Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 5 - Evidence - November 17, 2011
OTTAWA, Thursday, November 17, 2011
The Standing Senate Committee on Banking, Trade and Commerce met this day at 10:37 a.m. to examine the present state of the domestic and international financial system (topic: financing growth capital for SMEs).
Senator Michael A. Meighen (Chair) in the chair.
[English]
The Chair: Good morning, colleagues, witnesses and those watching over the airwaves.
[Translation]
Welcome to our meeting to discuss the domestic and international financial system. I am Senator Michael Meighen, from Ontario. I have the honour to chair this committee. I will introduce Senator Hervieux-Payette, from Quebec, the Deputy Chair of this committee. On her right is Larry Smith, also from Quebec, Senator Irving Gerstein, from Quebec, and Senator Carolyn Stewart Olsen, from New Brunswick.
[English]
Also present is Senator Harb, from Ontario; Senator Moore, from Nova Scotia; and Senator Massicotte, from Quebec.
We will be resuming our examination of our study topic, which is securing growth capital for small- and medium-sized enterprises, SMEs. At previous meetings, you will recall it was highlighted how the capacity to build and exploit networks, both business and personal, can be an important avenue for securing funding for SMEs.
For instance, our recent witness, Mr. Jenkins, Executive Chairman and Chief Strategy Officer of OpenText and chairperson of a recent federal panel on innovation, attributed his business success to banging on doors and networking in search of finance and other support. If I am to believe my morning newspaper, several studies have concluded that women tend to possess greater networking skills relative to males, especially as we all age. We all, of course, were referring to males, not to our witnesses.
This being understood and for many other reasons, how women entrepreneurs promote and invest in Canada's productivity challenges is an area worthy of study. I would like to thank and commend our deputy chair for her work in this regard.
Joining us today to discuss women and their contribution to Canadian competitiveness is Dr. Barbara Orser, Deloitte Professor in the Management of Growth Enterprises at the University of Ottawa, Telfer School of Management; Stephanie MacKendrick, President of Canadian Women in Communications; and Lynda Partner, Director of Canadian Women in Technology.
Barbara Orser, Deloitte Professor in the Management of Growth Enterprises, Telfer School of Management, University of Ottawa: Good morning. I would like to thank the committee for the opportunity to discuss women's entrepreneurship in the context of small business interventions, innovations, and economic prosperity. We hope our presentation will stimulate discussion about how federally funded small business interventions — including technology, innovation, and capitalization — can further support the needs of all growth-orientated business owners.
This discussion is important given that 47 per cent of Canada's 1.6 million firms retain some or partial ownership by women. Women retain majority ownership in 16 per cent of Canadian firms. The task force estimates that female business owners contribute $117 billion per year to the Canadian economy, yet majority female-owned enterprises are half the size of their majority male-owned counterparts.
My presentation will highlight recommendations drawn from a November 2010 task force report and related Canadian research. I will emphasize four points. First, women's business growth can provide a major boost to the Canadian economy, but increased support is needed.
Second, federally funded small business initiatives, including those that encompass growth capital, fail to consider gender differences in client needs.
Third, Canada lags other developed nations with respect to policy interventions to better support the growth of women-owned firms.
Finally, a national strategy on women's entrepreneurship is needed to capitalize on women's enterprise growth.
What is the Taskforce for Women's Business Growth? The task force evolved from an informal discussion amongst a group of women leaders. All were concerned about the performance gap between male and female-led firms. Founded in 2009, the task force is now a non-partisan group comprised of prominent women entrepreneurs, small business training agencies, academics and industry associations such as Canadian Women in Technology, and Canadian Women in Communication.
Our growth is to support the growth objectives of Canadian women entrepreneurs. The work is funded solely by in-kind contributions and a lot of volunteer time. The task force has produced two reports: the Blueprint for Economic Growth and Action Strategies to Support Women's Enterprise Development.
The latter report suggests that a 20 per cent increase in revenues of majority women-owned firms will contribute another $2 billion to the Canadian economy per year. This is a conservative estimate.
How might we facilitate the growth of female-owned enterprises? To answer this question, we gathered the perspectives of over 200 prominent women business owners from across the country. We asked round table participants to discuss the challenges they face and to discuss strategies to address these challenges. We collated the round table findings with academic research and Statistics Canada data.
We learned that there is a disjoint between the growth in tensions and the performance of women-owned firms. For example, Industry Canada reports that majority female-owned firms are just as likely as their male counterparts to seek growth. Women want to grow their firms. The gap is real. Telfer studies on gender differences in small business performance have found that even when researchers control for influences typically associated with growth — such as firm age, sector, investment in R& D and owner's growth intentions — majority female owned firms were still less likely to exhibit growth in revenue, profit, employment and salary mass. The disparities persisted. Women come to business start-up with less management experience, capital and other resources associated with growth. We know women are less likely to adopt or employ technology in their firms. This impedes growth and productivity.
There is a big gap between the perception of capital options for women and reality. Again looking to research, at the aggregate level, women are more likely to be turned down for short-term debt. However, Telfer's studies conducted in cooperation with Industry Canada consistently suggest that approval rates and terms of lending on short-term and long-term debt are the result of women-owned firms being on average younger and concentrated in certain sectors.
Women business owners were equally likely as men to seek debt financing. Women owners, however, are significantly less likely to seek equity capital. Studies have reported that businesses in which women held majority ownership are less likely to seek equity, even after controlling for those systemic differences mentioned earlier.
We do not fully understand why women are less likely to seek equity, but these findings are obviously important because of early stage financing needed to support enterprise growth. We learned that governments at all levels have introduced policies and programs to stimulate innovation. The vast majority of these interventions assume, without evidence, that they are just as effective for women as they are for men. The implicit assumption is there are no gender issues. Similar assumptions are evidenced in large-scale initiatives such as the Coalition for Action on Innovation in Canada and this week's report from the Task Force on Competitiveness, Productivity and Economic Progress. Reports are silent with respect to how women's entrepreneurship can uniquely contribute to high-value jobs, increasing productivity and building higher-quality innovation productivity.
However, research reminds us about the complex association between gender, innovation and entrepreneurship. For example, we know that women managers employed in technology firms are significantly less likely to intend to start a business. Women are less likely to commercialize innovation. We know that on average women bring less technical experience to start-up. This is important because technical experience is linked to enterprise growth.
Telfer studies undertaken in cooperation with Canadian Women in Technology have also reported that women entrepreneurs working in advanced technology sectors cite personal and industry-level barriers to business development.
There remains a gap in the data, public reported information on client usage, and impacts of all small business technology and innovation programs. We need to think about women entrepreneurs when we think about productivity and innovation.
To not do so today dilutes the potential impact of federal spending. What are sample best practices?
The task force observed that in some regions such as western and Atlantic Canada, business owners have access to federally funded women-focused small business services. These programs help women start and expand their firms. Repeated studies of the effectiveness of these programs have been universally positive. The impact of training, coupled with the loan program, is particularly impressive. For example, funded by Western Economic Diversification Canada, Women's Enterprise Initiative operates across four Western provinces. The agencies offer loans up to approximately $100,000 to new and existing firms. They offer business advisory service, walk-in consultations, training and development.
Third party assessment documents that 75 per cent of their clients remained in business after five years. This is comparable to an average five-year survival rate of small businesses of 38 per cent. Women's Enterprise Centre loan clients generate one job at approximately $5,200. This compares to between $5,600 and $8,000 for our Canadian Small Business Financing Program. Human Resource and Skills Development Canada offers comparisons as to the cost of job of similar public programs. The evidence suggests that Women's Enterprise Initiative is a cost-efficient job creation scheme. The program has been praised for being client-focused and for developing strong managerial skills by motivated and effective staff. However, no such service is present in our two most populous regions: Ontario and Quebec.
All of these observations help to explain why women business owners who participated in the task force seek to increase their financial literacy, employ technologies to increase operational performance, develop foreign trade and capitalize on public and private gender diversity procurement opportunities. Canadian women business owners cannot yet build on women-friendly federal procurement programs in Canada the way they can and are doing in the United States.
Finally, I would like to highlight one last recommendation detailed in the task force report. Women entrepreneurs seek a national strategy to support the growth of women-owned firms. This includes increased funding to existing women-focused programs such as expansion of loan portfolios to all federally funded women's enterprise centres and program development in those regions that do not currently support such programs. Such a strategy requires executive commitment from at least four key departments or ministries including Industry Canada, Foreign Affairs and International Trade, Human Resources and Skills Development Canada and Status of Women.
To implement such changes, task force round table participants echoed past reports that have called for the establishment of an office for women's enterprise. The office would work across federal government to coordinate programs and policies and share knowledge about women's entrepreneurship.
Many nations are taking steps to capitalize on this underdeveloped sector. In September, six task force members, including myself, joined Minister Ambrose at an APEC women's economic summit. The meeting served to launch the policy partnership on women in the economy across the APEC economies. Canada has considerable expertise to offer our trans-Pacific trading partners. Ironically, the same experience is not yet available to women across Canada.
We hope that the work of the task force will motivate government at all levels to examine the utilization and impacts of small business interventions and to consider the expansion of high-yield, women-focused policies and programs to support women entrepreneurs.
Stephanie MacKendrick, President, Canadian Women in Communications: Good morning.
[Translation]
First, I would like to thank the Senate Standing Committee on Banking, Trade and Commerce for having us this morning. It is really a pleasure to have this opportunity to deal with such an important issue.
As the president of Canadian Women in Communications, I would like to share with you my comments and experience about women in an area with an enormous potential for our economy, the telecommunications, media and technology industry. My goal is to give an outlook of the CWC experience relevant to today's subject matter.
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There are two areas I would like to address today. The first is the issue of how we best capitalize on the economic contribution of women in Canada, especially as it relates to the TMT sector, as it is known, and the second is to share CWC's experience with gender-focused programs aimed at women's career advancement and leadership development. We believe that the same factors are relevant within the work we do in the corporate world and increasingly with entrepreneurs, and it is very much transferable.
CWC is one of Canada's most firmly established women's business sector associations and we have more than 1,000 members in chapters across Canada. We have a 20-year track record of helping women to advance in their careers through professional development, networking and awards and recognition. I have been president of the organization for 15 of those 20 years, so I have had a chance to see a lot. We are supported by corporate sponsors and membership fees, and earlier this year we received our first government funding to create an industry-driven training program that will help to develop executive expertise for the digital economy.
In 1991, when we started as Canadian Women in Radio and Television, there were different issues in different sectors. There was exactly one woman general manager in the radio industry, in private radio, when I started in 1996. Today there are dozens of women who are general managers and there are women executive positions on the media side. What we faced 20 years ago in radio and television we face now in the telecommunications and technology sectors. There are low participation rates of women, low retention and few women in positions of leadership.
My colleague Lynda Partner will address some of those specifics in her remarks. This is a big challenge and it is also a lost opportunity. We see women's advancement as an economic issue. It is business, not really social justice, although it has the happy side effect of having that input.
Catalysts' The Bottom Line study and a growing body of evidence support the business case for gender diversity in leadership and in business. We believe that, given the anticipated war for talent in the coming years, the need to increase productivity in Canada and the importance of Canada's competitive ability, women represent a very important untapped economic resource, and to fully exploit that potential we need to find ways to support women's advancement in the corporate sphere. Increasingly for CWC members all across business disciplines, it also means more support for entrepreneurial success and growth.
We have had an opportunity to observe many of the factors that hold women back and we have developed some clear ideas on how to maximize women's contribution to business. What we do is no different from normal good business practice. When you manage people, you get the most out of them by understanding them and capitalizing on their strengths. That is the context in which we see it.
Women approach their careers and businesses differently than men and they face different challenges. In the October 2010 edition of Forbes magazine there is a great article about 10 unwritten rules that women face. I will not go through all 10, but I will focus on two of them that are germane to today's discussion.
At the top of the list is that there is still a double standard in terms of business behaviour. Men are more likely to be seen as assertive go-getters when they are successful and when they press for results, while women with the same behaviours are more likely to be cast as aggressive and difficult, et cetera. There is a lot of literature around this.
I mention this today because it speaks to the different approach that women take in business. As women observe this and sense that they have a very narrow range in which they can behave where they can be taken seriously but not burn bridges and put people off, they sometimes become more cautious about what they say and how they say it. This is related to and contributes to the second issue, which is self-confidence in terms of business. Whether it is nature or nurture does not really matter. Women view their own accomplishments and competence with more diffidence than men. An internal corporate study showed that women will apply for an open job only if they meet 100 per cent of the criteria, while men will apply if they meet 60 per cent. Frankly, I think the men have it right. That indicates the kind of issue we face.
It is critical to understand this so that programs are not created based on the assumption that if women do not apply for jobs or programs they are not interested or they are too concerned with family balance to do that. Women do want to advance and succeed, but they are less forthright about expressing their ambitions and accomplishments.
This reminds me of when the medical field discovered, to their horror, that men and women do not have the same types of heart attacks. It informed how they devised new treatments for women. It is kind of a business version of that same dynamic.
Those are only two of the ten observations that were in the Forbes article, but they are the two that make the most difference.
Let me illustrate how that works in terms of how we do things. We run a six-day executive training program called Career Accelerator for Digital Convergence. It takes 20 women through an intensive boot camp that helps them to understand the industry and the skills that are needed and to apply those learnings to their careers and take them back to their companies and provide value.
It is interesting that this course is provided on a full scholarship. All you need to do is find a week off work, yet I have to persuade people to apply.
For women who I think are perfect candidates, I will often say, "You should apply." Their answer is, "I do not know whether I could." Speaking to the 10 out of 10, "They will say that they do not have that tenth criterion."
We have to work hard, but it pays off because the women who do go tell us, "I cannot believe I almost did not apply. It has totally changed how I look at my job, how I look at skills, how I am going to apply it and what my aspirations are in terms of my career; and by the way, I will get at it right now, not some day." It has a huge impact.
The other example that I want to talk about is how targeted programs can really work. We have spent 12 years tracking the representation of women on boards in our industry. We tracked 52 companies and, at the time, 20 per cent had no women on their boards; that was in 1999.
Over 12 years, we have measured and helped suggest ways to find candidates, and an interesting thing has happened. We compared after 10 years to the FP500, and we found out that our survey group had 55 per cent higher representation of women on boards than the FP500, and that the rate of change among our group was twice that of the FP500. It was not 10 per cent a year; it was 1.14 per cent a year compared to 0.45 per cent, but double nonetheless.
While our organization has more experience on the corporate side, we believe the same principles are applicable to women entrepreneurs. The research that Dr. Orser has outlined certainly supports that view.
A growing cohort of our members is becoming entrepreneurs by choice or necessity. We feel we have a critical role to help them take their collective knowledge and expertise and understand the transferability of that — not only to transfer between sectors but also to transfer to entrepreneurial activity so we do not lose that understanding, because there is a really important source of knowledge there.
We have a major training initiative under way that I referred to earlier. Through public policy, through Status of Women and their blueprint project, we are able to do a robust curriculum that will do research to find out what the gaps are and what skills are needed, plus those kinds of confidence-building skills as well. We will be able to help women to apply this knowledge in various areas.
Finally, I had a woman come to my office who wants to create a platform for well-curated, serious content for women in business. She has big plans. She wants to go big; it is not a cottage industry. She said I have this plan and this is the research I have been doing; can you help me find capital? What do I do next? I am not sure where to go.
I thought if she was in Western Canada, I could send her here and if she was in Atlantic Canada, I could send her there; but I will have to get back to her. Despite all my years, I will have to dig a bit and figure out the best route for her. She has all the attributes and I see that as kind of a case in point; if we can help women like her, I think it will be really good for our economy and certainly for our competitiveness.
When it comes to support, our 20 years of experience says that one size does not fit all. I think the task force blueprint provides practical recommendations that were created by a bunch of women who did not have a penny of funding but felt something needed to be done. We hope our expertise will help you in terms of any recommendations you might make in terms of public policy.
The Chair: Thank you very much.
By the way, I think we have a copy of Dr. Orser's presentation and Ms. Partner's, but we do not have yours.
Ms. MacKendrick: Mine has scribbles all over it. I will clean it up and send it to the clerk.
The Chair: That would be helpful.
I made an improper reference to the aging process in my opening remarks, but I cannot vouch for the memories of some of my colleagues, particularly the male ones, so it would be helpful to have something written.
Lynda Partner, Director, Canadian Women in Technology: I am here in two capacities. One is as a serial CEO of four high-tech companies. I am the colour commentary representing a typical woman-led small business. I am also here as a director of CanWIT, which is a national forum for Canadian women in technology, so I am trying to represent women in tech more generally.
I worked exclusively in the technology industry for 28 years. I have been in telecommunications, software, wireless and Internet. I have been the president or the CEO of four companies, two of which I founded. All have been growth companies; two were backed by venture capitalists and one was a public company.
I have also been involved for the past five years with CanWIT, which is a not-for-profit organization that recognizes that women in technology require specialized tools and support to be more successful in their fields. They provide mentoring, networking, professional development and advocacy.
I have personally been driven by a desire to see more young women enter into science, technology, engineering and math streams, or STEM. I would like to see more women running companies. It was a bit lonely when I was there.
To help with these goals, I currently run an online community for young women to encourage them to look at careers in technology; and I currently serve on the advisory board of the Telfer School of Management at the University of Ottawa, where I get the opportunity to talk to students about the challenges and the rewards associated with starting and running a business in technology.
I would like to add to the remarks of the other witnesses and weave in my own personal perspective, which is backed by conversations with hundreds of women in technology. It also takes into account the results of a national study of CanWIT members, who were consulted about the issues that prevent them from starting or advancing their own businesses.
I want to look at it from a business perspective. In the business world, the best companies understand that treating all of their customers the same is suboptimal. It does take time and talent to understand the different segments of your market and to match your offerings — be they programs, products or services — to the different needs of these different segments. When you do that, when you can align your message or your product with the different groups' needs, you accelerate overall success as each segment grows more quickly than the total.
Programs aimed at increasing the strength, competitiveness and growth of small businesses in Canada are no different. With the vast majority of businesses run by men, if you do not take a determined approach to segmentation, it is inevitable that small business support, infrastructure and programs will be aligned with the attributes of the majority — in this case, male-run businesses. If our goal is to increase overall small business productivity innovation, it makes sense to look at the market as a series of segments, and to develop programs targeted to these segments instead of pursuing one overarching strategy.
Then I say, what are the attributes of a woman-led small business that may be different from those of men-led businesses? While I personally have some real discomfort with generalizing, I did select three that are repeated themes among women entrepreneurs. My intention is to demonstrate that women-led businesses may be a segment different enough to benefit from programs customized to meet these specific needs.
The first one I picked is the lack of comfort with technology. Women CEOs repeatedly report that they are not as comfortable with technology as their male counterparts. This may stem from several sources.
One of the most obvious is the smaller percentage of women who pursue streams in science, technology, engineering or math at the post-secondary level, and these are known numbers. That ends up resulting in a smaller percentage of women who go into technology; and those who do tend to be in non-technical, more administrative roles. In an age where the effective use and understanding of technology is a key driver of business success, by the time women become CEOs, they have already fallen behind the curve.
I speak and write about many things related to small business success, but my talks and my blog posts about how to harness technology — not for the sake of technology, but to grow your business — are always the most popular among women. Women recognize that they need to get up the curve in the area of technology and they want the resources to help them. I do not see this to the same degree among men.
A second issue is that there are fewer opportunities for relationship development for women. We heard earlier in the remarks that, in business, relationships are critical to success. While there is nothing to say that strong relationships cannot exist between men and women, same-gender relationships are, in many cases, easier to develop and maintain.
There is a subconscious common bond that gives same-gender relationships a starting advantage. In an environment where one gender enjoys a majority, relationships among that gender will always form faster and, in some cases, end up as exclusive to that gender. We see this whether the majority gender is male or female; it does not just relate to women. Women CEOs often report that with the gender balance tilted toward males they struggle to be part of the gang and to join the informal, but critical, networking around the water cooler, in the local pub, or even in the men's room. They strongly feel the lack of available same-gender mentors, and they recognize that their ability to draw upon a network of their peers is often weaker than that of their male counterparts. That puts them at a disadvantage.
The third thing is that the different approach by women to business growth may be affecting their ability to get financing. Women approach business growth and strategy differently from men. I am sure there are many studies that will prove this with real data. Dr. Orser's comment that her studies concluded that women sought out equity funding less frequently than men resonates with me. If you have never pitched a venture capitalist, a VC, for funding, you might wonder why that would be when equity financing is one of the fastest routes to business success. I have pitched over 40 times to venture capitalists to get funding for my businesses, and I learned quickly that there is a repeatable rhythm and style to their meetings. They are characterized by confrontation, and quick-snap questions and answers. VCs respond better to hardnosed and aggressive business plans and strategies that deliver fast results regardless of the cost to human capital. Women are more likely to propose a growth strategy that is built on a strong foundation of productive, engaged, supported employees, where balanced teams and innovation are common themes.
I learned to change my story. I learned very quickly that VCs accustomed to dealing with a very different approach from the vast majority of CEOs do not respond to nonstandard approaches. I recall vividly that of the 40 VCs I met with, only three had women on their decision making teams. I ended up doing deals with four VCs over the course of my career, and two of them ended up being those that had women in their decision making bodies. Fifty per cent of my VCs had women representing them on my board, but there were only three in the grand total. I do not think that was a coincidence. This also ties back to my point about relationships.
At the end of the day, I believe it can be proven that women-led businesses have distinct characteristics, but it is a good thing. The differences represent an opportunity to create programs and public policy to recognize these differences and to customize programs for this segment. Programs that address these differences will pay dividends in two ways: the economic growth we have spoken about and increased innovation through diversity. The second point is not insignificant. To stimulate innovation, different thinking, different perspectives and different views are critical ingredients. If we had more business with teams that were more balanced in terms of diversity, we would have more innovation.
Anecdotally, I have watched this happen over and over. One of my companies was one of first cloud-based software, as a service, companies in the world. The idea to run the business in the cloud came about when the women on my team said that they would never use the software themselves because they hated the idea of loading more software onto their computers and having to deal with the difficulties. They were intimidated, and it was such a barrier that they would not even try it. We confirmed that this concern was shared by a significant portion of prospective women users of the software, while the men we surveyed did not see this as a problem at all. In a business where success was predicated on a "try it and then buy it" business model, this would have eliminated a significant portion of our addressable market, and we probably would have failed. A creative solution to the problem was to run the software in the cloud, let people access it using a browser and make it dead-easy to use. At the time, this was really revolutionary. This innovation would never have happened if the team that was coming up with the idea and developing the product had not included strong representation from both genders.
My examples are, admittedly, anecdotal. As a business person, I would insist on knowing more to more clearly identify the differences that would allow me to get the best return for my dollar in creating a custom program. Yes, we need more research to quantify these impacts on a larger scale, but I do know that marketing to segments of your audience works and that diversity produces better teams and more innovation. Recognizing the needs of different segments is important in many ways, but, to me as business persons, it is an economic issue. It is just good business sense.
Organizations like CanWIT try to help by tailoring programs specifically for women in technology. They have e-mentoring, education and networking, but a volunteer organization simply cannot address the need; the demand outweighs the supply. We believe that government has a real opportunity to create policy and programs that will work alongside groups like CanWIT and the CWC to strengthen this market segment, producing greater economic returns and providing the diversity balance that will promote and encourage innovation.
The Chair: Before I turn to my list of questioners, let me reiterate my thanks to each and every one of you. This is very helpful.
Dr. Orser, you said that your four points were drawn from a, as I understood it, November, 2011 task force study.
Ms. Orser: This was released last week in Toronto, and, as well, the briefing includes a series of academic references in the endnotes.
The Chair: Could we have a copy of that task force report?
Ms. Orser: It is included in your dossier in English and French.
The Chair: I just wanted to make sure we had it on the record. Thank you very much.
There were one or two acronyms used, Ms. Partner. Thank you for spelling them out. That was is helpful. TMT is technology, media and telecommunications, for those of my colleagues who did not know.
Senator Massicotte: Thank you for being with us today. If you do not mind, let me repeat what I think I understood from your comments and make sure we all agree. It looks like women are as ambitious as men. Look at your credit growth and demands; I think there is no difference there. You say there is a significant difference in the seeking of equity capital. It is hard to understand why, but that seems to be a fact. I particularly enjoyed this because it conforms to my opinion. You say it is not a structural, prejudicial problem, but you do note — and it is a reality — that men are different from females and that there is a tendency for males to hang around with males and for females to hang around with female. You see it in golf. Good or bad, we are different. I kind of like that part. You are saying, "No, there are no structural prejudices, nothing structurally wrong, except human nature." You are saying, though, that females are not contributing to the potential GDP or economic growth of our country, and, therefore it is something we must address. Is that a good summary of what I thought I heard, or am I wrong?
Ms. Orser: I think that captures it, with the exception of one point. When it comes to the structure of our financial service industry, we see that those differences are accounted for by firm-size and sector. It is not the case in equity capital. However, when we look at market interventions that attempt to bolster innovation and the commercialization of technology, we do not know if women are represented. Anecdotal information would suggest that women business owners are not part of those programs. It depends on what part of the market intervention conversation we are having.
Senator Massicotte: We have heard many witnesses on the venture capital side. The objective and the discussion we are having is capital growth for businesses. Every country in the world is looking to do well in the sector because they are saying that is the fundamental lesson of good economic growth. Nearly every country in the world agrees the focus should be on seeking gazelles, which are companies that will grow immensely. If you look at the statistics, 87 per cent of small businesses do not grow, do not wish to grow, or the company does not have reason to stimulate growth because they will not have significant leverage on the economy. We are looking for the gazelles. We are always looking for the Googles in the world that create a lot of employment.
You note for some reason — maybe for good reasons — that females are not scientific or engineering oriented. Universities are having difficulties in getting them involved in the sector. There may be a real market prejudice against women in that respect. That seems to be used to explain why some sectors are not growing that much. You are here talking to parliamentarians. Use the argument that we can create more economic growth for our country. What should we do and are you convinced it will not displace growth in other sectors? We do not want to increase or incite prejudice. Can you comment on that?
Ms. MacKendrick: The key thing is that we see an opportunity for growth. If we are looking for a home run or grand slam with gazelles, you can play a lot of baseball with base hits. We are saying we have hitters on the bench. I am getting too deep in the analogy, but there is potential that is not being used. Our big point is there are ways to get at that potential. There will be some women who fall into the gazelle group, but there are a lot of companies and women entrepreneurs whose ambitions and capabilities are under the radar.
Senator Massicotte: What could the government do to ensure there is no displacement?
Ms. Orser: I will respond by looking at job creation. When you compare the Canadian Small Business Financing Program — one of our largest market interventions — with benchmarks against Women's Enterprise Centre, that is not displacement but incremental growth. They are taking the base hits and growing those businesses at a cost that is comparable to our largest program. We have evidence that says this is not displacement; it is incremental. In terms of looking for those gazelles, respectfully, governments around the world have trouble picking winners, yet we have our evidence that says small businesses are generating growth simply because of their mass — the number of women businesses.
The Chair: Was it your presentation that compared a governmental agency with something that exists in the United States?
Ms. Orser: That would refer to WEConnect Canada. For years, the United States has supported targeted federal procurement. At this time the private sector is the most aggressive on diversity procurement strategies. The Obama Administration has expanded their federal commitment to women-owned firms. We have certified women-owned firms doing business with the American government and corporations. Ironically, we do not have that program available for Canadian women entrepreneurs.
The Chair: I do not wish to sound frivolous, but I was struck by someone's point that if women are part of the decision-making process — for example of a grant to small or medium size enterprise — that often the response is likely to be more favourable to an operation that is run by women. The understanding is there. Someone should do an academic treatise on the Dragons' Den. There was one woman on that panel. I wonder how many times it was thanks to her intervention that operations run by women, or in which women were strongly present, were successful or not.
Ms. Orser: American data supports the observation that having a female on the VC team is associated with more female-funded enterprises. I have not seen Canadian work in that area.
Ms. MacKendrick: There is also a correlation between women at the board level with a company's representation of women at the corporate officer category as well. The correlation between women in decision making and women in other ranks and other roles is quite pervasive, I think.
Senator Stewart Olsen: A few of my thoughts were the same as everyone's on these questions.
Thank you for the federal women friendly federal procurement explanation. I did not really understand what you were talking about in that.
We are looking to have more women in technology and technology-based firms and obviously there are fewer. Is that because there is less interest in women that you found? Is that some other barrier that you noticed in your statistical evaluations?
Ms. Partner: There is a fair amount of research to suggest that because women operate differently from men, the inclination to avoid technology starts at a very early age. Young girls do not always want technology for the sake of technology. They shy away from that because their needs are more on how could technology help make the world a better place? How could technology help me work in an environment where I am working with people?
Until recently, our system has tended to focus on technology for the sake of technology, whether it is engineering, IT or computer programming. Young girls have not found it satisfies the other parts of the needs they have in their career aspirations. Recently things have started to change because technology has become easier to use. With the advent of social media, girls and women are suddenly embracing technology in a way they have not in the past. It becomes a tool and not an end in and of itself.
There are indications it is starting to shift, but it starts very early. It does not start at the business time; it starts when they are in primary school.
Senator Stewart Olsen: I would suggest that we should be looking to start that interest early. That would be an educational component and that is huge. By the time you get to your graduation, even in high school, you are programmed to look someplace else.
I am from New Brunswick and we work closely with Mount Allison University. You see women everywhere in every course. In fact, there is a majority of women students there. They are all brilliant and many are going on to different pathways. It is difficult for me to understand. I meet women like you. I meet women in this committee. They are forceful, vibrant women who do not take a back seat to anyone. I have a hard time still hearing that in this day and age, and am interested that you have recent statistics that is still happening.
Senator Hervieux-Payette: When you talk about women being afraid of technology, I think it is all related to risk taking. It is not that men know more about technology, but they take more risks.
If you look at all the big mistakes that the large corporations made for the famous year 2000, when everything was supposed to collapse and all the senior managers in Canada spent billions of dollars on computer science and so on, they did not know what they were doing. In this case, I can say it is not a gender thing; it is a generation thing.
I would like to also make a distinction there. I have a lot of contact with women in their forties who are winners, and as far as I am concerned, they are all very capable of using any technology that is good for their accomplishments. However, I must say that there is a question of age and also a question of schools.
If you go to the sociology faculty, I think they should have technology courses. In sociology, you should know about everything dealing with statistics. We have to look at the universities when we make our report to talk about the curriculum also, so that women are not being dragged into a sector where it is fun and they would like to have a future there, but they lack some of the tools they would need in the future.
To manage a company with 30,000 people, if you do not know about technology, I do not know how you are going to manage it. Your first interest is human resources, but at the end of the day, you need the technology.
I would like to be more precise than putting men against women. It is the age group and the curriculum that we should also take into account. As far as I am concerned, I think women, once they are well introduced to technology, are very good at using it. However, I agree that we have a gap and we have to cover that gap.
Do you agree with my remarks in general with regard to your suspicion?
Ms. Orser: I have two responses. First, we would be pleased to share with the committee research, which I believe will be published next month, on perceptions of women in the advanced technology sector. It is interesting that when we drill down into the data, age was not significant. Some of these perceptions are pervasive, so we will send the documents on the nature of those perceptions.
More importantly, one of my key takeaways is when we are talking about technology literacy, we should also be including the conversation of financial literacy and an umbrella conversation about growth literacy. We are not talking about that yet either.
I teach entrepreneurship, and much of our conversation focuses on start-up. However, the growth conversation, I do not think, is well informed. In terms of the universities and some of the sectors you are dealing with, this might also be a point to emphasize.
Senator Tkachuk: I would like to take a different tack. I think it is important that we study where women have been successful in the integration of women into the labour force. I am not speaking from statistics that I have in front of me, but from general knowledge.
I know that women are now in law in a greater percentage than men; they are now in medicine as a greater percentage than men. Women are making great advances in the field of accounting, and starting in insuring, but not as much as in those other sectors. They are still the dominant group in nursing and management of home economics and all of those other professions that were traditional women's professions. Men have not migrated in any great numbers to those areas.
What is the reason why we need to get women into MBA programs, business and engineering? They are making great strides in science, in all that I have read. That is a positive thing because these are the people who go into business.
Technical training is another area. If you study small businesses, it is the carpenter who starts a little construction firm. It is the plumber who starts the plumbing firm. It is the kid who has been mowing lawns in the back yard of his mom and dad who starts the maintenance firm in college and builds it into a big enterprise and then builds a janitorial firm that starting cleaning buildings. Women are not in that business.
When you study small business and the statistics on women involved, women will never be involved in that; but I bet that most of the small businesses are all of those areas that I mentioned. That is who they are.
If you look at the jobs that small businesses are advertising in The Star Phoenix, that is who is advertising. We cannot get people to work in technical fields or carpentry. We do not have enough in Saskatchewan. We are dying for them and we are advertising for them and bringing them in. They are all male-dominated jobs, and they are all required by small businesses.
I think you have to look at who you are studying, and that will help guide us. I think women would be a lot more involved in business if dad would give his daughter a hammer and a screwdriver and make her mow the lawn every second week — which I never did, of course. My son did that. However, I think that is part of it.
I think that is why we have these sorts of issues without resolution, because we have been talking about this for 25 years. Here we have all these strides in all of these other professions, where women are actually dominant now, such as law and medicine. That is how successful we have been. I would like your comments on some of that.
Ms. MacKendrick: I would like to comment on a couple of things. This is a multi-level kind of issue. There is the issue about in grade school, before the age of 11, when girls and boys are certainly more even in terms of their science and math scores and abilities. That is the age, in neuroscience, of brain plasticity; that is when you have the most opportunity, depending on your educational system and how it works and what it reinforces.
There is the post-secondary issue in getting women in the right streams, so they are in the sectors where there is need and where we see the future. To the senator's point, it is not just thinking about straight engineering or straight science or math; it is how you apply those things into different disciplines so they are part of every discipline.
Then there is the mid-career part, and that is huge. To the point about generational differences, there are a lot of women with a lot of skills in various fields. In some of these fields, such as in the broadcasting area, it is really consolidating. There are all sorts of opportunities on the technology side.
For instance, if you know how to create content, the wireless business is looking for content for mobile applications and there are ways to cross-purpose it. There is very little in the way of mid-career training, and that kind of evolution.
The other thing is the attitudinal issue, the sense of confidence. When we do training, we look at subject matter, but we also need to train our members to think about business, growth and next steps, and to apply some skills that are transferable and that they already have but do not really understand how to use them, or do not even recognize that they have them to the extent they do. There is a huge issue there.
Senator Tkachuk: I think it is important to realize that business comes from skills learned. It is not that people get into business. They love a particular profession and grow it.
To have a contracting firm and to build houses, you are either an architect or you love finance and love the mortgage and finance business, building around this, or you have an engineering degree. That is what drives you into business. It is that not you went into engineering because you thought about business. You went into engineering or finance because you liked to do that. I think we have to do more work at that level.
The reason that many girls are in law and medicine, I think, is because their moms and dads have said you should be a doctor or a lawyer, like they used to tell their sons. Now they tell their daughters. They do not say, "Why don't you help me fix the car?" Otherwise girls will never go into electrical work and carpentry. They will not do that even though they are very good at it, because there are a few of them in that business and they are very good at it but that is not where they are led. You will not get them into business unless they have all these skills. They will not be in those small businesses.
Senator Massicotte: I want to get the facts straight. My understanding is that from a university sense girls are dominating nearly every faculty, including MBAs and CAs, and where there is a lower proportion is engineering, particularly the electrical and mechanical side, not the civil side. Is that accurate?
Ms. Orser: You can include computer science and physics, some of the harder disciplines, and math.
Senator Massicotte: From my experience, in the high school sense, girls are doing as well as the boys in the sciences and maths. What are the facts there? I know they are not going on to university, but from a pure understanding of science and maths they are equal if not greater than the boys. Is that the case?
Ms. MacKendrick: When they still take it. The streaming used to be you had the same curriculum as everyone else until you finished high school and you took the full range, but now the streaming starts early and you start making choices about whether you go into science or technology. I took no science or math after grade 11 and the system allowed me to do that. I took a bunch of languages. If I had been four or five years ahead, I would have had to take both science and math to grade 13.
Senator Massicotte: Where they have no choice, I understand the girls are doing as well if not better than the boys. Is that accurate?
Ms. MacKendrick: They are able.
Senator Massicotte: It is not an ability issue, it is an interest issue.
Ms. MacKendrick: That is right.
Senator Harb: I agree with everything you have said. One would only have to go to Toys 'R' Us and walk around, because that is really what defines this whole issue: We are what we play with. If you go and see the areas where you have toys for boys and you go to an area where you have toys for girls and that to a large extent says it all. In our educational system, whether parents or the educational system as it is, as soon as they are born we start wiring them certain ways. The little girl will play with the doll, the teddy bear and get all of the soft, gentle nice colours, and the boy will get his truck, his plane, all of the Lego and such, and that is the way it is.
My question is simple: I know girls are smarter than boys. I do not have to go far to see it. As my colleagues have pointed out, when you look at some of the marks in the primary and secondary educational system, girls are far more superior. Ms. MacKendrick said something that is very true: We start segregating them at early stages; first the parent and second the educational system.
Do you not think there should be some sort of affirmative action in the educational system to rock this boat completely, and shake it up, so boys can play with Barbie dolls as much as girls and the other way around; girls can play with trucks?
Ms. MacKendrick: It is interesting how you set up the system. In Bulgaria and some of the former Soviet countries that put a high emphasis on math and science in their programs throughout the system, and in some of the Asian countries, it creates a different outcome. Bulgaria has more women engineers than men engineers. It has a huge impact, how you focus and how you integrate technology, to Ms. Partner's point, about making it part of other things so that women or young girls do not see it as some different thing. It is integrated into everything they do.
Ms. Partner: I wanted to add one point to that, and that is if we do believe that technology companies are one of the biggest engines for growth, I do not think we should believe you can only run a technology company if you were a technologist in education. The three companies that I ran are all software companies, hardware companies, and I am not from a technology background.
Increasingly, we see CIOs in some of the largest corporations in Canada. I interviewed eight of them, and all eight did not come from a technical extreme. However, they are chief information officers in some of our largest corporations.
I do not know that we have to assume that you have to be technical to run a technology company or to be an executive in a technology role. That is the blurring that is happening today, where it is not just technology for the sake of technology; it is how do you apply the technology to create and innovative and grow a business.
While I do not disagree with anything that has been said, it is not the only thing to contemplate when it comes to encouraging more business and more women to run these businesses.
Senator L. Smith: Ms. Orser made comments in terms of the federally funded programs for small business initiatives. It was also in Ms. Partner's report. What is your perception of the federal programs? Are there too many? Are they easy to understand?
You obviously want to have more programs designated for women, but I would like to have your observations on what the federal government provides in terms of numbers, difficulty understanding, access and, based on that feedback, do you have a specific type of recommendation that this committee could take back that would assist women?
Ms. Orser: There are three points. It is difficult to comment on the impact of federally funded small business programs because they do not report publicly on the client profiles or job creation outcomes. There are a tremendous number of programs; for example, export stimulation. There is duplication. These programs are buried within web-based pages, and small business owners cannot locate those programs. There is an urgent need to consolidate and to communicate where those programs are buried.
Finally, in terms of where might women-focused programs might fit, I think it is a complement to existing programs, but let us at the same time consolidate and look at the incremental impact of these job schemes because to not do that is simply increasing the pie. We do not need to do that in this country because small business owners do not have the time to sort through the myriad of opportunities that are out there.
The Chair: I think that is an observation we have heard from others as well, and certainly is a problem; there is no doubt about that.
Senator Moore: I have two questions; first, one for Ms. Partner. What was your educational background before you started to run these companies?
Ms. Partner: I have a Bachelor of Commerce from the University of Ottawa.
Senator Moore: In your presentation, you mentioned that 40 per cent of the VCs you met with, only three had women on their decision-making teams and ended up doing four deals and two of them had women on their boards. Were those venture capital companies all Canadian? Were there American companies or venture capital funds?
Ms. Partner: Three out of the four were Canadian, and the two with the women in the decision-making capacities were Canadian.
Senator Moore: Ms. Orser, in your report — and Senator Smith touched on this — when you talk about the recommendations in your recently released task force study, the second item, "Many federally funded small business initiatives, including those that encompass growth capital, technology and innovation, fail to consider gender differences and client needs," how would you see that practically put in place, or what would the process be? I do not think you are asking for favouritism for women, because they want to stand on their own, but how would you see that taken into consideration, and how would it be implemented?
Ms. Orser: Before implementation, let us simply ask the question: How are these programs servicing clients? For example, the Canada Small Business Financing Program is huge. Hundreds of thousands of Canadian firms are supported through this initiative. There is no reporting on the profile, using gender-disaggregated data, of that investment. Before we can understand exactly how, let us simply step back and ask: Who is using this and what is the impact? That is the main point I am trying to reach.
Senator Moore: If you knew that, if that was reported, then what?
Ms. Orser: I suspect we would find that there is a continuing need for micro-loan based programs, supported by training, to bring women-owned firms up to speed so they could enter into the formal market structure.
Senator Moore: I was looking at your endnotes and the considerable research you have done. Are you familiar with the paper that Senator Catharine Callbeck of Prince Edward Island spearheaded seven or eight years ago dealing with Canadian women and entrepreneurship?
Ms. Orser: Very much so. The work of Senator Callbeck and the Honourable Sarmite Bulte, the Prime Minister's Task Force for Women Entrepreneurs, is highlighted in our first report. To me, what is interesting is that the recommendations that were advanced by the women in 2010 mirrored those recommendations by Senator Callbeck. However, over this period of time, they have not been implemented.
Senator Massicotte: Could you respond to this comment? There is obviously an issue there regarding the scientific factor that women are nice. I do not doubt that. I certainly agree that in any population, our self-interest is such that we have to use all resources as fast as we can. If you compare progress from the last 30 or 40 years, it is critically important to get women in the workforce and to fully use their abilities. I agree that is a real problem, and that is why you are here.
However, how would you respond to this comment? Fast-forward 20 or 30 years from now. When you see what women are doing today — for all kinds of reasons, maturity or whatever — they are doing a lot better than boys in schooling and in universities. Some sectors are deficient, but they are doing super well. There has been a ceiling and a difficulty for society to change and to accept women fully.
However, 20 or 30 years from now, we could have a panel here with a bunch of men saying, "We have a big problem. Women are dominating the faculties; they are dominating education and governments; and because of lack of maturity or lack of genes, whatever it is, the men are way behind." If you look at young men, they are way behind. Is that a perspective that is appropriate?
Ms. MacKendrick: I would briefly like to say that I have two sons. I think that being aware of how the different genders respond is critical, and I would say there is a problem in our elementary school system with young boys. There is a problem with dropouts at the secondary level, and there are issues that are specific to boys and men that need to be addressed as well. By the same token, there are specific needs that girls and women have. Likewise, let us be a little more accurate about how we encourage our people to thrive and contribute to our economy.
Ms. Orser: I live in hope. Given the reports that have been cited on our lagging productivity and the absence of small- to medium-sized enterprises, I think there is an urgency to support women's entrepreneurship in this country so we can remain competitive. These are long-term issues at one level, but I think we do have evidence to say that we can bolster our economy by looking at women's entrepreneurship today.
Senator Hervieux-Payette: I must say that I concur with what my friends have mentioned about the difference. It is quite exciting, in 2011, that we just realize that women might be different. As far as I am concerned, it is great news that we need to approach the program from some different angles to deliver a great result. We do not have to be shy about being different.
I will just make a comment. My own experience with venture capital was that the women were more likely to work hard on their business plans and they were far more advanced in terms of projections and so on. They had great credentials to prepare that, but they were far less successful in getting the funding because they were not promising almost heaven before the company was created.
If you were a man and you had a business plan that works half the time, half prepared and so on, and you promised to deliver 25 per cent the first year, you were in good shape. When women were coming with a well-prepared plan and were saying maybe between 15 and 20, they were less attractive.
There is a prejudice there in our system. I hope we will eliminate this idea that it is a great quality to be a great risk taker. We have seen what our economy worldwide has suffered because of great risk takers. If we were just coming back with fundamentals, I would feel better.
Do you feel that we should simplify or merge our programs? I have heard about the one-door access to government programs for 25 years. We still say it is hidden in every department. Do you favour the one-door approach, one place where people should address themselves; and let the technocrats, if needed, give their advice on the substance, whether it is the environment or another science? Do you think the one-door approach is realistic? Do we see that elsewhere? Do they have to have 50 doors in other countries to be successful in getting some support?
Ms. Orser: I think it will take a number of strategies. In Canada we have seen the success of private initiatives to forward information, such as MERX and the new Funding Portal. These are private opportunities.
Women want one-stop shopping. Women entrepreneurs and all entrepreneurs want that. We certainly need to consolidate information. If we are investing in these programs, we owe it to Canadians to make that information available.
However, coupled with that, we need online, real communication with technocrats that can point business owners to the right program. We need to move — and private sector is doing this — to communication one to one to talk about those programs behind our web pages.
Senator Hervieux-Payette: Do you feel that if we are to be successful and reorganize the envelope, maybe add some funds if needed, that we should have a yearly reporting mechanism on the success and the performance of these programs?
Ms. Orser: That is the point I am making, and absolutely use gender-disaggregated data. The Prime Minister's task force clearly spelled that out, and we have not seen that. There is an irony. Our federal contract compliance legislation requires the private sector to report on equity, but our federal programs do not.
Senator Hervieux-Payette: When we say "merging all programs," do you mean that Crown corporations should also be a part of that initiative? I know that CIDA is giving many contracts to private entrepreneurs, and there are certainly other corporations, such as Canada Post and so on. All these are big consumers. Should we have a policy that applies to Crown corporations?
Ms. Orser: Again, anything we can do to consolidate information for Canadian small businesses is good news, and if that information links to our Crown corporations, then the programs offered by BDC for capital, EDC, to save business owners' time, makes sense.
Senator Hervieux-Payette: One item was the question of procurement of the federal government with billions of dollars. It is the same thing. For instance, there should be workshops so people know how to address these questions and participate in the process. We cannot expect to put everything online and have everyone understand. When I deal with our own technocrats, I need to ask a lot of questions to get an answer to a citizen. I helped someone a week ago to get a new passport, because the passport was stolen the same day the person was leaving. Believe it or not, I had to have the computer print the form before I went to the passport office.
What about the person who does not have computer access? If you go to the passport office, they do not have that form. I say that because it applies to every department. If they agree, we have to ensure that our colleagues have a one to one relationship or a way of conveying the information through workshops or another way. Do you have a mechanism whereby people will understand how the government works in person? Procurement is gigantic and the rules are also gigantic.
Ms. Orser: I have confidence that Public Works and Government Services Canada is moving in that direction. I think the technology is there. We can talk one to one behind the web pages. In the context of today's conversation I would hope that all federal departments are open minded about how they can look at their programs and see if there are gendered opportunities. I think the diversity procurement program in the United States is demonstrating that once women business owners get through the door of procurement, they are matched. They are performing at an equal level. We had the Canadian Aboriginal set aside. We have no idea what the impact of that program is on women business owners. It is suggested women business owners are simply front doors and we need to explore that. I think every federal department might take a look at these issues with potential results.
Senator Hervieux-Payette: The Western Economic Diversification Program is giving $100,000 to four provinces. Someone talked about segments. To me, it is not segments. It is strange that one region operates with such a program. If it is a program that works well in four provinces do you not think it should work well in 10 provinces? It is strange to have a different approach to helping small businesses. I do not think they have a different mind in B.C. or Alberta for starting a new company. They certainly do not lack money in Alberta. Do you feel that some measures were tailor-made for a certain sector? That is not the way I see segmentation.
Ms. Orser: Absolutely. I think the key recommendation this reports calls for is an office of women's enterprise that coordinates expertise to stop duplicating the wheel. Women in trade in the Yukon can share expertise with leaders in northern Saskatchewan and Newfoundland. They can take that expertise and share it across the country. If we do not, it is likely that we will see a lot of replication and learning curves that are stymied. We have expertise that is world class and should be shared.
Senator Hervieux-Payette: Can you comment on how we can help women with trading outside of Canada? We did not touch on that. There are small- and medium-sized businesses, and if you have 100 employees you can export. Are women are using these programs? Are they available to them? Are they not as confident as men to use the program in terms of export?
Ms. Orser: There is another study from DFAIT. It is on gender barriers to export and cultural challenges that women exporters face. I would be happy to send it. Women want sophisticated, timely and relevant information. Part of that includes information about cultural differences in countries of export and differences as it relates to foreign trade and importing. We have that documentation, historically when only trade missions have been used. I think when we connect opportunity in terms of growth oriented, smart, globally focused global firms is an immediate solution that might help.
The Chair: Thank you for taking the lead and inviting our witnesses today, Senator Hervieux-Payette. It has been a stimulating session. It sounds like we have a study on every problem and aspect. The question now is how to collate all the information — and cut through the duplication, replication and confusion surrounding some programs — so that women who form a distinct segment of the market can take best advantage, not to mention men.
That has been helpful to us in our study and we appreciate you taking the time out of what are undoubtedly very busy lives to talk with us this morning.
Honourable senators, we will stay behind to discuss upcoming sessions. I would like to have your input on our program between now and Christmas.
(The committee adjourned.)