Amid the optimism surrounding Twitter’s blockbuster IPO last week came a disappointing reflection on America’s progress (or lack thereof) in improving boardroom diversity.
Despite a customer base that is prominently female and a multitude of research showing the benefits to the bottom line of including women in leadership positions, Twitter chose to staff its board of directors with seven white men. And it doesn’t just stop with the board. The company’s top officials consist of only one woman – the recently appointed general counsel Vijaya Gadde.
Perhaps more surprising than an innovative tech company’s willingness to go into an IPO with such a visible flaw was its response after Twitter unveiled its IPO documents in early October. A New York Times article cited the decision as stemming from a lack of qualified female candidates. Unnamed sources told the newspaper that Twitter’s CEO Dick Costolo tried to find a woman to serve on the board. Vivek Wadhwa, a fellow at Stanford’s Rock Center for Corporate Governance, said in the article: “This is the elite arrogance of the Silicon Valley mafia, the Twitter mafia. It’s the same male chauvinistic thinking. The fact that they went to the IPO without a single woman on the board, how dare they?”
From here, Costolo chose to lock horns with Wadhwa over Twitter, which drew further attention to the shortage of women in Twitter’s top ranks. Costolo’s tweets (which can be viewed here) included a criticism of Wadhwa (“Vivek Wadhwa is the Carrot Top of academic sources”) and a statement that the issue can’t simply be about “checking a box & saying ‘we did it!’”
The lack of a meaningful response from Twitter on its lack of management diversity and the focus on criticizing Wadhwa via Twitter rather than addressing the issue allowed other commentators to shape the story in the press. The New York Times later posted a list of 25 women qualified to serve on Twitter’s board and Harvard Business School professor Rosabeth Moss Kanter noted that she “could come up with 30 names without thinking too hard.”
Commentators also said Twitter could look outside the technology industry for board-qualified women in industries that overlap with its business. For instance, Apple recently hired Burberry CEO Angela Ahrendts to assist its efforts in China and in finding new ways to build excitement among customers for its products.
In the year spent preparing for its IPO, readying a response to questions from media and other stakeholders on the makeup of its board would have been a clear factor to consider. Much has been written about the lack of female executives in the technology industry and numerous studies have shown that board diversity has positive effects on profitability. For instance, The New York Times cited a study from Catalyst, a prominent research firm studying women and business, that found companies with the most female board directors earned a 26 percent higher return on invested capital than the companies with the least number of women.
At Foley & Lardner’s 12th annual corporate governance conference in Chicago this month, speakers emphasized that a diverse board – in terms of gender, race, experience, philosophies, etc. – is not about “checking the box” but bringing a variety of perspectives that lead to better business decisions. Homogeneous boards that do not challenge their management teams or question their decisions are not doing their job of overseeing the company’s strategy and ensuring good governance practices. One CEO even remarked that he hates his board for constantly questioning his decisions, but considers that a good thing – suggesting that all of Corporate America would be better off if more CEOs hated their boards.
This topic of a lack of women in leadership has been coming up in the press more frequently. For example, in an op-ed in today’s Crain’s Chicago Business, Chicago Network CEO Kate Bensen highlighted the organization’s most recent census of women leaders, which found that 80 percent of all new board seats still are being filled by men. And Deloitte found that at the current pace, it will be 71 years before men and women reach parity on boards and in executive suites. As Bensen asks – with the clear benefits for building diverse boards and leadership teams – “Can companies really afford, competitively, to wait until 2084?”