Co-working giant WeWork came under fire recently when it filed to go public with a board of directors that doesn’t include a single woman.
This is alarming, for sure. But only focusing on the dearth of women misses a broader point about building effective, diverse boards.
Diversity isn’t just about gender, or even race; it requires diversity of thought, and creating room for opposing and varied views.
If startups continue to draw their directors from the same clique of billionaire venture capitalists and executives, they risk building corporate monocultures that will be dangerously out of step with the changes in technology and culture happening all around us.
As a woman of color and a board member myself, I am an unequivocal proponent of gender and racial diversity. It’s why I joined Athena Alliance, a nonprofit dedicated to helping more women gain directorships and positions of executive power.
For these same reasons, I know that diversity requires us to go deeper than appearance: An effective board brings together a variety of backgrounds and expertise in areas that go far beyond just finance and investing.
For a startup, that means thinking critically about your customers and stakeholders and designing a board with that in mind. Areas like security and digital marketing have seen tremendous change in recent years, and failure to execute in either of these areas can kill a young business.
Human resource leadership is also more critical than ever. Millennials have new expectations about their work environment, and several companies have seen their employees walk out because they don’t like how their company is run. These are all issues that need expert board-level guidance.
Ironically, startups today tend to have less diverse boards than the legacy companies they aim to disrupt. A recent study found that the boards of recent IPO companies were comprised of just 11% women on average, compared with 20% for large public companies. And nearly 40% of the IPO companies had no women board members at all.
How does this happen? Partly, it’s because investors demand representation in the companies they invest in. I get the rationale, but the result is too many boards that are packed with aging white males who have a limited grasp of how the world is changing around them. This will never create an effective check on the impulses that drive some companies to make poor decisions.
But part of the blame lies with startups themselves. Everyone these days wants to enlist a Reid Hoffman or a Sheryl Sandberg to help navigate the perils of early-stage life. But there are only so many Reid Hoffmans and Sheryl Sandbergs in the world—and more importantly, there are only room for so many, if we want to build truly diverse boards.
I’m encouraged by some of the awareness we’re seeing in the business community, particularly as it applies to women. Investment management company BlackRock now requires that the companies it invests in have at least two female directors. And California law will soon require public companies to have at least one woman on the board. This is progress.
But startups must think beyond just gender and race when considering a diverse slate of directors. These characteristics don’t define how people think; we are all individuals with unique talents and perspectives. It’s those less visible traits that companies should be selecting for.
That means looking beyond the Ivy League and Sand Hill Road for board members who can better understand their employees and customers, as well as their investors. It means looking for experts in security, human resources and digital marketing to balance the focus on finance. And it means looking to communities like the disabled for new ideas about access and inclusion.
The tech industry is facing a crisis of trust that shows no signs of letting up. To win back public confidence, our boards must reflect the richness and diversity of all the constituents we serve.