Office buildings and cranes dot the Seattle skyline. (GeekWire Photo / Nat Levy)
Former drugstore.com CEO and board chair Dawn Lepore doesn’t need to be convinced that it’s important to have diversity on company boards of directors. Over her decades of corporate leadership, Lepore has had plenty of opportunity to see the value firsthand as a director for companies including eBay, Walgreens, RealNetworks and Accolade, among other roles.
She recently recalled a past experience on a smaller board, where she was one of two women. The board was tackling an issue related to talent and the women saw things quite differently than their male counterparts, a difference acknowledged by the CEO. Their perspective, Lepore said, helped drive a better solution.
“Diversity matters, just like in everything else,” she said. “Different points of view and life perspectives, you make better decisions. It’s just a fact.”
But when it comes to the boards that oversee and guide companies that can have huge impacts in all of our lives, white men dominate the ranks, with many fewer women and racially and ethnically diverse directors. Now there are efforts — some voluntary and others legally mandated — to change that.
To get a sense of where Pacific Northwest companies are starting from, GeekWire researched the board composition of 30 publicly traded technology and biotech corporations in Washington. The results suggest that efforts launched in recent years to increase gender diversity are starting to pay off: nearly 27% of the 251 board seats are held by women. But racial and ethnic diversity lags in many areas. Some 6% of directors are Black and only 1% are Hispanic or Latinx. Asian directors made a stronger showing, holding nearly 9% of seats; most are Indian.
But Northwest tech companies on average compare favorably to corporations nationwide. An analysis last year of the 3,000 largest publicly traded companies found that only 4% of directors were Black, 21% were female and 12.5% were from non-white, underrepresented ethnic and racial groups.
In June, Seattle’s Perkins Coie launched the Black Boardroom Initiative to increase the diversity of S&P 500 corporate boards by training cohorts of potential candidates. The law firm set a goal of 12.5% Black directors in Washington by 2028 — a ratio that matches the fraction of America’s Black population. Last year’s murder of George Floyd was an important motivation in creating the effort, according to Perkins Coie.
The initiative has support from major Northwest tech companies and provides a free, six-month training program for “board-ready” Black executives. The participants receive instruction in corporate governance issues and have opportunities for networking and mentoring. The Black Boardroom Initiative can help pair candidates with companies seeking directors.
Looking at the largest Washington tech companies, among the 15 that are publicly traded and have nine or more directors, one has two Black directors, nine have one, and five have none. Amazon currently is without a Black director, recently losing Rosalind Brewer who took the role of CEO of Walgreens. Myrtle Potter was its first Black board member and left in 2009. With Andy Jassy taking over as CEO this week and joining the board, Amazon’s diversity percentages slipped further.
Charlotte Guyman supports efforts like the Black Boardroom Initiative. She is the founding senior strategist for BoardReady, a nonprofit providing board diversity analytics and that helps match companies with diverse directors. As an experienced board member and former Microsoft manager, Guyman applauds the use of data and goals to drive progress.
“You’ve got to start with the target, and it’s got to be aggressive,” she said.
Other efforts to increase the numbers of underrepresented populations on boards include:
California laws requiring both gender and racial diversity on boards, with racial diversity rules passed in October.
A year ago, Washington became the second state to pass a law requiring companies (with some exceptions) to appoint boards with 25% female membership, or provide an explanation as to why they haven’t.
Many European countries require 30-40% gender diversity on boards.
Nasdaq filed a proposal with the U.S. Securities and Exchange Commission in December to require Nasdaq-listed companies to have at least two diverse board members, including one woman and one person who is an underrepresented minority or LGBTQ+.
Goldman Sachs has pledged to only underwrite IPOs of private companies that have at least two diverse directors.
Voluntary programs include OnBoarding Women, a Seattle-based effort started in 2014 to boost the number of women on public boards. The Board Challenge launched in September, asking companies nationwide to add a Black director within the next year.
Zillow is one of the companies that took the Board Challenge pledge, and in October appointed its first Black director, Claire Cormier Thielke, a managing director at the global real estate firm Hines.
“The talent exists, it’s about meeting people where they are and fostering opportunities,” said Kristina Adamski, Zillow’s vice president of corporate relations, by email. “We need to be intentional about stepping outside our usual networks to find the right people and make sure there is a seat for them at the table and their voice is heard.”
Experts on corporate leadership also emphasize the importance of considering a variety of attributes in order to get true diversity. That can include nationality, sector of expertise, age and socio-economic backgrounds. In addition to gender, race and ethnicity, GeekWire also looked at where directors were educated, finding that more than 27% of board members hold Ivy League degrees, and 14% attended Stanford University.
Boards of directors have challenging roles, tackling wide-ranging issues. That includes guarding against cybersecurity attacks, responding to climate change, serving an increasingly global economy, and keeping up with technological advances moving at breakneck speed.
Interestingly, research doesn’t provide significant evidence that a diverse board will improve market performance, but it does reduce the amount of prosecution by regulators, said Mary-Hunter McDonnell, an associate professor of management at the University of Pennsylvania’s Wharton School.
There is the possibility that a more diverse board is proactively putting out fires that could have had a negative effect on the financial bottom line, she said, but that’s difficult to show. At the very least, a more diverse board doesn’t help or hurt market performance, McDonnell said, in which case, boards should seek diversity given the important benefits in terms of greater social good and fairness.
“If you’re looking at a null effect,” she said, “there’s no reason that it shouldn’t be diverse.”
In decades past, boards were often filled by current or retired CEOs, creating a small pool from which to draw. Companies today pull from much wider roles.
But there are hurdles on the path to diversity. Turnover comes slowly. Board members are rarely removed from their roles, except in the case of a crisis. Strategies for increasing diversity include implementing term limits or adding more seats. There’s also the problem of tapping the same women and racially and ethnically diverse directors to serve on many boards simultaneously, stretching them thin. And sometimes a board needs a candidate with specific, uncommon expertise that’s difficult to find.
At the same time, programs to promote diversity, pressure from investors and shareholders, and increased awareness about the issue help drive progress.
“Do I wish the change would come faster?” asked Lepore. “Of course, we all do.”
Survey methodology: GeekWire examined the boards of publicly traded technology and biotechnology boards in Washington state. For the 30 companies meeting that definition, we researched public records on education, awards, organizational memberships, news stories and other sources to determine directors’ gender and racial and ethnic identities. We also contacted companies to verify our results; 22 responded, though three were unable to confirm our analysis. The analysis does not include other important measures of diversity, such as LGBTQ status, age and nationality. We opted to include Middle Eastern as one of our categories. The U.S. Census did not in 2020 recognize this distinction, but many members of the community support the option.
Companies included in the survey: Accolade, Achieve Life Sciences, Adaptive Biotechnologies, Alpine Immune Sciences, Amazon, Aptevo Therapeutics, Athira Pharmaceuticals, Atossa Therapeutics, Avalara, BioLife Solutions, BSQUARE, CTI BioPharma, Expedia, F5 Networks, Impinj, IsoRay, Marchex, Microsoft, MicroVision, NanoString Technologies, nLIGHT, Omeros, RealNetworks, Redfin, Seattle Genetics, Silverback Therapeutics, Smartsheet, T-Mobile, Zillow and ZoomInfo.
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