Abstract

According to a recent report, only 15.9% directors of Financial Post 500 are women. When Crown corporations are removed, women make up only 10% of directors. The percentage of women directors in Canadian tech companies is slightly higher (16.1%), but when the boards of multinationals are excluded this figure falls to (11%), which is consistent with other sectors. Blackberry and Open Text have high representation, 28.6% and 37.5% respectively, but four others have no women on the board. Implications and remedies are discussed.

Introduction

The 2013 Catalyst Census: Financial Post 500 Women Board Directors was found that women held 15.9% of seats on boards of directors, an increase of 1.4 percentage points from 2011. It also reported that 39.5% of boards had no women directors, but 20.9% of boards had more than 25% women and 7.6% had more than 40% women.  

The industries with the lowest percentage of women directors are mining, quarrying, oil & gas extraction (7.0%) and construction (7.7%). The Catalyst Census did not examine computer technology industry on its own. It was partially covered by professional, scientific, and technical services (16.5%) and informational and cultural (20.7%) . So how does the computer technology industry compare?

Methodology

Tech companies were selected from the most recent publicly available FP500 (2011) and the composition of their Boards of Directors were considered. In selecting the companies, I focused on companies that provided a technology-value add. Consulting and services were included, but excluded retailers (Best Buy, and Glentel), telecos (Rogers, Bell), manufacturers (Creation Technologies), and distributors (Solutions 2 Go Inc.) of technologies. No information could be found for the boards of directors for SoftChoice and Compugen. However, both these companies listed their executives. SoftChoice had 1/5 women, while Compugen had none. The two figures for Ericsson, a Swedish company, are for shareholder-appointed board members and union-appointed board members. The former figure was used for comparison purposes. SAP, a German company, has an Executive Board, a Global Managing Board, and a Supervisory Board. The latter was used as the Board of Directors, due to the similarity of its role and responsibilities to a board of directors.

Results

* indicates foreign-owned subsidiary

Among tech companies, 16.1% of board seats are occupied by women. When multinationals are excluded, this figure drops to 11.0%. Canadian-owned tech companies at the top of FP 500 have very good percentages. Blackberry has 28.6% and Open Text has 37.5%. But these impressive numbers are offset by the four at the bottom with no women directors.

Discussion

Although, the Catalyst Census pegs the percentage of women directors at 15.9%, there are other conflicting measures. A study by executive search firm Spencer Stuart found that women were 20% of the directors on the boards of the 100 largest Canadian companies. This proportion placed Canada ahead of US and Britain. Another report by TD Economics, stated that women represented only 11% of board members of companies on the S&P/TSX composite index. A similar survey by GMI Ratings put the percentage of female board members at 13.1%, earning Canada a rank of nine among major industrialized nations. The percentage of women on the boards of directors in computer technology companies is in line with these figures.

A natural question to ask is whether there is a sufficient talent pool of women to draw from in computer technology. Female participation peaked in 1984, when 37.1% of computer science bachelor’s degrees were earned by women. By some estimates, 20% of current programmers are women. Both figures are higher than the average percentage of women directors.

At the other end of the pipeline, women comprised 12.9% of the graduates from bachelor’s degrees in 2012. Only    13% of series A venture capital funding went to companies with female founders.

Clearly, more work needs to be done. The Ontario Securities Commission has proposed new disclosure requirements for corporations. They would be expected to disclose their policies on female representation on their boards and in senior management; on how women were considered in the director selection process; and certain quantitative information about representation of women. Companies would be expected to “comply or explain,” but they would not be required to meet quotas.

Catalyst is leading an effort to increase the participation of women on boards. They have created the Catalyst Accord for Canadian companies to pledge to increase the percentage of women directors on the FP 500 to 25% by 2017. Catalyst will support this effort by helping the companies recruit women directors, building a cadre of “board-ready” women, by honouring best practices with an annual award, as well as raising awareness.

One actionable, and non-discriminatory, practice is interview at least one woman candidate for every job opening, especially for directors and senior management. Subsequently, the hiring decision can be made on the basis of merit. If a woman candidate cannot be found, recruiters must look more broadly.

Conclusion

The board of directors is highest decision-making body in a corporation. They have a wide range of responsibilities, including setting direction for the company, approving budgets and executive compensation, and oversight of the chief executive. Consequently, it’s important to have a group that makes good decisions and this usually means having a diverse group of directors. The Conference Board of Canada and the Ontario Women’s Directorate found that companies with more women on their board of directors have:

1. Higher return on investment and higher return on sales;
2. Better able to attract and retain excellent employees;
3. Identify and foster innovation more effectively;
4. Have better insight into the needs and preferences of clients;
5. Exhibit stronger performance on non-financial indicators, including social responsibility; and
6. Boards that function more effectively, are more proactive and objective.

These positive effects would suggest that women directors are highly desired. Yet the percentage of women directors on the FP 500 is 15.9%, while the average percentage in Canadian tech companies is 11%. There is much room, and opportunity, for improvement, both in tech specifically and across the FP 500.