Excitement about Facebook’s recent IPO filing quickly turned to anger for those concerned about diversity issues. As the company revealed that it will go public with no women on its board of directors, the irony was not lost on many in the media who noted that most of Facebook’s 800 million users are women. (See Bloomberg’s “No Women on Facebook Board Shows White Male Influence.”)
In fact, new research shows that contrary to stereotype, women are actually bigger purchasers than men of technology in general. A study conducted in late 2011 by Parks Associates found that women are more likely than men to buy smartphones, laptops, and tablets—three out of four categories that were surveyed in the consumer tech space.
Malli Gero, executive director of 2020 Women on Boards, expressed the view of many when he said in a recent MarketWatch article: “It’s outrageous that Facebook, representing a new genre of American company, could not find a single woman director. Does Mr. Zuckerman think that women are too busy socializing on line to sit on his board?”
Adding to the chorus of disappointed voices, the California State Teachers’ Retirement System (CalSTRS) registered its disapproval about Facebook’s board by sending a letter to Facebook CEO Mark Zuckerberg. The letter, from CalSTRS director of corporate governance Ann Sheehan, expressed that the company’s choice to exclude women from its board “is particularly glaring at a time when there is clear evidence that companies with diverse boards perform far better than the companies with more homogenous boards.”
No Financial Sense
Facebook’s choice to go “zero” on board women shows it’s ignoring the largest part of the company’s consumer base, rather than reflecting that base in its directorship. It’s a move that doesn’t make sense when examining the research on diversity. A Fortune 500 survey found that companies with at least three female board members performed substantially better than those with fewer than three women from 2005 to 2009, resulting in a close to 50 percent better return on equity.
Nancy Sims, president of the Robert Toigo Foundation, whose All A Board program connects boards with diverse candidates, reiterated to the Evolved Employer that greater diversity of thought and talent on a board drives better results. “This is not a social or philanthropic endeavor; board diversity is tied directly to improved financial performance of an organization,” said Sims.
Does Facebook’s board reflect an anomaly or a trend in the tech industry? While Facebook is taking the brunt of the criticism for its female-free board in the wake of its announced IPO, are other tech companies much further ahead of the curve when it comes to diverse board composition?
The answer is yes and no. When looking at the Fortune 500 as a whole, the Alliance for Board Diversity (ABD) report Missing Pieces: Women and Minorities on Fortune 500 Boards shows that women are severely underrepresented throughout Fortune 100 and Fortune 500 boards.
But Facebook is among only 11.3 percent of companies with zero female board members, according to research by Catalyst. In ABD’s report, other tech and media companies that get a “zero” for diversity—with no women or minority directors—include Affiliated Computer Services, Virgin Media, General Cable, and Blockbuster.
When it comes to tech companies specifically, while some have slightly better numbers than Facebook by virtue of having at least one female board member, the numbers are still underwhelming, to say the least. When women hold only one or two seats on the entire board, it’s easy to see why companies would be accused of tokenism.
Of LinkedIn’s seven board seats, only one is held by a woman. Apple has eight board seats, with only two held by women. Yahoo! has eleven board seats and two women directors. Google has ten board seats and three women directors.
However, some forward-thinking tech companies are identified in the ABD report as having 40 percent or more seats held by women and minorities. Kudos go out to IBM, AT&T, Verizon, Micron Technology, Xerox, and SunGard Data Systems.
These companies show what’s possible when management puts a premium on valuing diversity. We can only hope that Facebook and other members of the “zero” club get on board quickly to better reflect their customer base—without the support of which they cannot succeed in the future.