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Corporate Canada needs a plan for gender diversity in the boardroom

Jennifer Reynolds is the chief executive officer of Women in Capital Markets.

Are tall men better business leaders? A recent study in the United States found that 60 per cent of CEOs were over six feet tall, yet less than 15 per cent of men in the United States reach the six-foot mark. And 36 per cent of CEOs are over 6 feet 2 inches, relative to less than 4 per cent of American men.

The correlation between height and leadership talent would certainly seem to imply that on average, tall men are more likely to be talented business leaders. So should we start adding height to the criteria for leadership roles in corporate world?

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Outside the obvious issue of discrimination against our height-challenged colleagues, I would argue that rather than placing higher value on those extra inches, we should do some work on the meritocracy.

Take, for example, the boardrooms of Corporate Canada. A recent report by the Canadian Securities Administrators (CSA) on 722 public companies in Canada found that 50 per cent of boards have no female directors and another 29 per cent have just one woman on their board. Given that women have made up 50 per cent or more of university graduates for 30 years and are 47 per cent of the work force, one could conclude that the lack of presence of women in Canadian boardrooms is simply because women do not make good leaders – much like their shorter male colleagues. If the meritocracy in Corporate Canada is successfully winnowing down the best talent for the top leadership roles, then our boardrooms would tell us that strong leaders do tend to look a lot like each other.

The problem with this thesis is that the data on corporate performance and diversity in the boardroom and in the executive suite tell a very different story. Extensive research by firms such as Credit Suisse, McKinsey and Catalyst demonstrates that companies with more women on the board and in the C-Suite outperform companies with fewer women. This holds true globally for all industries, even resource industries. The fact that so few companies have women in leadership roles indicates that today's corporate meritocracy is, in fact, very broken.

The good news is that many countries, including Canada, have recognized this issue and are taking steps to ensure the best and the brightest actually do get the opportunity to make it to the top.

In Canada, the Ontario Securities Commission adopted comply-or-explain disclosure requirements around gender diversity on boards and in executive positions beginning on Dec. 31, 2014. This approach was also adopted by Britain and Australia several years ago, and has resulted in progress with increasing gender diversity on boards without resorting to the more heavy-handed quota approach taken by many European countries.

Sadly, the CSA's recent review of this disclosure indicates that Corporate Canada has largely shrugged off the discussion of gender diversity in leadership. Sixty-five per cent of companies reported that they had decided not to adopt a policy on increasing gender diversity on the board or in the C-Suite. The reason cited by the vast majority of those companies was "we appoint based on merit." Essentially, those boards said the meritocracy is working just fine. There simply is not one woman in Canada (or elsewhere) who merited a board seat on half the companies in this country.

It's time for Canada's boards and corporate leadership to stop defending a meritocracy that promotes only those in its own likeness.

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The fact that there are so few women, not to mention visible minorities, in this country's leadership is a problem that needs to be addressed today. The public sector has begun to focus on the issue, most recently with the Liberal Party's commitment to ensuring the cabinet will include an equal number of women and men. It's time for Corporate Canada to address the issue, too.

Diversity in leadership leads to stronger companies and a more competitive economy. Capitalizing on 100 per cent of the talent pool for leadership should be a top priority for every board and management team. But to fix the meritocracy and ensure that women are just as likely as men to make it to senior leadership roles, a company needs to have a plan to get there. A policy for increasing gender diversity in the boardroom and in the executive suite should be expected of every board in this country.

It's time for boards to stop wasting time explaining why they don't need to focus on this critical economic issue and to start committing to shareholders that they will make progress toward ensuring that their leadership ranks include Canada's top talent – not just those who are most familiar to them.

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