Diversity in the Boardroom: Resistance is Futile

If you’re reading this, chances are you sit on at least one board.  If that board happens to be one that understands the value of diversity (and here I’m speaking of gender diversity) or has moved aggressively to get the board there, I applaud you. Your board will benefit, the company will benefit, and other boards will benefit (I’ll explain more later). If you align with board members who are still unconvinced – please consider that diversification sooner rather than later is in your best interest, the best interest of your fellow directors, and all boards. Let me present to you both the carrot and the stick:

The Carrot: Studies indicate diverse boards tend to be better
boards and lead to more stable companies.c2.jpg

There are studies with hard data from Pepperdine University, Catalyst, McKinsey and others that overwhelmingly suggest that companies with more women at the top are better off. More studies like these continue to come out and point to virtually the same things.

Recently, Credit Suisse Research Institute looked at the performance of selected companies with at least one female director over the last six years. While it noted little or no correlation with company performance between 2005 – 2007 when the economy was robust, between 2008 and 2012, the stock prices of companies with at least one woman on board yielded a 26% higher return than those with none. The assessment was that a more diverse board means less “volatility and more balance” during tough economic cycles.

A recent Thompson Reuters study, Mining the Metrics of Board Diversity, revealed how the increase in female participation on boards affects organizational performance. The study drew upon information on 4,300 global companies and over 750 data points that covered every aspect of sustainability reporting. According to the study, on average, companies with mixed boards show marginally better or similar performance measured against a benchmark index. Companies with no female board members underperformed relative to organizations with women on their boards, and had slightly higher tracking errors, indicating potentially more volatility. The study went on to suggest that the performance of companies with mixed boards matched or outperformed companies with male-only boards, stronger evidence that gender equality in the workplace makes good investment and business sense.

The value of board diversity, from directors themselves:

Michael Critelli, board member of Eaton Inc. and former Chairman and CEO of Pitney Bowes, built a strong reputation for advocating using diversity to make his company and board even better. On having one of the most diverse boards during his tenure as Chairman/CEO he said: “Boards are most likely to do their job effectively when they have diversity of life experience and insight.  Groupthink on a board is very dangerous. The advantages of diversity are only realized when a board is inclusive in its membership and when it invites and values diverse thinking relative to board responsibilities.”

Linda Rabbitt, Chairman and CEO of Rand Construction Corporation, Lead Director of Towers Watson, and Chairman of the Federal Reserve Bank of Richmond notes: “As a woman I have had to overcome many obstacles as an entrepreneur and in the corporate environment. As a result of these experiences I see the world and business through a different lens. Having large obstacles to navigate around teaches you how to solve problems, identify opportunities and associated risks, and bring up new talent in a way different than the men who built the road before you. These skills bring a new value to the boardroom that has not been there before.”

Maggie Wilderotter, Chairman and CEO of Frontier Communications said: “Company leaders and directors, male and female, must do more to advance women in their ranks, and it is incumbent upon women to be responsible for their advancement as well. After all, doors successfully open and close when we push.” Mrs. Wilderotter added: “A recent Catalyst report shows a continuing shortage of women in America’s C-suites, Boards of Directors and as top earners. Studies show that companies with three or more women on their boards perform better financially than those with fewer members. Diversity in the board room and in the C-suite is a competitive advantage.”

The Stick: The rise of the ““Sheconomy.”

Even for those with a minimal grasp of the obvious, some things are plain. We have moved into a new economy, one overwhelmingly influenced by women. Consider these points raised in research by MassMutual, Fleishman-Hillard, the Spectrem Group, and other noteworthies:

  • Senior women over 50 control net worth of $19 trillion and own more than three-fourths of the nation’s financial wealth.
  • High net-worth women account for 39% of the country’s top wealth earners; 2.5 million of them have combined assets of $4.2 trillion.
  • Over the next decade, women will control two thirds of consumer wealth in the United States and be the beneficiaries of the largest transference of wealth in our country’s history. Estimates range from $12 to $40 trillion.
  • Wealthy women investors in the U.S. are growing at a faster rate than that of men: over a two-year period, the ranks of wealthy women in the U.S. grew 68%. The number for men was 36%.
  • Women account for 85% of all consumer purchases, including everything from autos to health care.

It’s hard to believe that many women could not apply for a credit card in their own name until 1974, when the Equal Credit Act was passed.

The point here: traditional boards cannot ignore the influence, control, and power that women hold as decision-makers, consumers, and, as investors, to go away. Or that they can have a dramatic impact on sales and have gained, through their dominant use of new media, a growing ability to advocate for or against a company’s products and services. Companies that understand and reflect this in their boardrooms will have the advantage over those who do not.

Here are some questions to ponder. With women’s dominant role in customer and financial decisions, coupled with growing transparency of company operations and board composition, plus the rise of electronic reporting and social media allowing everyone to easily see where a board is aligned or not with its customer base and markets (and this new economy), where do you want your company to be? What is the likelihood that if your board has a negative attitude toward more women in the boardroom, your company will be targeted for activist or populist actions and retaliations at a speed, and scale, never previously imagined?

Quotas are coming! Quotas are coming?

Board diversity, especially the number of women serving on boards, has become regular headline news, reflecting a growing pressure on boards to change or explain why their composition is appropriate. Legislative bodies worldwide find themselves under enormous pressure, and have started instituting changes. Outside the U.S., 16 countries have mandated some type of quota, threatening fines and, in some cases, dissolution if corporations don’t meet deadlines for achieving legislated. Formal quotas were introduced nine years ago in Norway where resident companies were required to have 40% of their board seats occupied by women by January 2008. Quota requirements are going global. This past November, Germany legislated a requirement that 30% of all non-executive board seats be occupied by women by January 1, 2016. At the close of last year, women held 14.1% of all non-executive board seats there. In our own backyard—Canada—the Province of Quebec requires that women occupy half of all board seats on state-owned institutions.

In this country, it’s important to gauge the increasing momentum behind gender diversity quotas. Currently, women hold 16.9% of the board posts in U.S. Fortune 500 Companies, have barely improved in their 16.6% performance since 2012. The numbers are even smaller among Fortune 1000 and mid-cap companies. Boards’ failure to respond to these changes will invite legislative and regulatory mandated quotas, if only to relieve the pressure regulators feel. If history is any example, the slower the pace of voluntary change, the faster the pace of imposed change. The more boards resist, the more likely change will come in ways they might not anticipate or want.

Sooner is better than later.

I’m no fan of imposed regulations in the board room. Regulations and mandates, while well-intentioned, often produce unintended effects and consequences. Quotas, with aggressive time limits can easily translate into board seats Nancy-May2.jpgoccupied by people who don’t belong. I applaud boards that see diversity positively now, and are going on to adopt, adapt, and improve. Boards that carefully consider and bring on excellent, relevant female board members improve their perspective and ability to deliberate. Diversity contributes to better board governance, because, as the number of qualified and valued women increases and becomes known, the perceived need for external actions (i.e. quotas) will start to fade. Thus, as your board grows more diverse, the pressure on other boards to do likewise will increase, even if only in a very small way.

So, “fellas,” here’s where this leaves us: this boardroom diversity “thing” isn’t going away. Diversity and equality in the boardroom is coming. How soon you face it and embrace it is up to you. Resistance is futile.

090a144ba8cd74647326980e2a3c6aaa_f50.jpg

Posted in Board Level, General, The state of the world, Uncategorized | Tagged , , , , | Leave a comment

Thinking university? This isn’t your parents’ labour market

 

My parents and I first talked about university at the end of Grade 9. We’d learned that I would have to choose between a “Latin-science” and a “math-science” stream. I chose Latin-science.

Neither of my parents had attended university. They tried to convince me that I should be a dentist because of the benefits of being my own boss and the status that went along with the profession. My dream had been to design spacecraft and space probes. But that would have demanded a specialized degree in Engineering and our finances couldn’t handle it. Two years into the bachelor’s programme that was a prerequisite for entry into dentistry, I was no longer convinced. There was also the matter of my low tolerance for the sight of blood.

I completed a general B.Sc. and joined IBM. IBM trained: most employers didn’t. After 7 years I left to start what became a 26-year career as a self-employed IT executive recruiter that evolved into transition counselling and the Personal Due Diligence Project (PDD).

In the mid-1980s, and with the global economy already on the horizon, I started preparing myself to answer questions from my daughter and son on the subject of attending university when the time came. At the time, they were 8 and 5 respectively. They both attended, graduated, married and are thriving.

Chances are that you’re thinking about sending your children to university, or know someone who is. If so, here are some questions you might want to think about.

  • What kind of work will your child will be doing after they graduate?
  • How did they make that decision?
  • Who, if anyone, influenced it?
  • Have you priced a university education lately?
  • How do you rate the odds that there actually will be “acceptable” work for them to do?
  • On what do you base that conclusion?
  • If work in their chosen field isn’t available, what’s your plan B?
  • If you’re planning to finance their education, who’ll be paying off the loan?
  • What if your child plans to but can’t?
  • Are you willing to delay your retirement to help them pay off that debt if necessary?
  • What if your employer denied your request to postpone your retirement?
  • What if you became unemployed prior to retiring?
  • If your children can’t earn enough to leave home, will you be able to subsidize them?
  • If they want to buy a home but can’t or haven’t saved enough for the down payment, will you make it for them?
  • How important is retirement planning to you and your child?

Unless the work you do requires that you constantly monitor the labour market, you might be astounded to learn that:

  • An estimated 300,000 university graduates in Canada are working as unpaid interns with no guarantee of a permanent position at the end of their term.
  • Canadian families have borrowed to pay for tuition and owe between C$25 billion and C$50 billion.
  • American families owe over US$1.2 trillion in student loans. Many have begun to default for lack of sufficiently lucrative work.

To satisfy yourself about the gravity of the situation, set your Google Alerts or other aggregator to find “student debt” and request daily delivery of the results to your desktop. You can expect an average of 10 items a day.

In today’s labour market, university is as likely to mean financial hardship as financial gain. Students are returning to the family home because they can’t afford to pay rent, let alone make mortgage payments. This is not the outcome that parents expected or wanted for their children. Predictions that this generation will be worse off than its parents’ are already coming true. A major contributing factor is the extent to which parents and their children are out of sync with the needs, wants and priorities of employers. That includes attitudes and tactics designed to reduce costs that simply didn’t exist 20 years ago.

Our business is the extraction and interpretation of deep market intelligence early enough to guide our clients in making informed decisions about how they intend to approach the subject of university. PDD is about building sound business cases for investing in higher education that will satisfy your children’s short-, medium- and long term needs. This includes their financial security and, possibly, yours. We apply the same kind of thinking to clients who are between situations.

As food for thought, consider the implications of this quote from an article in the May 26 – June 1, 2014 Bloomberg Businessweek about the future of IBM entitled ‘The Trouble With IBM’. It will explain why this isn’t your father’s—or mother’s—economy:

“In February, during an onstage interview at a mobile technology conference in Barcelona, [IBM CEO Ginni Rometty] was asked whether business leaders understood just how rapidly their industries are being disrupted. ‘If you try to compare today to the past,’ Rometty said, ‘the speed of change is much faster. And you should not be dissuaded by that, meaning, that is all the more reason to push forward with things.’”

7.2 billion people call Earth home. It’s estimated that 2.5 billion of them were connected to the Internet in 2012. By 2017, there will be 7.6 billion of us, 3.5 billion of whom will be connected to the Internet—and to each other.

That’s a lot of competition, complexity and unpredictability for one planet. And there’s no end in sight.

 

 

 

 

 

Posted in Applications to career management, Education & Starting a Career, Future threats and opportunities, It's the economy, The state of the nation, The state of the world, Uncategorized | Tagged , , , , , , , , | Leave a comment

We have engine ignition and lift-off. Is the future leaving you behind?

mars_one1

One of the reasons science fiction has appealed to us as much as it has is that it’s almost always been set in the future and usually involved at least one trip to or a prolonged stay on a planet or planets other than Earth. And because it’s been far enough in the future, we haven’t really had to worry about dealing with it.

The obstacles humankind (other species hardly ever came into the picture) had to overcome and the technology it had to create to deliver itself to those planets were seldom mentioned because, at the time the books were being written and the motion pictures filmed, the technology and knowhow didn’t exist. Significantly, authors were able to develop their storylines quite comfortably without them.

How far into the future the stories were set was also seldom if ever mentioned: probably several hundred years, if not more. Three notable exceptions are Star Trek (the TV series, the books and the movies), the Star Wars saga—“a long time ago in a galaxy far, far away”— and 2001: A Space Odyssey. You can find a discussion of a hypothetical Star Wars timeline by clicking here.

That’s all about to change.

If everything goes according to Hoyle, and if the people in charge of the Mars One mission know what they’re about, the hypothetical will give way to the historical, psychological, anthropological and sociological sometime in 2024 when science fiction becomes science fact and very down-to-Earth—or Mars—as the case may be.

Mars-One-habitat

2024 will mark the beginning of the first one-way colonization mission to the Red Planet and sci-fi authors and film-makers everywhere will be pressing their big red Reset buttons. 2024 is 10 years from today. Training for the mission starts next year. The reporting and images won’t look, feel or sound like 2001: A Space Odyssey, but they will be real. So will the changes in our educational, social and business landscape. And you, dear PDD follower, will likely experience many of them.

If this seems a little abrupt and far-fetched, rest assured that humankind has been in the space business for some time. To develop a sense of what it’s been up to, you’ll find reassurance in the Space Launch Report, Space Launch Report Forecast for 2014, and Space.com. Sierra Nevada Corporation, SpaceX and Boeing are bidding to replace NASA’s retired shuttle fleet.

Up until crews started rotating through the International Space Station (a really worthwhile assignment for Google Search), the impetus to be “up there” was more a push than a pull. The Mars One mission will make the pull stronger than the push, permanently.

At some point, assembly of the crewed and un-crewed spacecraft that will travel to Mars—and elsewhere—will take place on or in orbit around the Moon. You don’t need to be an astrophysicist to appreciate what that’s going to mean to employment opportunities and to the need to be educated for that employment. Canada is a serious player in the space business, and it’s only one of several. You’ll see just how serious when you Google “Canadian companies in the space industry”.

This isn’t a free-time advertisement for space exploration and colonization. It’s a message that warrants serious thought: We’ve caught up with the future, and you can prove it for yourself.

This “catching up with the future” phenomenon isn’t unique to space exploration. Change is exploding all around us but most of us are unaware of it. Some of us are fighting it. Don’t expect it to come looking for you because it probably won’t. People who’ve followed the links and done the Google exercises you just read about were blown away by how much they didn’t know about what they didn’t know. And in this day and age, there’s no excuse for being left behind.

When I founded the Personal Due Diligence Project, it was with the intention of helping as many people as possible avoid being left behind. The Mars One countdown clock reads “T minus 10 years and counting”. Inevitably, that clock will reach T minus zero and we will have engine ignition and lift-off. As of that moment, things will never be quite the same again.

If you want us to help you prepare, we’re here.

Posted in Applications to career management, Education & Starting a Career, Future threats and opportunities, The state of the world | Tagged , , , , , | Leave a comment

The economy is the environment: Here are three rules for surviving in it

McLuhan said: ‘The medium is the message.’ Robert Baden-Powell said: ‘Be prepared.’ PDD says: ‘The economy is the environment.’

Baden-Powell founded the Boy Scout movement to teach young men and, later, young women, the rules of survival in the natural environment. One way or another, we all learn them, especially the part about paying the price if we don’t.

The $1.2 trillion dollars Americans owe on their student debt, and the $25 billion to $50 Canadians owe, suggest that nobody taught them Rule #1 and Rule #2. Understanding those rules is a rite of passage. There are three of them:

  1. Eat or be eaten. Or, out-compete.
  2. Be prepared.
  3. See 1 and 2. There is no 4.

PDD trains people in the meaning and application of Rules #1 and #2 to choosing and justifying higher education. We’ve assembled links to over 40 articles on the ‘In the media’ page of our blog on the subject of what the economy is doing to the labour market right now and what some of the best minds believe it will be doing. More are on the way. We don’t expect our clients to agree with everything they’ll read there, but we do expect them to be aware of it. Our job is to lead them to the information we’ve assembled in the PDD trough. Their job is to choose what they’re going to drink and why. I think business calls that ‘accountability’. 

One of the biggest challenges we face as a country in a global economy is creating an awareness of what is and what will be. What was is history. Much of the inertia associated with clinging to the past comes from the influence of parents and other elders. The president of a college in the Southern U.S. said that it’s easier to change the course of history than it is to change a course in history. Refusing to respect Rule #2 is like mental foot binding. It explains why one of the toughest things to change is a mind.

The Personal Due Diligence Project is committed to encouraging and helping young people become gainfully employed post-secondary graduates. They will:

  • Be the underpinning of a society that’s intellectually nimble, adaptable and resilient
  • Spend their time in ways that benefit all of us
  • Make a social and economic difference
  • Be necessary if the Canada we know is going to survive

May we all live long and prosper!

 

 

 

Posted in Applications to career management, Future threats and opportunities, It's the economy, Personal, The state of the nation, Uncategorized | Tagged , , , , , , | Leave a comment

Education and work: Living the life our parents lived

My parents bought their first and only home in Montreal for $24,500 in 1956. We were able to retire my modest-by-today’s-standards university tuition loan in under 2 years. There was no doubt in anyone’s mind, mine included, that I would find work, that salary increases would be inevitable and that employment would be long-term. Even if mortgage or car payments stretched us at the beginning of the repayment cycle, the financial burden would become progressively easier to bear. We expected to be employed full-time for the duration of our working life and that we’d retire at age 65 with a good pension and little or no debt.

I mention Montreal because people buy and hold onto houses there for 30 years or more. Even before we moved to Toronto, we were hearing about residential properties here that were being flipped within months to profit from a hyperactive real estate market. The introduction of capital gains taxes on property held short term and occupancy requirements were intended to cool the market down—not extinguish it.

On CBC Radio this morning, a Toronto-based mortgage broker proposed that we resort to auctions instead of bidding wars to return some sanity to home buying in the Greater Toronto Area. The average selling price across the GTA in 2013 was $523,036. Resale condo prices averaged $343,943 for the same period. A week ago, also on CBC Radio, another mortgage broker spoke in terms of a 2.94%, 5 year fixed mortgage and a prospective homebuyer who could see his way clear to carrying that mortgage for $3500 a month—and no more.

Even for people earning enough to carry a home for $3500 a month, raises are not inevitable. Nor are guarantees of full-time employment to and retirement after age 65.

The subject of debt and debt avoidance in connection with higher education and tuition has appeared here all too often since October 2012. But it’s also appeared elsewhere. Parents are thinking twice about how to allocate their education budgets and enrollments are beginning to drop on both sides of the Canada-US border. This is something we can’t afford.

We need as many minds trained to the postsecondary level and gainfully employed as possible. This can happen only if education and training match labour market demand. Otherwise, young people will not be able to leave home and start lives of their own. Those of us who depend on pension income now, or will in the future, have a vested interested in seeing them employed because the dollars we’ll be drawing will not be dollars we contributed, but rather dollars that their generation will have contributed.

At present, the economy is wobbly at best. If there is to be some replacement for the manufacturing-related and other incomes we’ve lost, it won’t appear until 2015 at the earliest, according to today’s Toronto Star. The federal government has been telling us for some time that we have not set aside enough money to be able to retire comfortably at 65, if at all. It says nothing about the life our children will lead until they reach 65.

We have to deal with that subject now. That’s why the Personal Due Diligence Project exists. We place a premium on making decisions about buying higher education that will translate into disposable income after graduation. It wasn’t so long ago that we prepared for only one “career”. Recent history shows that our children will have to prepare for more than one. Those decisions will be a function of conditions in the world economy and how much job creation it stimulates in the labour market. Whether our children benefit from that job creation will be depend not only on whether they’ve been taught to read tea leaves, but whether they’re reading the right tea leaves. Individuals, the labour market and the economy are inextricably bound to one another.

We have to teach our children that what they think about is as important as thinking itself. University and other forms of higher education are for teaching them how to think. The Personal Due Diligence Project is for teaching them what to think about if they want to live the kind of life their parents lived.

Posted in Applications to career management, Education & Starting a Career, Future threats and opportunities, It's the economy, The state of the nation | Tagged , , | Leave a comment

Parochialism, Canadian modesty, and getting out of our own way

When I was growing up, my world was the size of the Island of Montreal and, mostly, the part of it west of St. Lawrence. You could fit what I knew about goings-on on the far side of the St. Lawrence River on the head of a pin. Toronto, New York, Boston, Detroit and Chicago were home to each of the other 5 of the Original Six NHL teams. I knew that because I loved hockey, not because I’d travelled there. Later, I discovered that I could listen to radio stations in Toronto, New York, Boston, Detroit and Chicago at night on an ordinary AM radio without travelling there—because I couldn’t. The word for that worldview is “parochialism” and I grew up with it.

When it came time to look for full-time work, it was understood that I would find it in Montreal because there was a job there with my name on it and I was a Montrealer. The thought that people from “l’étranger” (abroad) might actually travel there to snatch “my” job away from me never occurred to me or my parents.

That was “combination lock thinking”: turn the dial in the right direction far enough and often enough and the lock will open. Applied to preparing for a first job it became: Turn once to the right and enter public school. Turn once to the left past public school and enter high school. Turn once to the right past high school and enter university or community college or trade school. Twist the handle, open the door and your job will be waiting.

It isn’t like that any more: it only looked that way. The last tumbler is the university tumbler. Tuition fees have risen to the point where they’re beyond the reach of a growing number of Canadians. But as a lot of families have learned through bitter experience, even if you manage to afford to slip that last tumbler into place and enter university, there’s no guarantee that you’ll be able to open the door to the job waiting behind it, assuming there was one there in the first place.

That doesn’t mean that the system doesn’t work. But it does mean that the combination is a lot harder to figure out and that it has to be to all the right doors. If people are willing to work at it, they will figure it out. It’s happening as we speak. That’s because those people educated themselves about how to educate themselves. The words that describe that are “market wise” and “strategic”.

As you ponder this, here’s something else to think about. Our modesty is making it harder to get out of our own way. We use language like “looking for work” as though it’s there waiting and someone is going to bestow it on us as an act of charity. We should be using language like “competing for work and winning”. Check out the World Economic Forum’s Competitiveness Index and look at which countries have been moving up in the rankings and why.

I remember hearing a conversation about Canadian business people several years ago. The speaker made the point that we build world-class Canadian companies so that we can ruin them. We did it to Northern Telecom and the jury’s still out on whether we did it to RIM (BlackBerry). We did such a magnificent job on the Toronto-designed and built CF-105 Avro Arrow that we ground up and disposed of the 5 aircraft A.V. Roe built. Those aircraft embodied Canadian world-beating aerospace technology. Shutting down the project populated NASA with Avro engineers.

 

1_arrowimage

 

The debate over the Arrow continues to this day.

We have to learn to think strategically and, dare I say it, immodestly about educating ourselves to educate ourselves. We need our young people to attend and leverage our universities, our community colleges and our trade schools because we’re more than oil, lumber, maple syrup and beer.

 

161

Posted in Uncategorized | Leave a comment

Risk is free, risk-free costs

Enough said.

Posted in Applications to career management, Education & Starting a Career, Future threats and opportunities, Going Independent, Personal, The state of the nation | Tagged , , , , , , , , , , , , | Leave a comment