Voices and perspectives of women and minorities in Canada are largely excluded from corporate decision-making at the board level. Furthermore, legislation to encourage gender diversity on corporate boards has had little impact on the percentage of women on boards. Women on corporate boards made up 11% of board members in 2014 when the legislation was introduced; by 2017 this had increased to 14%. What are corporations doing to resist diversity and maintain the status quo? How are concepts of merit used to keep women out of corporate boards?
A study conducted by researchers from Carleton University, the University of Ottawa and Wilfrid Laurier University looked at diversity disclosures of 119 public corporations traded on the Toronto Stock Exchange (TSX). The objective was to explore how corporations responded to diversity disclosure requirements introduced by the Government of Ontario in 2014. The research found that many corporations crafted their disclosures to resist change.
The following article highlights the findings of a study authored by:
- Walid Ben-Amar, University of Ottawa
- Merridee Bujaki, Carleton University
- Bruce McConomy, Wilfrid Laurier University
- Philip McIlkenny, University of Ottawa
Gendering Merit: How the Discourse of Merit in Diversity Disclosures Supports the Gendered Status Quo on Canadian Corporate Boards
How firms disclose diversity varies widely
Legislation in Ontario, Canada, requires publicly traded companies to either have policies in place to increase gender diversity among their boards of directors, or explain the lack thereof. Of the 119 companies studied, half (59) were TSX60 firms, which are the 60 largest companies listed on the Toronto Stock Exchange. The other half (60) were non-TSX60 firms. Diversity disclosures among the corporations studied varied widely.
Policies on nominating women: Over half (59%) of TSX60 firms had a written policy for identifying and nominating women board directors compared to less than a third (28%) of non-TSX60 firms.
Diversity targets: Few companies had diversity targets (34% TSX60 firms, 18% non-TSX60 firms).
Definition of diversity: What constitutes diversity varied greatly, with 49 distinct dimensions of diversity among the firms. Gender and experience were the most used ones.
Prevalence of merit: Merit was frequently mentioned as a recruitment criterion (32% TSX60 firms, 42% non-TSX60 firms).
The length of disclosures: How much was said in diversity disclosures also varied significantly among firms ranging, between 92 – 1,243 words.
The pitfalls of merit as a selection criterion
Existing studies define merit, in theory, as an evaluation concept focused on a variety of abilities such as knowledge and experience, while excluding irrelevant factors (ethnicity and gender). In practice however, multiple studies found that merit is often used as a tool to reinforce the status quo, maintain existing power dynamics, and perpetuate exclusionary practices.
How the use of merit puts women at a disadvantage
Researchers in the field of merit argue that because leadership positions in corporations and government have historically been predominantly occupied by men, standards of merit have also been developed to reflect male experiences and characteristics. Therefore, in defining what constitutes merit, commonly viewed masculine traits such as individualism, competition, undivided commitment to work and long hours of work, take precedence over typically female traits such as mutual empowerment, empathy, and authenticity. Consequently, it is easier for men to seem meritorious, while women struggle to meet a masculine definition of merit.
“The big issue is ‘who gets to define merit’,” said Dr. Bujaki. “When organizations position merit as a neutral and objective evaluation criterion, without any type of questioning, inequalities and patriarchal dominance are perpetuated.”
The subjective nature of merit
Diversity disclosures of corporations in this study revealed distinct conceptualizations of merit. Therefore, the concept of merit varied among firms and was not well defined.
Merit as a multidimensional concept: Some corporations viewed merit as multidimensional, listing the criteria constituting merit. The use of merit as multidimensional was most prevalent among companies within the consumer, energy (TSX60), and industrials and materials sectors (Non-TSX60).
By their choice of specific characteristics to define merit, and their exclusion of factors such as gender and ethnicity from the definition, companies can appear to be objective and rational in their choice of who to include on their board and thus minimize the need for change.
Merit as one characteristic among a set of desirable qualities: Among the list of other characteristics sought alongside merit, the most common qualities were skills, experience, and performance. The listing of merit as one of a set of distinct, equally prominent criteria sought in future board members was most prevalent among companies from the materials sector.
Existing studies argue that to place merit alongside skills and experience tends to ignore the gendered structural conditions within which only some individuals are given opportunities to develop competencies seen as meritorious.
Merit as a stand-alone criterion: Other companies viewed merit as the standalone characteristic or qualification sought in board members. Under this view, candidates for directorships either have merit or they do not. Five TSX60 companies used this concept of merit, as did 11 non-TSX60 companies.
Using merit to maintain power structures and resist change
Merit was positioned as important for many companies’ rationalization of their board composition. Of the 44 (19 TSX60, 25 non-TSX60) companies referencing merit in their board diversity disclosures, nine described merit as a dominant criterion for board membership. Moreover, six of the nine companies referring to merit as the most important factor are from the materials, energy or industrial sectors which are traditionally masculine sectors in their structures, practices and norms. In these instances, merit as a dominant criterion for board membership, without acknowledging how concepts of merit disadvantage women, supports a masculine status quo in board membership.
“With the assertion in some of the disclosures that board appointments will ‘continue to be based on merit’ or that ‘board appointments have always been based on merit’, companies invoke past practices to strengthen corporate claims that no change in recruitment or appointment practices is needed,” said Dr. Bujaki.
Widening the scope of diversity to appear diverse
The definitions of diversity offered by the corporations studied were wide-ranging. It seemed companies took the requirement for gender diversity disclosures as an opportunity to discuss many other dimensions, downplaying the lack of gender diversity on boards. For instance, many of the companies incorporated Experience (55%), Skills (40%), and Age (39%) within their description of diversity. Similarly, Ethnicity (29%), Geography (28%), Race (19%), and Expertise (17%) were mentioned by a number of the companies.
Broad definitions of diversity make it easier for corporations to claim that their boards are already diverse, and that efforts to increase the representation of women on their boards are not necessary, thus effectively maintaining the status quo.
The researchers argue that for public-traded companies in Canada, diversity was viewed at best as secondary in importance in comparison to merit. Case in point, one TSX60 company stated, “While diversity, including gender diversity, is an important and valuable consideration…all appointments are made on merit.” Similarly, a non-TSX60 company stated, “In determining candidates for election to the Board…the Board does not consider the level of representation of women on the Board…, but rather makes their nomination and appointment decisions based on merit, by assessing whether a person’s skills and experience are appropriate for particular roles.”
Even though, there is some recognition of the importance or benefits of diversity in the disclosures referring to merit, considerations of diversity were clearly secondary to merit.
Using difficult language to conceal lack of diversity
Is there a difference in how firms describe their diversity policies? When employing a readability test to assess the corporations’ diversity disclosures, the study found that disclosures that invoked merit were less readable than those that did not mention merit. Twenty-five percent (25%) of TSX60 disclosures fell in the “bad” or “dreadful” categories, while 40% of Non-TSX60 disclosures fell in the “bad” category. In contrast, of the disclosures that did not include merit, only 10% of TSX60 disclosures fell in the “bad” category, while 23% of Non-TSX60 disclosures fell in the “bad” or “dreadful” categories.
It therefore appears that regardless of size, firms referring to merit are more likely to use difficult language to obscure their policies and practices around diversity, than firms that did not refer to merit.
Creating paths towards change
Overall, companies appear to use their discourse on merit and wide-ranging interpretations of diversity to legitimize current board-recruitment practices and resist change. These practices help maintain the power held by existing board members, the vast majority of whom are male.
The study concludes that existing perspectives on merit may reinforce current board recruitment practices rather than moving towards meaningful change.
To move towards change the authors of this study suggest corporations do the following:
- re-evaluate past practices and adjust current perspectives on “ideal” characteristics of leadership to appoint board members more objectively
- formally acknowledge the value of diversity and the impact of diversity in fostering better decision making
- challenge definitions of diversity and perspectives on merit that overemphasize masculine traits
- encourage longer term perspectives to be factored into decision making
- introduce board member term limits and/or mandatory retirements
The authors of the study also suggest governments implement legislation with specific timelines and targets for women’s participation on corporate boards.
The authors of this study hope to advance equality and equity by exposing and challenging hidden power structures embedded in the language of corporate disclosures.
When asked about the significance of the study, Dr. Bujaki replied, “Until the gendered roots of the language of merit-based policies are acknowledged, corporations have little incentive to challenge the status quo and engage substantively with diversity. We hope this study gives corporate decision makers reason to pause and reflect on where their concepts of merit come from.”
The study concludes that fundamental changes in corporate recruitment, training, development, promotion, and appointment practices at all levels are crucial for board positions to become more accessible to all talented individuals, regardless of gender.
Article Notes
Research Highlight writer: This Research Highlight was written by Fiorella Jansen-Nicorescu. CRIW’s Research Highlights share relevant and actionable information about workplace inclusion with a broad audience.
References: This article references work of other scholars, a list of references is available in the published study, Gendering Merit: How the Discourse of Merit in Diversity Disclosures Supports the Gendered Status Quo on Canadian Corporate Boards.
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Acknowledgements
This study was made possible, in part, through the generous support from the RBC Foundation.
About the Centre for Research on Inclusion at Work (CRIW)
The Centre for Research on Inclusion at Work (CRIW) is a research centre at the Sprott School of Business, Carleton University, focused on conducting and sharing research that advances diversity, equity and inclusion at work. By making research findings available to the public and connecting academia with the broader community, CRIW aims to advance knowledge and drive change towards more inclusive workplaces that welcome and support greater participation of all peoples.