The legislation mantra

I'm From the Government and I'm here to.......

Really?
Here to help, are you?!

The current Canadian mantra is that companies can set targets for themselves, make good use of recruiting companies and then watch the market place for strong female candidates for their boards. 

One voluntary initiative, launched in 2012 is the Catalyst Accord. The Accord was a call to action for Canadian corporations to increase the overall  proportion of FP 500 board seats held by women to 25% by 2017.

They didn't make it.

Also in 2012, Canada's then Conservative government signalled its intent to advance as a matter of federal government policy , gender equity in the board room. The scheme was to link corporations to a network of women with professional skills and expertise. 

Kinda smacks of candidate Romney's infamous election gaff when he announced that he had binders of resumes of competent women to serve in his government. 

But, back to Canada.

The government of the day acted in true Canadian fashion and ....appointed a committee (advisory council) to suggest to businesses how to recruit more women to directorships. These, presumably are the same companies on the FP 500 who already knew how to proceed with recruitment consultants in place to help them. 

Now, we wouldn't be Canada if we let the Feds act alone. No, we have provincial governments who can also duplicate what the Feds do. In 2013, Ontario (also in its budget address) declared a goal to generate broader gender diversity inn board rooms across businesses in Ontario. It enlisted the help of the Ontario Securities Commission through which 50% of Canadian companies are registered. The intention was to set out comply or explain guidelines for companies to describe what they are doing to bridge the gender gap in Corporate governance. However, it would be to government to consider the best way for firms to disclose their approaches to gender diversity.

The OSC would then take steps to amend its disclosure rules by requiring publicly traded corporations to describe how they are promoting gender equity , in their annual reports. 

Institutional shareholders-who hold the majority of shares in corporations listed on the TSX, agreed with this approach (through the ICGN. The CCGG however added the caveat that this should be re visited in 3 years to see if the comply or explain approach actually worked. The CCGG also suggested that corporations also describe how their efforts are working. If they are not and are not meeting defined targets , they are expected to explain why. 

The Quebec government has had nothing to do with this meely mouthed approach. In 2004, Quebec imposed a 50:50 rule for public sector companies. By 2011, 52% of directors were women. 

In 2011, a Quebec Senator, Celine Herieux-Payette introduced Bill S 203, which was subsequently referred to the Senate Standing Committee on Banking, Trade and Commerce. The Bill recommended that an approach similar to PQ's be adopted for Canadian Crown Corporations. It was subsequently re-introduced with a 40% quota but has failed to get traction. 

The Canadians might want to consider the US approach, which is, actually getting some traction. In 2009, the SEC amended item 407(c)(2)(vi) of its regulations S-K to set out guidelines for Nominating Committees to follow with respect to recruitment practices and attention to diversity practices. It would not be a federal case for Canadians to do the same with respect to Canadian NP 58-201, 58-101 FI or 58-101F2. 

Of course, given that this would be specifically to advance gender equity, there would need to be a clear definition of what is meant by diversity. 

Does comply or explain work...or are mandated quotas better?

Strategies for change

Change brother- lets change

Change can happen but it needs to be created. 

While women are poorly represented on Boards, once they do secure a directorship, women are fairly well placed to promote diversity. Boards may typically include:

• executive/strategic
• nominating
• compensation
• audit
• financial
• CSR/public responsibility

In a couple of studies, done 20 years apart (1988, 2008), women were found to be most likely to serve on the Nominating, Audit and, CSR Committees. The Nominating Committee is well positioned to: 

• re-define the pool of eligible directors
• reconsider the eligibility criteria so that, for example, women who have other than senior management experience are given the opportunity to serve as directors;
• consider qualified women from inside the corporation for board subcommittee involvement as a proving ground for their abilities.

But, an area as yet untapped as a resource for boards may lie in female led owned businesses. Fifteen years ago , in the US women owned 6.5 billion businesses constituting 28% of business, accounting for $951b in sales. 25% of 3000 family managed businesses indicated that their next CEO would be a woman. 

Is that merely a nod to the God of Diversity?

No.

Female owned businesses are nearly twice as productive as their male counterparts.

There are other strategies for women aspiring to a corporate directorship. Remember yesterday's post? Women at senior levels in the voluntary and public sector were also sought out by evergreen committees and by nominating committees. In fact, female community leaders make up 27% of corporate directorships whereas male community leaders represent 12.6% of directorships. 

Consider also the strategic needs of the corporate sector-and particularly corporations which may be in trouble. In one study, 19 female board appointments for time of appointment and business sector were compared to 19 male board appointments. After comparing the annual stock performance of all 38 corporations, it was found that women were often appointed to leadership positions "under problematic organizational circumstance associated with a greater risk of failure and criticism". Therefore, one might conclude that corporations faced with certain problems may be well advised to recruit women. 

Corporations might want to try to be proactive in advancing the cause of gender diversity. The National Bank introduces its diversity policy statement by declaring 

• Diversity is critical. Female nominees are to fill 50% of all directorships that become vacant.

Governments too (!!) have a role in advocacy and can also promote diversity. While the imposition of quotas for Crown Corporations, Agencies, Boards and Commissions, so often troubled, accused of mismanagement and generally not transparent, might consider recruiting women to their ranks by assigning quotas. But, Governments might also want to consider quotas for publicly traded corporations. The normal rate of percentage increase for female directors in any country was 1% or less in years prior to quotas> What quotas have accomplished in these same countries has led to an increase in gender diversity than previously seen.

Is all lost?

Is all lost? 

Not really and not at all. In fact, the board recruitment climate for women is very positive, according to a Spencer Stuart report (2016).

Search committees are  broadening their search criteria to consider what have euphemistically been referred to as "non-traditional sources". To be sure, likely candidates ought to have the requisite skills including: executive experience, industry knowledge and market understanding. However, and certainly in a country like Canada, political and public sector connections are vital. And, executive experience need not be specific to a particular industry. It may also include senior public service experience either as an ADM or DM. For this reason , first timers need not be shy. In 2010, 29% of board appointments were , in fact , first timers. Over the course of the next 7 years, this has inched up to 30% of board appointments. In 2011, almost 50% of Canadian director appointments had no executive experience. 

Women who have an interest in serving on Boards, may wish to compare their backgrounds to those of newly appointed directors. Three years ago, Ernst and Young reviewed the biographies included in proxy statements for Canadian directorships held by 275 women who joined company boards in 2011 and 2012. While 63% were current or former public corporation executives, most of these held executive positions other than CEO. A companion study done by Spencer and Stuart (circa 2011) noted that the qualifications of new directors sought by corporations more typically reflects the strategic needs of the corporation. 

The interests  and expertise recruited included besides executive leadership and industry experience, as the top 2 qualifiers, in order of preference:

• financial/accounting
• expertise in governance ( a very critical skill in this climate post 2008 financial collapse)
• operational
• international (this one qualification adds 4000 women to the potential pool of candidates, if one is selecting from abroad)
• strategic planning and marketing
• IT (especially important given the current climate of cyberwarfare being prosecuted against business world wide)
• public policy (important in a period of increased government activity in the market)

Don't expect the topic of diversity to be even considered. 

Ad don't expect regulators or government to introduce legislation to advance equal opportunity legislation. The notion that mandated pay equity would make changes to women's earning power has turned out to somewhat ineffective, in this country. And, yet, where it has been properly implemented-and accepted-by industry, it is more likely that women will be well represented on corporate boards. 

Where are we going with this set of blogs.?? What I am doing is outlining more than a few of the impediments affecting women as they rise to positions of authority and power within the corporate world. 

I will eventually get to a discussion of  what strategies women might use to rise to directorships. 

Ultimately, I will proposing a board game using this information. 

Discrimination against women

Discrimination against women

As noted in my previous post, discrimination against women makes no sense: not from a human rights perspective, not from a civil societies perspective and not from a business perspective. 

Here are a few practical reasons why this is dumb:

• adding women to the governance mix increases the diversity of perspectives and opinions and reduced the chance of mistakes created by group think.
• having women involved in corporate governance will improve the corporation's ethical behaviour (Stedman at al 2007)
• including women on the board the board is more likely to be involved in power sharing amongst its members thereby creating a culture of inclusiveness (Bradshaw et al. 1992, Burke 1994, Angelides 1994)
• the board is more likely to conduct its conversations in a civil tone 
• by adding women to the board, it is less likely that the corporation will fail (Burton & Ryall 1995)
• by adding women to the board, the corporation's image amongst shareholders and within the community will be enhanced 
• by adding women to the board, corporations will enjoy a 53% higher return on equity, a 42% higher return on sales and a 66% higher return on capital. 

Before we launch into an indictment of boards of publicly traded companies, consider how fairly are women treated in Canadian society. Women have comprised the fastest growing sector in the labour force. Women's educational attainment has now surpassed their male contemporaries.

• Yet, women are over-represented in informal employment, part time work and unpaid work.
• Women are also paid at 75%-80% of their male comparators. And,
• they are under-represented in senior management and as directors.
• Only 15 CEO's in the Fortune 500 are women. 6.2% women senior officers had top earner spots. 
• 37% of management jobs are held by women and the majority of these are relatively junior management positions. 

Harassment-fix it by putting women in leadership positions

Harassment-one way to fix it: Put women in leadership positions

Several months ago, I had written about harassment in the workplace. Subsequently, our US cousins/brothers/sisters have been challenged by accusations of  appalling sexual harassment and, at times assault, in the workplace. Similarly, these accusations have been made in Congress. 

Sadly, the US experience is not unique...as far as I can tell. 

A solution used in other jurisdictions has been to aggressively promote gender equity throughout society. More recently, in Canada, the Senate has promoted a broader discussion of gender equity on corporate boards. 

Why care?

Well, companies with more women on boards perform better than those publicly traded companies which do not have women on boards.
Certainly, in Canada, there is a certain bias against recruiting women to boards. However, newer government regulations, regulator expectations (like the TSX) and finally, shareholder advocacy are reversing this stupid bias, thereby enhancing corporate value
Curiously, and as an aside, governments do not appear to be meeting the same standards for appointments to their own agencies, boards and commissions as are businesses-or at least publicly traded businesses. One would think that for all their bluster, all levels of government in Canada would be as aggressive in fostering gender equity. 

What context?

Indeed.

Effective Dec. 31/14 securities regulators in all (Canadian) provinces and territories (except Alberta and BC) adopted a comply or explain strategy with amendments to existing corporate governance disclosures per NI 58-101. 

In April 2015, the Federal Government announced that it would propose amendments to the CBCA. These amendments would require companies incorporated under the CBCA to describe their policies regarding gender diversity on the board of directors. 

In September 2015, securities regulators on 7 provinces and 3 territories published the results of an audit of compliance through Multilateral Staff Notice 58-307. 

Will this change anything?

It should but.....

Bias against female staff still exists despite these regulations and the business case to recruit women to corporate boards. What are these biases?

• recruiters and Nominating Committees believe that women do not have enough relevant experience;
• Boards often believe that family responsibilities would hinder women in the fulfillment of their governance responsibilities;
• social systems within which men and women interact are (still) gendered;
• there persists within society sex role stereotyping;
• it is thought that women have interrupted career paths caused by marriage, pregnancy or because women will limit their career options to support their husbands;
• it is thought that women are reluctant to network and self promote.

Neither regulators, politicians nor intelligent business leaders believe any of this. As a consequence , there is now a national goal for public traded corporations to have boards which are 30% gender balanced.
But this is widely regarded as tepid and a watered down response to Senator Herieux-Payette Bill 207. This Bill was designed to modernize the Board composition of certain corporations, financial institutions and parent Crown Corporations. Her goal was to have 50% female representation on Boards. Subsequently, Bill S-217 was introduced recommending a 40% quota on certain boards etc. Bill C-473 was introduced to balance gender proportionality on state corporations. 
Enter the great Canadian fix.
Don't mandate the private sector.
Introduce comply or explain (without consequences...rely on moral suasion, instead)

Through the comply or explain mandate issued by regulators, there is an expectation that there is a greater participation of women in the governance recruitment process. Further, publicly traded companies are being expected to demonstrate through statements of policy, the practice of HR departments and the practices of the nominating committees that they are aggressively supporting the recruitment of women on to boards. 

Books and Games for whistleblowers

Yes: Books and Games

Yes there are games for whistleblowers teaching you what to watch for, how to respond to immediate threats and with incentives during and after the game-assuming you survive. 

Incentives??

If you are a US citizen, it is wise to clue into the relevant legislation:

Sarbanes Oxley Act of 2002 (the first to encourage whistleblower activity)

Dodd Frank Wall Street Reform (the first to propose whistleblower protection)

Consumer Protection Act 2010 (the first to propose whistleblower incentives).

The Bothwell Law Group has a good article expanding on all this.

whistleblowerlaw.com/game-changer-for-whistleblowers

Not surprisingly, they recommend that you engage a lawyer BEFORE you launch into your actions, just for protection. 

It is sage counsel.

Craig Deitrich has some excellent resources to view in the area of corporate social responsibility.
craigdietrich.com

His game, in development, is Whistleblower: The Game. The enemy is the military industrial complex. 

Watch for this one!
whistleblower.games

Another game- is Outlast: Whistleblower by Red Barrels.This can be downloaded to your PC or purchased through PlayStation and Xbox. 

The player is Waylon Park a software engineer under contract to Murkoff. His task to alert journalists around the world about the malfeasance of profit oriented doctors and scientists, doing irresponsible psychiatric experiments on the patients at Mount Massive Asylum. 

For a real life adventure, you may want to read these books.

1) Extraordinary Circumstances : The Journey of a Corporate Whistleblower

The author is Cynthia Cooper, who was Worldcom's Chief Audit Officer. She was responsible for exposing the largest fraud in Corporate history. It reads like a whodunit-which I suppose it is. 

• who could she trust with her findings?
• how might she deal with her own job loss?
• how do you protect yourself when you are being physically threated?

2) Exposure : Inside the Olympus Scandal: How I went from CEO to Whistleblower

The author, Michael Woodford, describes his journey from an ambitious manager on the rise in the corporate world, to the senior executive with the unenviable task of calling out his Board of Directors. For those who wish to study this in a more classical business case study, the case can be downloaded from the University of Western Ontario B-School site. (Ivey School of Business)
ivey.uwo.ca
or directly to its case catalogue
iveycases.com

These 2 cases have much in common with the movie, the Insider, cited in my last posting.

• who do you trust with your findings?
• how do you deal with job loss and, effectively career ruination?
• how do you protect yourself against physical and psychological threats? 

Journalists are coming under increasing scrutiny and are being increasingly threatened by the Trumpty Dumpty White House. Fear of exposure is a remarkable sensation and quite often results in the guilty trying to cover up malfeasance and treason (likely in this case). The next blog submission with focus on the role portrayed by journalists as whistleblowers in film adaptations. 

Still wondering what employer I was referencing?
Check back in a week and all will be revealed!!

Activist Whistleblowers

Activists are driven

If you are going to be a whistleblower, you must be driven by the cause you are advocating and by the wrong you are trying to expose. You are an activist.
An activist is:

• an especially vigorous advocate of a cause or;
• a person who campaigns to bring about social or political change (attribution Wikipedia)

Some activists are well insulated from institutional reprisal. Take, for example, Media Matters and its role in attacking the non response of Murdoch Enterprises to the culture of sexism and sexual harassment at Fox News through their advertisers.  Had it not been for this whistleblower organization, would Bill OReilley still be there? Would Sean Hannity still be running his ugly mouth?Would those advertisers, outed by Media Matters still be advertising? 

Being an activist is not for the faint of heart-as I have pointed out before.
If you want to take a look at perhaps the top ten whistleblower movies go to 

toptenz.net/top-10-whistle-blowers.php

My favourites include:

1) The Insider

with Russell Crowe and Al Pacino. Its the story of how Jeffrey Wizard exposed the cigarette industry for the criminal purveyors of poison that it is. The lengths that the separate cigarette companies went to to shut him up will shock you.

youtube.com/watch?v=5rkvxi5hdbA

2) Silkwood

set at a plutonium processing plant, where a worker is purposely contaminated, psychologically tortured and possibly murdered to prevent her from exposing worker safety violations.

youtube.com/watch?v=1KGmkaoIbQo

3) The Most Dangerous Man in America

The story of Daniel Ellsberg, a Pentagon insider, and his efforts to expose the fraud of the War in Vietnam and the complicity of successive US Presidents in perpetrating that fraud. Dynamite!

Both President Johnson and  Secretary McNamara accused leakers as being un-American and seditious.  
Sound familiar? 
Sound like something going on today??
And yet, had Ellsberg not leaked Pentagon information to the media, it is unlikely that the US public would have realized that the War being prosecuted by their government was a consequence of corruption and dishonesty at the highest levels of government and the military. 
youtube.com/watch?v=1G1SaatIp0w

4) North Country

is a fictionalized account of the first major sexual harassment case in the US. Jensen v Eveleth Mines. This one would be mind boggling if we hadn't seen what is happening at Fox News, now. Oh yes, the US citizens elected a President who bragged about sexually assaulting women and ogling teenagers dressing. 

youtube.com/watch?v=P6Wk91Om3hs

5) Erin Brockovich
is the story of a former beauty queen with no education, 3 kids by 2 different men, no job and, evidently, no future who by sheer will power convinces a small real estate law practice to take on a big corporation which is systematically poisoning a town's water supply. A whistleblower does not necessarily need to be an insider, have expertise or be well placed politically. What a whistleblower needs is a belief in a cause, a belief in oneself and grit. 

6) Semper Fi: Always Faithful
is a sleeper in this list. Its the story of a dedicated marine Corps Master Sergeant whose daughter dies of leukemia. His search for  answers leads to the discovery that the Marines were covering up the largest water contamination incidents in US history. Talk about betrayal of epic proportions. 
youtube.com/watch?v=3d532nOYjSs

Happy watching. 
The next blog will deal with some books you might want to consider at your friendly library