Twitter has garnered worldwide attention for its bad corporate governance practices and itsinappropriate response to criticism. The company needs to be congratulated, however, for announcing that it is adding Marjorie Scardino to its board. Scardino is former chief executive of publishing giant Pearson PSO -0.42% and is highly accomplished. She is known for being outspoken.
Scardino might well not have been considered for the job had there not been so much pressure on Twitter to add a woman to its board. That’s because Silicon Valley doesn’t usually recruit outside its Boys Club. When it does, it usually recruits celebrities who make great trophies. This announcement is therefore quite significant. Twitter has become a poster child for the sexism and arrogance that pervades Silicon Valley. This sends an important message to the corporate world that male-chauvinist behavior that was considered acceptable in the 1950s is no longer so.
One woman board member isn’t enough, however, no matter how competent or outspoken she is.
Let’s be clear about one thing: I am not advocating any kind of affirmative action, quotas, or preferences. This is about hiring the best people for the job—and including groups that would otherwise not have been considered. Sadly, the way Silicon Valley’s much-touted “pattern recognition” system works is that its moguls claim to know a successful entrepreneur, engineer, or business executive when they see one. The pattern is always a Mark Zuckerberg, a Marc Andreessen, a Jeff Bezos: a nerdy white male. Often, the best candidates for jobs or investments are left out because they don’t fit the right pattern. In other industries, pattern recognition would be called gender or racial discrimination.
The reason companies need diversity is that it is good for their shareholders and employees.
To start with, adding women as board members improves the financial performance of a company. Research shows that companies with the highest proportions of female board directorsoutperform those with the lowest proportions by 53 percent. They have a 42 percent higher return on sales and 66 percent higher returns on invested capital.
Diversity also increases a company’s “collective intelligence”. A 2010 study published in Sciencefound that a collective intelligence factor that explained a group’s performance was strongly correlated to the average social sensitivity of group members, equality in distribution of conversational turn-taking, and the proportion of females in the group. There was a low correlation to average or maximum individual intelligence of the group. In other words, better performance came from diversity—not just individual smarts.
And Silicon Valley’s frat boy “brogrammer” culture is damaging the industry as a whole by discouraging women and some minorities from being part of it. You see obscene behavior at conferences such as TechCrunch Disrupt—where two teams recently made lewd sexual comments and gestures on stage—and in disgusting posters such as those that were found in the women’s bathroom at Twitter. The insensitivity to such behavior starts from the male-dominated boards, down to the executive ranks, to mid management, and to employees.
Alison Konrad and Vicki Kramer documented, in aHarvard Business Review paper, that women directors make three contributions that men are less likely to make:
1. They broaden boards’ discussions to better represent the concerns of a wide set of stakeholders, including employees, customers, and the community at large.
2. They can be more dogged than men in pursuing answers to difficult questions.
3. They tend to bring a more collaborative approach to leadership, which improves communication among directors and between the board and management.
So Twitter now needs to go the extra mile and do what will be best for its shareholders and a great example for the rest of the industry. It should create a more balanced board, management team, and employee base—with more women as well African Americans, Latinos, and Asians in the mix. There are many who are competent and qualified. Here is a list of 16 women whom I recommend.
In his public spat with me about the lack of women on his board, Twitter CEO Dick Costolo, tweeted:
“@wadhwa you’re not seeing my point. you give people an easy out by just checking a box. The issues are much bigger than checking any 1 box.”
I completely agree. That is why we need to check more boxes.