Corporate Governance: Women on the Board of Directors in Canada - Assignment Example

CORPORATE GOVERNANCE ………………………….. College ……………………………… ……………….. Covering Letter Dear Sir, According to Catalyst most recent report, Fortune 500 companies with higher proportion of women on their boards have shown higher financial performance than those with lowest women representation (Catalyst.org, 2014). Increased representation of women on boards can significantly contribute to the economic growth since women representation brings diversity of opinions, influences majority of purchasing decisions, improves company image with stakeholders, creates a culture of inclusion and brings stronger financial results. To improve women representation on boards, Canadian government has strongly supported gender diversity and has requested Ontario Securities Commission to undertake a public consultation process regarding disclosure requirements to be followed by businesses. This paper is presented to the regulatory authority to show effective policies for increasing the number of women on corporate boards and to specify whether disclosure requirements would be appropriate and useful. This paper answers five consultation questions set out in the OSF Staff Consultation Paper. Answer-1 Following are some of the most effective policies to enhance increased women representation on boards and senior management and leadership positions. Organizational strategic initiatives: At corporate levels, developing effective strategies based on organizational culture and workplace environment can further enhance increased women representation on boards. Understanding what is going on in the firm and how gender equity can be maintained in a given workplace context through certain strategic efforts is a basic key to developing such strategies. The strategic program should start from selective hiring, recruitment, training and development programs. Status of Women Canada (2014) suggested companies to consider women from outside the ‘C-suite’ with skills and talents required for effective board performance. For this purpose, market expertise, industry knowledge, functional capabilities etc of women can be considered. A very strong positive approach to retaining women on board and leadership positions is another essential requirement for enhancing women representation. Women on leadership and directors’ positions can be retained through gender-equity organizational culture, special incentives on high-performers among women, equal consideration for women and other strategies such as team-work, reward and recognition, knowledge-share etc. Management approach: It is more important that the commitment from management needs to be reinforced by provision of proper resources, monitoring of women leadership targets and timely actions, presenting relevant reports in and other critical reports and holding all staff accountable for achieving the targets. Legal tools: Legal tools such as disclosure requirements, enforcing ant-discrimination law can be useful for enhancing women representation on boards. Focus on women leadership: internal training and development programs such as mentoring and monitoring of women on boards will also be useful for increasing women representation. Answer-2 In order to increase women representation on boards and senior management positions, following disclosure requirements will be most useful and appropriate. 1- Policies and strategies for enhancing women representation (Iliopoulos and Stroz, 2014): Since increasing women representation on corporate boards and advancing women in to leadership positions are business imperative, companies should disclose all its specific organizational strategies and policies that have been implemented and developed to increase women representation on boards. 2- Board’s consideration of women for nominating directors (Iliopoulos and Stroz, 2014): Similarly, disclosing board’s consideration of women representation in nominating directors will be most appropriate as it can certainly give meaningful information to the relevant stakeholders about company-wide practices of considering women representation. 3- Board’s consideration of women representation in executive officer positions (Iliopoulos and Stroz, 2014): Investors and shareholders will be benefited from having greater transparency in to understanding whether an issuer considers women representation in executive officer positions while making executive officer appointments. 4- Targets regarding women directors and women executive officer positions Iliopoulos and Stroz, 2014): It is again more appropriate to show explicitly about company’s specific targets regarding women directors and women executive officer positions so that investors and shareholders will get greater insights about the company. 5- More importantly, disclosing explicitly the percentage of women on corporate boards and senior management will be more appropriate and useful for increasing their proportion in representation. Answer-3 The proposed model disclosure presented in the OSC consultation paper requires non-venture issuers to exhibit information on policies, director selection and board evaluation processes related to women representation on boards and senior leadership positions. All these contents are appropriate. However, some other contents in the model disclosure can be suggested. Yes, there are additional disclosure requirements. The Pay Equity Commission, for instance, has suggested some additional considerations for strengthening the scope and contents for disclosure requirements. They are: 1- Specify gender-goals: Businesses are required to specify their gender goals in both short and long terms so as to provide meaningful information about their progress towards achieving their goals. 2- Provide an explanation and a plan of action: When initial targets are not met or the basic gender goals are not achieved, businesses are required to provide an explanation and action plan including assigned accountabilities for achieving targets in both its short and long terms. 3- Disclosing about whether or not the business has been subjected of any issues: It is again more important for firms to disclose whether or not they have been ever subjected of any orders or issues of findings of employment discrimination, harassment, human rights violation, or pay equity violation under the concerned legislations and rules. 4- Disclosing percentage of women on boards and director positions: number of women leaders or percentage of women representation in executive officer positions need to be considered. Executive officer positions are critical as far as diversity and women contribution to performance as well as leadership roles are considered. All these information are critically important because they can directly influence the voting and investment decision among shareholders and investors. Answer- 4 The non-venture issuers are required to disclose measures of women representation in boards as well as senior management positions in terms of percentage. Pay Equity Commission (2014) suggested following qualitative information regarding the representation of women on boards for non-venture issuers to be disclosed. Corporations are required to disclose benchmarking practices and to measure and report on their progress on gender equality in their workplace environments. This reporting should include information about data on recruitment, retention and advancement rates by gender. As organizational culture is an important element that influences the shared values and beliefs among the workforce, businesses are also required to adopt best organizational practices. Non-venture issuers are required to disclose executive compensations by gender Explicitly indicate about diversity among women in leadership roles In order to indicate trends occurring across the province, an analysis of data by industry and company size need to be disclosed. In order to gain a ‘critical mass’ of diversity, corporate are also required to indicate the numbers and percentage of women representation on boards and to explicitly mention about whether they serve more than one board. To facilitate comparison between industries and reports on progress across province, standardized definitions for senior executive positions, mainly to include about women positions, to be clearly disclosed (Pay Equity Commission, 2014). All these disclosers are required not only for non-venture issuers, but also for its subsidiaries. Answer-5 It is extremely important that women representation in corporate boards and senior executive positions are to be increased. All those organizational policies that can increase individual’s leadership capacity including mentoring, counseling, incentives, rewards and recognition, team-work, leadership etc can be considered. Similarly, voluntary institutional initiatives such as diversity recruitment, retention as well as promotion targets, diversity training and development programs etc can be enhanced. Legal techniques such as anti-discrimination laws, quota laws etc can also be enforced. All these practices are recommended for enhancing women representation in boards as well as senior executive management positions. A gender diversity policy for non-venture issuers can be recommended. The gender diversity policy should contain provisions such as 1) policies regarding percentage of women on boards, 2) consideration of women representation in director selection process, 3) consideration of women representation in board evaluation process and 4) measurement regarding women representation in the organization etc. These contents for the policy are recommended because they provide meaningful information to the investor and shareholders and these can significantly provide to unified guidelines to serve national equity goals. Yes, non-venture issuers are required to ‘comply or explain’ with the requirements. For strengthening this model, OSC has recommended that companies should set targets, accountabilities and consequences for achieving women representation on their boards. They also should report on their progress. These disclosures in turn can help companies succeed in increasing the proportion of diverse women in leadership roles. References Anand, A, 2014, Getting women on corporate boards: Canadas middling approach just might work, The Globe and Mail, Retrieved from http://www.theglobeandmail.com/globe-debate/the-middle-ground-on-board-diversity/article17008105/ Iliopoulos, A and Stroz, C.L, 2014, Women on Boards: Proposed Disclosure Requirements, Cassels Brock Lawyers, Retrieved from http://www.casselsbrock.com/CBNewsletter/Women_on_Boards__Proposed_Disclosure_Requirements Ontario Securities Commission, 2013, OSC Staff Consultation Paper 58‐401: Disclosure Requirements Regarding Women on Boards and in Senior Management, OSC, Retrieved from http://www.osc.gov.on.ca/en/SecuritiesLaw_sn_20130730_58-401_disclosure-requirements-women.htm Pay Equity Commission, 2014, Submission to the Ontario Securities Commission (OSC) on Disclosure Requirements Regarding Women on Boards and in Senior Management, Pay Equity Commission, Retrieved from http://www.payequity.gov.on.ca/en/about/pubs/submissions/osc_submission.php Securities Law and Instruments, 2014, Proposed OSC amendments to Form 58-101F1 Corporate Governance Disclosure of national instrument 58-101disclosure of Corporate Governance practices, proposed disclosure requirements regarding the representation of women on boards and in senior management, OSC, Retrieved from http://www.osc.gov.on.ca/en/SecuritiesLaw_ni_20140116_58-101_pro-amd-f1.htm Status of Women Canada, 2014, The Business Case for Women on Boards, Status of Women Canada, Retrieved from http://www.swc-cfc.gc.ca/initiatives/wldp/wb-ca/booklet-eng.html Read More