Status of Women Committee on Feb. 9th, 2017

[The Chair, Conservative, Marilyn Gladu]

Good morning, colleagues. We're happy to back studying the economic security of women in Canada.

Today we have a number of witnesses with us from universities. We have Richard Nesbitt, a professor at the Rotman School of Management at the University of Toronto. Welcome, Richard.

Also, we have Marjorie Griffin Cohen, professor emeritus at Simon Fraser University. We're glad to have you with us today.

We're going to start with Richard.

Richard, you have seven minutes.

[Professor Richard Nesbitt, Professor, Rotman School of Management, University of Toronto, As an Individual]

Thank you, Madam Chairman.

I'd like to start by making a few remarks that mirror the written submission I made. I'm very pleased to have this opportunity.

Today I'm going to share some of the research we've done at Rotman School for a book entitled Ascent, which is coming out in June, published by Wiley. It's co-authored by Barbara Annis and me. Barbara is a well-known expert in the field of gender diversity, and I'm very proud to have had the good fortune to work with her.

For decades the burden of women achieving parity in leadership, whether in business, education, or government, has been placed squarely and wrongly on the shoulders of women alone. There have been few, if any, expectations specifically placed on men and what men can and should do to support and champion the advancement of women into positions of leadership.

What we need to do to change that is to make the case that is provable, based on evidence from an overwhelming number of experts in the field, a case that matters to those people who are in positions of power. Who are in positions of power? Why, men, of course. This is the challenge that many who have tried to create change in this area have been unable to overcome.

Men have played a very important role in the significant developments involving bringing women into positions where they can achieve the full realization of their potential. Men were the ones who created the legislation to give women the right to vote, and they were the ones who voted on that legislation. Why do we know that? Well, women didn't have the right to vote, so of course they were the only people who did that.

But how about the millions of men who marched in favour of the Equal Rights Amendment in the United States? Also, how about the business clubs that have more recently voted to end the decades-long process of excluding women? Of course, it was men who made these changes.

We're witnessing a growing realization on the part of men in companies around the globe that sharing leadership with women produces superior financial performance. Virtually every study conducted since the 1980s on the financial performance of companies with women on their boards and in positions of leadership has proven this to be true.

There are many male leaders today who are aware of this economic value, and what the vast majority are not aware of is what their roles are in achieving this. If you want your business to perform at peak, you must hire and promote women alongside men into management and elect them to your board of directors.

In the research, we've assembled dozens of studies that research the impact of gender diversity on boards and in management. In all but two papers out of almost 60, it's undeniably positive. The two outlying papers were not negative, but were, instead, neutral, one from Indonesia, and one from South Africa. All of the other papers were uniformly positive.

However, no one has ever said that you just start picking employees at random and that this will result in a better outcome for boards and management teams. You have to look for diverse candidates who will bring the ability to contribute, which will pay off more than sticking to the same tired criteria we used in the past.

An unfortunate fact is that the graduating class from most MBA schools today is only 30% women. It makes it difficult to achieve a 50% gender parity if you're only recruiting from a pool of 30%. But why don't you just widen your net? The fact is that the graduates of the undergraduate commerce program are 57% women, so why not hire these graduates and invest a little more money in training?

It may all start with the board of directors, which I want to focus on for a second. Boards of directors have a lot of power, and we call that corporate governance. Let's go through how they impact gender diversity. First of all, boards choose their own gender composition. Boards choose their own slate of directors who they put forward to the shareholders to vote on. You can tell by the facts of where we are today that most boards are comfortable with having underrepresentation in terms of gender diversity on their boards—quite significantly, as a matter of fact.

Boards choose the gender of the CEO. The only people who hire a CEO are boards, so whenever there's a change in CEO, they have a choice of whether to choose a man or a woman. Also, they're supposed to have a ready and available list of candidates at all times, under good corporate governance practices. Boards, directly or indirectly, influence the composition of the top management team. Ultimately, the CEO hires the top management team, but in most companies there's oversight of that by the board, so they ultimately control the gender composition of their top management team.

Finally, this has a virtuous circle to it. The more women you have on top management teams, the more candidates are then available for boards of directors, because those people would have the requisite experience to sit on boards of directors. This would have an automatic impact of improving the overall situation.

Let me finish with one obvious question. What chance do you think there is that a management team will be gender diverse if the board is not diverse? That's the situation we're in today. Our research on the S&P/TSX 60 largest companies in Canada says there's a direct mathematical correlation between the number of women on boards and the number of women in top management teams. There's a one-year lag. The more women you put on the board, one year later you will start to see more women showing up in the top management teams.

All the work that's going into changing the gender composition of boards is very worthwhile because it will ultimately affect the management leadership of the company, and ultimately that will improve the financial performance and other criteria that we value in our companies.

In conclusion, it is up to men to work with women to achieve this improvement. It's up to men in positions of power to ensure the addition of more women on boards and, ultimately, on the management of their organizations. It's up to men to share leadership with women in their organization, and we need to do that now.

[The Chair, Conservative, Marilyn Gladu]

Thank you very much.

Now we'll go to Marjorie Griffin Cohen.

Marjorie, you have seven minutes.

[Professor Marjorie Griffin Cohen, Professor Emeritus, Simon Fraser University, As an Individual]

Thank you.

I'm going to talk about only three things today. There is a lot to talk about, but I'm going to focus on gender inequality as related to workplace segregation. I'm going to look at the skilled building trades, teenage work, and a problem with a government program that you may not know too much about.

It's important to look at the skilled building trades, because Canada is now committed to spending many billions of dollars in the near future on improving Canada's infrastructure program. It appears that most of this will be done through the private sector, through P3 arrangements. It also appears that while some social services may be covered, it will primarily focus on physical infrastructure: roads, bridges, transportation, water systems, and maybe even social housing.

These are areas where men overwhelmingly dominate the workforce, accounting for about 97% of all workers. There are a great many reasons for this imbalance, but there are ways in which this can be changed by government, and I'm going to give you an example of one that worked very well. This was in Vancouver, in the 1990s, through the building of the Vancouver Island highway. It happened to pass through first nations land, so they had to have equity initiatives there, and at the same time we had a government that was committed to equity. That worked very well with having a training program for first nations and females to lead into a highway program. This was initially resisted by the private sector and by the unions. Nobody wanted it, but because we had a government that was committed, and because they actually controlled the labour force, which is too complex to explain now, it actually worked.

What I am saying is that there is a way in which this could happen in Canada through project agreements, if the government insisted on it through the P3s—and this should happen, because there is an enormous amount of federal money going into this. What it required was a considerable degree of compulsion on the part of the government initially, because neither contractors nor unions wanted this. A specific clause in the agreement saying that employment equity hiring “shall operate in priority” over other kinds of hiring is also extremely important, as is supportive leadership at the highest level. The premier of the province at the time was supportive of equity.

This was a huge success. Women went from being 2% of the labour force at the beginning to being 20% at a particular point in time. Of course, a new government came in and overturned all of that. It did not continue, but this was something that was extremely successful.

On teenage work.... I've done studies on all of these things, and that's why I'm bringing them up now, but we know very little about what's going on. What is particularly distressing is that in two provinces in Canada the work age is as low as 12, and Statistics Canada takes information only from ages 15 and on, so we don't know what's happening there.

What we do see is that female workers at a very early age are at certain disadvantages. They are more likely to have jobs than their male counterparts. On average, they make less than teenage males. They are more likely to have multiple jobs and to work throughout the year, and they are concentrated in fewer occupations and job categories.

Basically, what I am saying here is that there is too much we don't know about this. Part of the overrepresentation of women in that area of work may be because of the very high costs that have happened since austerity measures in education, and you have more women having to work longer because they make less, and so on. This is something to look at.

The final thing I want to talk about is the Canada research chairs. In 2008, I, with six other full professors in Canada, had a human rights complaint against Industry Canada because of the discriminatory nature of the Canada research chairs program, which is completely covered by the government. We had a win. We had a settlement in 2006, and the government did not meet its obligations.

What we are seeing is that universities are routinely not meeting the targets they are supposed to meet. I should say that the targets are extremely low. They were calculated in the worst possible way, so the targets are bad, and they're not even meeting them. There are no penalties for universities that don't do this.

By the way, I have given you copies of this, so you can see this more in depth. What I am saying is that we are now in a position to ensure that the Canada research chairs program meets the requirements of the human rights settlement of 2006.

By the way, we are either taking this to court or having another mediation. This is coming up and will be in the news soon. It would be a good thing to act on.

We need to revise the methodology, to define the target populations. We have to ensure that the CRC administrators comply with what we agreed to in a speedy and forward-looking manner. They are not doing it either speedily or forward-looking.

A lot of the people who get CRCs don't even apply. It's just a network. We have to be sure there are application processes because it is very poor. There are also limitations. For example, women who are...you can't apply for the lower tier if you are more than 10 years away from your Ph.D. This is problematic because many young women at that particular stage are having their children and thus need to apply later.

I'm going to close by saying that I want to reiterate that the federal government has a responsibility to ensure that its own programs promote equity for groups protected by Canada's human rights legislation, but it should also go further and ensure that when it injects money, whether it's for crisis control or climate change or infrastructure programs, it makes sure that there are equity conditions associated with that.

[The Chair, Conservative, Marilyn Gladu]

That's excellent. Thank you very much.

I want to welcome my colleagues Ted Falk and Greg Fergus, who are joining our committee today. We're going to begin with my Liberal friends with Ms. Nassif for seven minutes.

[Eva Nassif, Liberal, Vimy, QC]

Thank you, Madam Chair.

I would like to thank all the witnesses.

My first question is for Mr. Nesbitt.

In 2014, you received the Women in Capital Markets Visionary Award for your work on gender diversity within management teams and boards of directors.

How does the financial performance of companies with gender diverse management teams and boards of directors differ from those of companies with predominantly male management teams and boards?

[Prof. Richard Nesbitt]

Thank you for the question.

Very clearly, companies that have diverse management teams and/or diverse boards perform better from a financial perspective; they have higher earnings, higher return on capital, higher growth and earnings. They also perform better from an environmental perspective and in times of stress, for example, when a CEO resigns. There's a whole bunch of reasons for that.

To achieve that, you've got to get to a minimum critical mass of diversity on a board. Some of the research studies say that there need to be at least three women on boards, making up at least 30% of the board. It's the combination of men and women together that creates the improvement. With one or the other, you cannot get the improvement, but together you can.

[Eva Nassif, Liberal, Vimy, QC]

What non-financial benefits, if any, do gender diverse management teams and boards of directors provide to their companies or employees?

[Prof. Richard Nesbitt]

Obviously there are substantial benefits. In many companies, such as financial services companies, the majority of the employees are women. As we know, more than 50% of university graduates are now women, and in the next decade that will be 60%. You're seeing an entire universe of women who are able to contribute, but their abilities to move into leadership positions has been limited.

I think there's a tremendous number.... There's also social fairness. But I think motivating all your employees by creating an environment of fairness is very important.

I have focused on the financial performance because, quite honestly, that's what talks to men in power.

[Eva Nassif, Liberal, Vimy, QC]

Thank you.

My next question is for Ms. Griffin Cohen.

Your recently published work, Public Policy For Women: The State, Income Security, and Labour Market Issues, focuses on the public policy issues that do not address the needs of women.

In your opinion, which of the federal government's public policies do not address the needs of women? What steps could the federal government take to correct this?

[Prof. Marjorie Griffin Cohen]

There are things that the federal government does, but generally not very well. One example is gender auditing. Usually auditing comes after the fact and doesn't change anything. That doesn't really help.

Basically, you need to ensure that the examination of how something is going to affect women—any kind of public policy or legislation—happens at a stage when you can actually make a difference in what it looks like.

When we're dealing with very important things that are coming up, whether trade issues, climate change, or micro-level issues related to employment, the government needs to have a clear picture beforehand of what the implications are for women.

I've given you three areas where the federal government could act with regard to very specific labour issues. These are just a drop in a whole sea of things that could happen. It has to do with will and it has to do this with leadership on the part of the government.

By the way, just to respond to the issue of women on boards, it's very important that governments also appoint women to boards and commissions. This can be done extremely effectively. When that happens, you'll see that these companies have more day care centres, for example, available to their employees.

[Eva Nassif, Liberal, Vimy, QC]

Okay.

My question is for both of you.

What challenges, if any, do male-dominated sectors, especially business and science, technology, engineering and mathematics, present to women who wish to train and work in those sectors?

[Prof. Marjorie Griffin Cohen]

That is something that people have struggled with for a long time. The barriers are enormous in the universities. Part of it has to do with research funding. It's often presented as though it is because women are selecting to do things in which they're going to earn the least and have the hardest time getting jobs. That isn't what is happening, and there are inroads by brave people in areas that are dominated by men.

This is where public policy can really make a difference. I use the example of the Canada research chairs, because the target is 30%, and they're not even meeting it. That's very low compared to the number of women who have Ph.D.s. It's the kind of thing that can be worked at from the top. You need to work at both the top and the bottom on these issues. Even in the skills trades, women can do these and are happy to do them. They just can't get jobs when they do them.

[The Chair, Conservative, Marilyn Gladu]

All right, we'll now go to my colleague, Ms. Harder, for seven minutes.

[Rachael Thomas, Conservative, Lethbridge, AB]

Thank you very much for taking the time to be with us today to share your expertise in this area.

My first questions go to Richard Nesbitt.

Can you comment on what you've seen in your studies on the factors preventing women from being able to enter top positions within business organizations?

[Prof. Richard Nesbitt]

It's starting to change but it's changing very slowly.

There are some very significant role models out there today. Women role models in senior positions are important, not just to women, but are actually more important to men. Men need to see women in positions of power in order to get comfortable with that. That's starting to happen.

If you look at my written submission, you'll see that I talk about the notion that the first thing you have to do is to fix what we call the “plumbing”. There are barriers to entry for women. There are are all sorts of policies, procedures, and processes within corporations, within universities, and within government that basically deter women from applying. They make it harder for women to apply.

A good example is a recruiting night where the only recruitment people there are men, and they're perhaps playing a video of a hockey game as their entertainment. Maybe they have a male hockey star there. They're not doing anything deliberately exclusionary, but we've seen that this can create an environment in which women don't even bother to apply. So, first of all, you have to fix the plumbing.

I would go back to the other speaker's comment that the federal government has a lot of resources through which it could make a change to the situation at no cost, namely making sure that the crown corporation boards and government agencies are all gender diverse. I would set a target for that. I would commit to their all being gender diverse by a certain time. First, that would cause people to comply with that—and there's no reason they can't. Second, it would start to change the organization from within.

[Rachael Thomas, Conservative, Lethbridge, AB]

Mr. Nesbitt, you talk about being gender diverse. I think we have gender diversity. Most boards do have men and women on them. Are you actually saying you want equality, not just diversity?

[Prof. Richard Nesbitt]

The benefits come from achieving close to gender parity.

[Rachael Thomas, Conservative, Lethbridge, AB]

Okay.

[Prof. Richard Nesbitt]

If you had a board of all women, you would not be performing as well as if you had a diverse board of women and men.

[Rachael Thomas, Conservative, Lethbridge, AB]

Sure. How do you measure parity versus skill set and ability?

[Prof. Richard Nesbitt]

As I said in my remarks, you can't just go and hire people off the street. You need people who understand business. You need people who understand the industry. You need people who understand corporate governance. But those people are out there. I would leave it to the boards to make that decision, but I'd put the accountability on them to achieve a certain goal.

[Rachael Thomas, Conservative, Lethbridge, AB]

But you would be saying, of course, both that gender diversity is very important but also skill set. You would be saying that we need to be considering both, not just one over the other.

[Prof. Richard Nesbitt]

Absolutely. One of the challenges we have on boards today is that even the men on the board don't have the requisite skills—

[Voices]

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