Boards should implement new strategies that outline the essential criteria of diversity.
This year boardroom diversity has managed to land a prominent place on the governance agenda. Many Canadian corporate directors agree that diversity is an important issue that should be taken seriously, especially when making decisions. But often companies forget that diversity goes beyond just gender.
The Institute of Corporate Directors (ICD) today released a report, entitled ‘Diversity in the Boardroom: Findings and Recommendations of the ICD,’ which reveals that a staggering majority of survey participants are strongly against government-imposed quotas or legislated mandates, as in some European countries where companies are required by law to report their diversity efforts.
‘I don’t think any company wants to be told what to do,’ says non-executive board director Lucy Marcus, who is also the CEO of Marcus Venture Consulting. ‘The discussion of quotas can be distracting at times; companies should look beyond this and try to build a dynamic boardroom.’
Just 4 percent of respondents were in favor of such measures, says the association, which represents corporate directors across Canada. Of those surveyed, 90 percent agree that board diversity is a hot governance issue and 80 percent believe a diversified boardroom results in more informed decision making.
‘The key is for boards to make diversity a priority and approach it within the context of their particular skills matrix and board composition,’ says Stan Magidson, president and chief executive of the member-based association.
The ICD made the following recommendations to all Canadian boards:
• Diversity beyond gender: Companies should bear in mind that diversity is an important part of the criteria used to determine board composition. Diversity for these purposes should be broadly defined to include gender, ethnicity, age, business experience, functional expertise, personal skills, stakeholder perspectives and geographic background;
• Adopting formal diversity policies: Boards should implement new strategies that outline the essential criteria of diversity and experiential attributes needed to fulfill the needs of the board;
• Directing search firms: When using this option, it is best to include diverse candidates in searches whenever possible (and subject to satisfying the qualifications of the position);
• External recruiting: Companies should encourage search firms to include qualified candidates who are unknown to current board members;
• Facilitate diversity agendas: These should permeate all levels of an organization, starting at the top with the board, CEO and senior management ranks; and
• Impose term limits: Consider limits on the tenure of board members to encourage ongoing board renewal, being mindful of the need for a healthy degree of board continuity and experience.
The report involved a series of townhall discussions throughout Canada and surveyed 550 ICD members. Â
