Adding a woman to a corporate board is good, but not good enough

By Vivek Wadhwa, Special to The Washington Post
Posted Dec. 11, 2013, at 12:25 p.m.

Twitter made an important announcement last week: it was adding a woman, Marjorie Scardino, to its board. This is significant because Twitter has become a poster child for the sexism and arrogance that pervades Silicon Valley. This appointment sends a signal to the corporate world that behavior that was considered acceptable in the 1950s is no longer so — that there must be diversity.

Scardino is a great choice for Twitter’s board. She is former chief executive of publishing giant Pearson and is highly accomplished. She has been an outspoken critic of the lack of diversity on boards and is likely to speak up when she sees frat-boy behavior.

But we can’t let Twitter declare success and get off the hook. It has garnered worldwide attention for its bad corporate governance practices. Therefore, it must now be the example of what is good. It should create a more balanced board, management team and employee base, with more women as well as African-Americans, Hispanics and Asians in the mix.

It needs to do this not because it will look better but because it is good for the company.

Adding more women as board members will improve the financial performance of the company. As research by Catalyst shows, companies with the highest proportions of female board directors outperform 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.

Alison Konrad and Vicki Kramer documented in a 2006 Harvard Business Review paper that women directors also make three contributions that men are less likely to make: “They broaden boards’ discussions to better represent the concerns of a wide set of stakeholders, including employees, customers and the community at large. They can be more dogged than men in pursuing answers to difficult questions … And they tend to bring a more collaborative approach to leadership, which improves communication among directors and between the board and management.”

Women and minorities can also fix the groupthink that is common in companies such as Twitter in which management and boards often resemble a boys club. Their “collective intelligence” will increase. A 2010 study published in Science found 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.

In his public spat with me about the lack of women on his board, Twitter CEO Dick Costolo, wrote “@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 and to have Twitter do the hard thing: fully diversify its board and management.

Vivek Wadhwa is Vice President of Innovation and Research at Singularity University and Arthur & Toni Rembe Rock Center for Corporate Governance at Stanford University. His other academic appointments include Duke and Emory Universities as well as past appointments at Harvard and the University of California Berkeley.

http://bangordailynews.com/2013/12/11/opinion/contributors/adding-a-woman-to-a-corporate-board-is-good-but-not-good-enough/ printed on September 19, 2014