Corus Entertainment offers a program called “Corus Women in Leadership” to women in management, which is attended by the Chair and the President and CEO of Corus, says Tracy Ewing, Vice-President of Communications for Corus.
Having diversity as a visible part of a company’s policy makes a significant difference.
“We find candidates will come to us and say, ‘You’re really serious about having opportunities for everybody,’” says Hirji. “It’s a recruitment tool as well, where people are saying, ‘You’re putting your money where your mouth is. You’re serious about this. You’re willing to go public about this.’”
Formusa finds the same thing at Hydro One.
“If your policies are fair and you’re interested in diversity, you’re going to be attracting people from diverse backgrounds,” she says.
Vrooman, who started at Vancity in September 2007, found that the reputation of the firm was a driving factor in accepting her position.
“Vancity is an organization that has been a leader in terms of trying to be inclusive and connected to the communities it serves,” she says. “It’s absolutely key to recruitment for everyone from our front-line services staff right up to our CEO. It was important that I was walking into a culture that was open to the idea of a woman CEO.”
Diversity recruitment also includes proactive measures to ensure that the company attracts applications from the full spectrum of candidates.
“We do targeted advertising,” says Loftstrand of Vancity. “We held our own career fair in September and we had 600 people attend. We proactively sent ads out in the mainstream media, to immigrant services associations, ethnic newspapers, groups supporting or representing people with disabilities, aboriginal groups and employment resource centers.”
Starting at the point of first contact – high schools and universities – is also helpful.
“Hydro One does a lot of work with high school programs to interest both men and women in professions in our industry,” says Formusa. Hydro One is also in the planning phase of launching an aboriginal outreach program.
Since most companies have federally-regulated targets for their general employee pool, which has already reached a representative level of diversity, companies are finding that when they hire internally for executive positions – and the Top 10 firms we talked to do – the candidate list is inclusive. Then, it becomes a matter of finding the best person for the job.
“We truly can go out and say we’re going to take the right person,” says Tom Goldie, Vice-President of Corporate Services for Hydro One. “And many times that is a woman or a visible minority. It’s taken care of itself because we’ve created the culture in the organization where we attract people with that type of background to work here.”
“If we have multiple candidates who have all of the required technical skills, we then look at things like our marketplace,” says Hirji. “It may be advantageous for us to have somebody that spoke another language that was reflective of the market, or somebody that has good relationships in communities who could attract talent from those markets. So it’s very much driven by our business needs.”
David Galloway, Chair of BMO’s Board of Directors, says that BMO uses recruiters to ensure that it is exposed to all possible board candidates.
“We tend to use recruiters much more than we used to so that it’s not just asking people on the board who they know.”
Galloway says that when searching for board nominees, BMO directs recruiters to make certain the shortlist is diverse.
“Then [board diversity] just happens naturally,” says Galloway.
Anne Fawcett, a partner with executive search firm Caldwell Partners, says that the demand for diverse candidates is “very real.”
“We absolutely are experiencing it,” she says. “It really is reminiscent of [twenty years ago] when people began to pay attention to the fact that there was a big pool of women who were professionals and executives and might be terrific candidates for these roles. We’re finding exactly the same thing now as people try to tap diverse communities.”
Fawcett says that specific recruitment methods are often necessary.
“It’s really about personal outreach, and identifying the leaders in these diverse communities,” she explains. “There’s always a leadership group in any community. It’s about tapping into those communities and seeking advice and recommendations, and appearing in their media.”
While Caldwell does not have headhunters that are assigned to specific communities, Fawcett says that a diversity focus is included in each candidate search.
Search firm Hewitt Associates, on the other hand, employs Diversity Sourcing Specialists to attract diverse candidates.
“We advise clients to take a look at candidates based on the qualifications for executive positions, and seeing the cultural aspect as something separate,” says Suzanne McFarlane, Diversity Sourcing Specialist in the Toronto office.
“We have connections with different agencies and organizations that service communities and protected groups to ensure that the message is getting out that ‘We’re not just looking for everyone, we’re looking for you,’” she says. “Employers who are interested in infiltrating the ranks in these communities need to start stepping outside of the general recruitment box and look at traditionally untapped labour pools.”
Being flexible within the selection process is equally as important as doing so within the recruitment process.
For example, Loftstrand says that while Vancity has standard interview questions, recruiters are trained to understand that other cultures may answer behavioural questions differently.
“Where there are diverse applicants, we work with hiring managers to understand how a person might answer a question differently based on that diversity,” she explains.
Loftstrand uses the example of a candidate from a collective culture that frowns upon boastfulness.
“Often there are other ways to ask a question – less of an ‘I’, more of a ‘we’. There are other ways to find out what the accomplishment was without pushing a candidate out of their comfort zone, or making the judgment that they don’t have a good answer for that question.”
In the end, the numbers tell how well a company promotes its diverse employees.
“BMO reports diversity data both by hiring decisions and promotional decisions,” says Taggart. “And if we see that it’s skewed or that there are missed opportunities, then we put in place action plans to address that.”
But once a diverse candidate gets to the top, how do companies ensure that they feel like they belong?
The Top 10 use a wide variety of strategies, including mentorship programs, support groups, ombudsmen, sensitivity training, and parenting accommodations such as flextime, paternity, and maternity leaves.
One initiative is RBC’s “Diversity Dialogue” program, a mentoring program which allows senior management to learn about diversity and inclusion concerns from the frontlines.
As well, Hydro One created an award-winning diversity calendar in 2006 with social justice photography group PhotoSensitive. The calendar highlights the various religious and cultural holidays celebrated by Hydro One’s employees.
BMO also supports several “affinity programs” within the company that bring together people with common issues; for example, a program called Envision for employees who are visually impaired.
The overarching framework to ensure an inclusive work environment, though, is the company’s code of conduct, which outlines diversity policies and disciplinary actions. Companies usually require employees to sign these codes annually.
But codes of conduct are not enough if they are just lip service.
“I think they’re important documents, and they’re there for the employees, senior management, the board, and the public to see,” says McLellan. “But at the end of the day it takes will and leadership to drive that code of conduct through the board, through the senior management, down into the lived reality of companies.”
Overall, a diversity leader believes that including diversity is necessary for any successful company – and takes that responsibility seriously.
“There’s a very obligatory role for organizations like Vancity to take the lead and to be an example,” says Soo.
Says Formusa, “I think all companies who are reflective of their communities are going to be seen as more of a ‘corporate knight.’”
How to close the gap
Despite all the evidence of the benefits of diversity, there is still a lingering belief that hiring diverse candidates means hiring less qualified people.
Fawcett says that this simply isn’t true.
“I have never have never seen a client choose a candidate that wasn’t the best candidate in the group [just] because they were from a diverse community,” she says. “Keep in mind we’re talking about pretty senior roles, where companies have a lot on the line.”
“The name of the game is populate those shortlists, work hard to make sure people from diverse backgrounds get a serious crack at the those [executive] jobs. And they will win if they are the best person from a credentials point of view.”
Shakil Choudhury, diversity and leadership consultant and the Program Director of Anima Leadership, says that biases such as these often inadvertently creep into decision-making.
“It is our blind spots individually and collectively that create the barriers and create the problems in the first place,” he says. “We unconsciously trap people into boxes by our stereotypes and we need to consciously and literally think outside the box.”
“To address diversity, then, is not about reverse-discrimination; it’s about addressing a deficit that is created by our collective blind spots.”
McFarlane understands these blinds spots and works to eliminate them. She says that employers may be concerned about hiring diverse candidates, wondering whether they will be fully productive members of their organization.
She gives the example of an “internal conversation” an employer might have about a disabled candidate.
“‘There’s going to be a lot of sick time. I don’t know about these benefits.’ These conversations may impact decisions to hire or to recruit,” she says. “But [for disabled employees,] there’s a higher level of retention, less sick leave, and a general greater loyalty than the average.”
“Once given the opportunity to excel and thrive in an organization,” McFarlane says, these findings also hold true for members of visible minority groups.
Companies who fall short of representing their communities may not find it to be a priority from their stakeholders.
At BMO, the demand for diversity on the Board of Directors comes from within the company as opposed to from shareholders.
“We don’t feel any push from outside at this point in time, but it’s a factor we’re conscious of ourselves,” says Galloway. “We just think it’s good business.”
The onus, then, falls partially upon we the consumers to demand change.
“If that metric of diversity is important, and companies are assessed on that metric, and that is publicly known, then I think there’s an aspect of transparency and accountability there,” says McLellan.
Essentially, what gets measured gets done.
Using an analogy from her findings for the Liberal Party’s task force on women and gender balance in politics, she says that a company’s commitment needs to be visible and tangible.
“You need your leader and the party to make a commitment to a target,” says McLellan. “Because if you just keep saying we’ll do our best, I’m not sure that a lot happens.”
Soo frames the challenge to boardrooms and executives suites as: “How do you grow an organization that is truly felt to be owned by the people who work and do business and are members?”
And demand for diversity is increasing all the time, as companies become more and more attuned to the economic reasons for increasing diversity, says Fawcett.
“It’s because people understand how powerful it is when marketing to the Canadian public how important it is for the whole public to relate to your business,” she says. “And a major way they relate to it is by the people who are serving them. People do pay attention to what the faces look like in the annual reports. And what’s really reinforced that and accelerated the demand is the war for talent.”
But there is something to be said for being unreasonably committed to rigid targets.
“There’s sort of a paradoxical mentality,” cautions Soo. “You want everybody to be treated in such a way that is based on individual abilities and contributions, [while] there’s still sensitivity to who’s not at the table.
“But you don’t want to be so wrapped up in the need to have a representative of every colour. You don’t want to end up being like Noah’s Ark, where you’ve got to make sure you have two of each.”
Eventually, the hope is that diversity becomes a natural part of Corporate Canada’s landscape, instead of needing to be espoused explicitly.
“It’s like walking into a forest – you just don’t pay attention that some of them are cedars, and some of them are alders, you just take it for granted. It’s part of the backdrop,” says Soo. “And when people see that they say, ‘You’re one of us. You’re relevant.’ That’s the key thing to do.”
But the task is far from over.
“We won’t be successful in the future if we’re not constantly paying attention to our communities,” says Vrooman.
“Yes, we’ve made progress, but are we there yet? No. We’re not where we want to be – it’s a journey. Which is why we’re continually focusing on diversity,” she says.
We’re not out of the woods yet.