When Kathleen Taylor becomes chairwoman of Canada's largest bank, she will gain a platform to show the financial industry there is no limit to the leadership roles that women can take on.
Never before has a woman led the board of a major chartered bank in this country. And Ms. Taylor, the former chief executive of Four Seasons Hotels and Resorts Inc., is getting one of the most prestigious jobs in Canadian finance on Jan. 1 when she is introduced as the head of the board of Royal Bank of Canada.
The bank's decision comes at a time when regulators are placing more scrutiny on boardroom diversity – or the lack of it. Barely 10 per cent of seats in Canadian public-company boardrooms are occupied by women, according to a 2011 report by advocacy group Catalyst Canada; they fill just 3.6 per cent of board chair positions.
RBC was hailed on Friday for breaking down what had been one of the most intractable barriers on Bay Street. "I think this is sending a huge message," said Pamela Jeffery, founder of the Canadian Board Diversity Council. "Directors typically recruit from within their own networks, and they typically recruit individuals like them. It is great for Bay Street to see RBC take this step to say, it's so important to look at the entire talent pool."
Today, women remain a minority on each of Canada's major bank boards, but are an increasing presence in the boardroom, making up about one-third of the directors of Big Five institutions.
Ms. Taylor has been an independent director at RBC for 12 years, working on audit and risk committees, and leading the human resources committee since 2010.
"Katie has been an outstanding director and will provide great leadership to our board," said RBC chief executive officer Gordon Nixon, who is known for championing diversity initiatives. "We are very proud to have the first female chair of a major bank."
Her appointment was also cheered by many female directors in corporate Canada, including Sheelagh Whittaker, the former head of Electronic Data Systems Canada, who became an RBC director in 1993.
"Every appointment to the chair at a major corporation is important, but this one feels particularly so, because each upward step we take that makes egalitarian gender choices more normative is a step toward a better and fairer society," she said. Ms. Whittaker noted the trend toward equality for women at RBC was just emerging when she joined, but there were already three female directors at the bank. She sat on the board until 2001.
Canada's seventh-largest lender, Laurentian Bank, appointed Isabelle Courville as its chairwoman in March. She said Ms. Taylor's appointment is another step in the right direction for women in the boardroom. "Some may say it's not fast enough and it's probably true…but personally I think we're getting there."
Ms. Courville sees similarities in her background and Ms. Taylor's in their work on board committees, which she said helped her learn the job.
Female directors such as Ms. Courville and Ms. Taylor who sit on a board's "tougher" audit and risk committees are important, says Richard Leblanc, an associate professor of law, governance and ethics at York University. This shows the women aren't being marginalized and will get an opportunity to show other board members and the CEO their leadership style.
Appointments like Ms. Taylor's help pave the way for a female CEO at a top five Canadian bank in the "not too distant future," he said.
But there is still much progress to be made. "The dial hasn't moved significantly in terms of women on boards," said Jennifer Reynolds, president of Women in Capital Markets. "It's one board. We need to see changes on many more boards."
To do that, Canadian companies may need more structured board appointing processes that make sure women are considered for vacant seats, she said.
At the end of July, the Ontario Securities Commission rolled out a consultation paper proposing that companies develop a plan to promote boardroom gender diversity, or explain why they have chosen to forgo such a policy.
Eileen Mercier, chair of the Ontario Teachers' Pension Plan board, said that Ms. Taylor's move up brings positive attention to the OSC's plans. "I think we just have to put a little fire under it and see if we can't ratchet the numbers up a bit," she said.
That would be a big change from what Patrice Merrin, who is days away from chairing her last board meeting at CML HealthCare Inc., can remember from the mid-1970s. That's when RBC president Earle McLaughlin "set off a firestorm" when he said that he would put a woman on the bank's board – if only he could find one that was qualified. "He was vilified for that," Ms. Merrin said.
With files from reporters Jacquie McNish and Tim Kiladze