It may take extra time and effort, but it’s worth it.

By Brenda LaRose, Partner and Head, National Diversity and Indigenous Board Practice, Leaders International.

When I began my career in the world of executive recruitment, there was very little diversity in executive positions and on boards, and even less discussion or transparency around it. There was no employment equity legislation to support diversity and inclusion, and even fewer diverse individuals at the senior leadership level.

Progress in gender diversity, but more work is needed

As my career has progressed over the last twenty-five years, corporate Canada has made important strides in normalizing certain diversity and inclusion practices, particularly when it comes to hiring and promoting women to leadership positions.

Within the last three years especially, I have seen significant improvements – companies embracing gender diversity, critical discussions around increasing representation taking place at the board table.

However, as a country, we have barely moved the needle on placing other under-represented professionals (including Indigenous persons, racialized persons, persons with a disability, and persons of a minority sexual orientation and/or gender identity) in executive or board roles.

Changes are still necessary to strengthen the social fabric of our country.

Research and data clearly demonstrate that diversity on boards and at the executive table improves innovation, increases revenue, helps attract the best talent in the market, and supports mitigating risk in an organization.

Diversity is an opportunity

A recent example of how diversity can become a risk management opportunity for a corporation can be seen when examining the reputational damage that affected global mining giant Rio Tinto.

Had an Indigenous executive been on their leadership team or board, would the destruction of a 46,000 year-old Indigenous site in Australia still have happened? The lack of an Indigenous perspective on Rio’s board and executive profoundly impacted its bottom line: the decision enraged global shareholders and stakeholders, ultimately leading to the CEO and two senior executives’ resignation.

The First Peoples have been on this land for thousands of years. However, systemic racism and limitations are still taking place, despite the Supreme Court recognizing, in more than 250 decisions since the 1970s, that Indigenous Peoples have inalienable rights.

New legislation a step in the right direction

Only recently, in January 2020, did Canada demonstrate its commitment to improving diversity and inclusion practices in its corporate sector, with the enabling of the new Canada Business Corporations Act.

The legislation now requires all federally incorporated public companies to disclose their diversity statistics in executive and board roles, including gender, Indigenous persons, racialized persons, and persons with disabilities. While it has been a long time coming, it is still a step in the right direction for the country.

Canadian companies are also feeling internal and external pressure, knowing that institutional investors and shareholders are now demanding corporations do the right thing by embracing diversity at the executive and board levels.

Given the increasing global awareness around systemic racism and diversity issues, many Canadian boards have been driven to act immediately to demonstrate their commitment to the cause and to manage shareholder criticism.

Does diversity impact the bottom line?

However, there is another key driver to the broader corporate response regarding societal expectations that needs to be acknowledged: the bottom line.

Recent data and research clearly demonstrate that supporting diversity on boards and executive roles contributes to increased business performance and improved revenue.

Specifically, McKinsey & Company released a study in May 2020, titled Diversity wins: How inclusion matters, which provides hard data to support the statistical connection of increased financial performance and diversity at the executive and board level.

The data on diversity and improved performance and revenue also hold true for Indigenous corporations. As Indigenous leaders, we need to take advantage of and benefit from having diversity on our boards and leadership teams.

This can mean having independent Indigenous professionals from other nations or territories, as well as mainstream professionals and experts, on our corporate boards.

Board recruitment must be inclusive

An additional driver beginning to impact the corporate world is the shortage of key talent and executive leaders.

The composition of a corporate board says a lot about an organization’s values: a diverse board shows stakeholders and clients that the company is supportive of all communities.

In addition to advancing the bottom line, this commitment also helps attract and retain a broader range of talent, demonstrating to a new pool of leaders (at all levels) that they have clear opportunities for progression within the organization.

The traditional board recruitment methods in the past, which included using the board’s personal, social, and professional networks, are insufficient. This approach almost always tends to reflect the existing composition of the board and uphold the status quo.

Capable, diverse, and qualified candidates are usually excluded or are not part of that exclusive network. As such, the board must prioritize looking for potential candidates outside of their own social and professional circles.

An opportunity for Indigenous Professionals

There is an increasingly large pool of qualified and diverse Indigenous candidates from various industries who can be considered, including CPAs, engineers, lawyers, business leaders, and other skilled professionals – all of whom can contribute and add real value at the board level.

Many Indigenous professionals have their ICD.D and have operated and owned corporations of their own.

The under-represented community can now become invaluable assets for corporations across all Canadian sectors and help build the bottom line and increase access to a growing market and economy.

Bringing diverse directors to a board may take extra time and effort during the recruitment and onboarding processes, but the organization’s bottom line will thank them for it.

This article originally appeared in issue 28 of the Journal of Aboriginal Management, and has been edited to fit the blog format. Access the full issue at https://afoa.ca/about/jam/

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