The Paradox of Tech Boards and Diversity
September 20, 2016
Why tech boards need to recruit more women and how they can do
It’s a curious paradox: Tech boards represent some of the most innovative companies in terms of their strategies and their products and services, but they are among the least progressive when it comes to the number of women members.
Technology, which used to be a discrete and limited sector of the economy, has become a crucial component of virtually every aspect of day-to-day business operations and, more generally, how we all lead our lives. Companies that five years ago would have said technology was tangential to their business would today likely acknowledge that technology is as essential to their overall success as a strong finance or marketing function.
Concurrent with the transformative effect of technology, there has been a push for greater diversity on boards. It is increasingly understood that a diversity of perspectives—taking into account the views of a range of stakeholders, including employees and customers—enables rich discussions in the boardroom and well thought-out decisions.
But tech boards still lag behind in recruiting women directors—a gap that, compared with leading companies overall, is startling.
Of the 969 corporate directors serving Tech 100 companies (the largest US technology companies ranked by revenue), only 178 (18.5 percent) are women. This was significantly less than the 21 percent of board seats held by women in this year’s KFMC100 (the largest companies by market cap in all sectors). Further, nine of the Tech 100 boards have no female directors at all; there is not one KFMC100 board that is all men.
If recruiting women to the board is a priority and previous efforts have not been successful, it may be time to shift tactics. Here are three suggestions:
1. Start with the strategy. While it may be a priority to have women represented on the board, any search spec should go further than that. Do a thorough gap analysis—regardless of the opening—to determine the skills and experience currently covered on the board and what is required to support the ongoing strategy. It’s best to nail down those requirements before undertaking a search for a new director.
2. Ensure alignment on the board. The nominating/governance committee, the CEO and the rest of the board should be on the same page regarding what the board is seeking in a new director and why. If gender diversity is a priority, explicitly make that part of the recruitment strategy.
3. Expand your search strategy. If you look only at CEOs and those with previous board experience, the few women who are qualified may be “boarded up.” Be prepared to look a level down at women who are experienced senior managers with the requisite functional expertise.
Board composition has been evolving rapidly, and understanding the value that greater diversity brings to boards will lead to better acceptance of new directors. Adding female directors who can share new perspectives and enrich discussion and decision making has already proven to have a positive effect on company value. Now boards have to learn to identify and compete for the best women available.