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March 10, 2023

Spotlight on inclusive boards: Demystifying the ‘I’ in DEI

By Shona McGlashan, Principal, McGlashan Consulting
 
Do boardrooms belong to everyone? You might think so from observing the proliferation of articles, op-eds, conference sessions and workshops on the importance of board diversity. But just because a group is diverse, it doesn’t mean it’s inclusive – a fundamental requirement for getting the best decision-making outcomes. As Josh Palmer of OnBoard asserts, inclusion is “the superpower that activates diversity.” [1]
 
Diversity: Are we there yet?
Canadian directors now understand that a diverse board – diverse in terms of sex and gender, cultural background, experience and age – is a requirement for organizational legitimacy. Shareholders, employees and the public all demand boards that are representative of 21st-century Canada. Studies also repeatedly show that diverse groups make better decisions: diverse boards lead to increased innovation [2] and levels of risk-taking that maximize performance. [3]
 
Dr. Carol Liao, Associate Professor and Director of the Centre for Business Law at UBC Allard School of Law, observes, “We’ve decided that board diversity is the right thing to do ethically and the bright thing to do in terms of organizational performance. And yet, the numbers still don’t add up. While Canadian boards might be heading in the right direction, progress is so slow we might not see gender parity in my lifetime – let alone other types of equal representation.”
 
While all-male boards seem like an anachronism, 11.6 per cent of all TSX-listed company boards still have no female directors. And only 10 per cent of board directors at corporations governed by the Canada Business Corporations Act (CBCA) reflect diversity beyond gender: members of visible minorities, Indigenous people and people with disabilities.[4] Consider those numbers in the context of one in four Canadians being a member of a racialized group and a similar proportion living with a disability,[5] and you’ll see we have a long way to go.
 
Unlocking the superpower of inclusion
In the early days of my governance career, a board chair told me, “On this committee, we play total football.” What he meant was that my contribution was not just valued, it was expected. He had created a culture in which everyone’s voice was heard. For a 20-something in a room with more experienced professionals, it was a powerful moment that fundamentally shifted how I saw my role.

But not all new directors are as fortunate. Without a deliberately inclusive culture, even experienced individuals can take a while to find their feet. Ellen Pekeles, C. Dir, was already a seasoned executive when she joined her first board but recalls her experience.
 
“The first time I walked into a boardroom as a director, I did not feel completely comfortable,” she says. “It probably took me a year to contribute as fully as I was used to in my executive career – largely due to the non-inclusive style of the board chair.”

What does an inclusive board look like?
As Mark Williams, CEO of the Toronto Symphony Orchestra, puts it, the aim of inclusion is “not to kick anyone out but to make the tent bigger, to open arms wider, to bring in more people.” Every inclusive board will look and feel different. What they have in common is:
  • A welcoming, adaptable culture that acknowledges all participants bring value.
  • Psychological safety, meaning that all participants feel safe to speak up, challenge ideas and take risks.
  • Thoughtful decision-making in which alternative perspectives and possibilities are explicitly called out and explored before a decision is reached.
  • Collegiality without groupthink.
  • Mutual respect and trust.
Go deeper This is the first article in a series on inclusive boards in which I’ll explore how to deliberately create a culture that ensures boardrooms really do belong to everyone. In upcoming issues of the Director Lens Communiqué, I will look at how meetings are run, director recruitment and orientation, education, and how boards oversee organizational strategy – all through a lens of inclusion.

Shona McGlashan is a Fellow of the Chartered Governance Institute. As principal at McGlashan Consulting, she advises organizations, boards, and leadership teams on corporate governance, EDI, and workplace wellness. She lives and works on the the xʷməθkwəy̓əm (Musqueam), Skwxwú 7mesh (Squamish), and Səl ̓ ı́ lwətaʔ/Selilwitulh (Tsleil-Waututh) Nations.
 
Sources
  1. Good governance isn’t what you think it is, Josh Palmer, December 2022
  2. Di, H., An, J., & Yao, M. (2022). Finding the key to the black box of board diversity and firm performance: A mediating effect analysis of technological innovation. Frontiers in Psychology, 13.
  3. Wabara, K. (2021). How Many Female Seats on a Board? Board Gender-Diversification, Power, Risk-Taking, and Financial Performance. Corporate Finance: Capital Structure & Payout Policies eJournal.
  4. Osler 2022 Diversity Disclosure Practices
  5. Statistics Canada 2021 and 2017 censuses
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