Over a recent dinner with twenty C-suite executives, one founder-CEO recounted how he was preparing a slide for a company all-hands with headshots of his board of directors when he was struck by the contrast between his gender-balanced employee base and his all-male board.
Board diversity offers an array of benefits, including new perspectives that can improve decision-making and reduce “groupthink,” access to a broader talent pool, and of course the symbolic power of women and minorities at the top rung of the corporate ladder.
Only 19 percent of independent directors — those appointed without a prior operating or investing relationship with the company — are women.
Why should CEOs care about building boards that bring more women and minorities to the table?
For Stephane Kasriel, CEO of Upwork, “our board has been the most useful in discovering blind spots, by asking questions that force us to think outside of our day-to-day way of looking at things.” Ripple CEO Brad Garlinghouse says his board brings “a satellite view of the world so that we can analyze global macro trends that may converge or diverge, affecting Ripple’s future.”
For early-stage startups, board members can help address tactical needs, providing introductions to candidates or lending functional expertise to shape strategy.
A broader set of skills, life experiences and ways of thinking give CEOs more resources to draw from for assistance.
Says Lurie, “a diverse set of perspectives and experiences will help you anticipate and respond to all kinds of challenges in your organization.
Lurie points to “one study [that] found that companies with one or more women on their board have 26 percent better share performance than companies with all-male boards.
Garlinghouse cautions CEOs that, “building diverse boards and leadership teams take time and intention, so make it part of your mission from the beginning — it should not be an afterthought… otherwise, those with the ‘right’ experience who get the big jobs will continue to look the same.”
Kasiel explains that, in building out the Upwork board, “We were very thoughtful in finding people who brought a specific expertise.” Recently added directors were selected for their deep knowledge of finance and operations, enterprise sales and M&A and tech marketing.
Garlinghouse suggests that CEOs “pay attention to what’s happening in adjacent verticals, especially if you’re in a space that’s constantly evolving; the perfect director might not — and likely won’t — have a career dedicated to what your company does, but skills always transfer.”
“In fact, I often advise early stage companies to add an independent board member as early as they can.”
“It’s never too early to have an independent director on the board,” agrees Garlinghouse at Ripple, where the first independent was appointed only a year after the company’s founding.
“The advantage of having independent directors,” he points out, “is that CEOs can prioritize diversity of thought because they are not constrained by board seats controlled by shareholders… With independent directors, CEOs have more flexibility in choosing an expertise in a specific area or a unique experience that’s currently lacking to bring companies to the next stage of scale.”
To CEOs worried about upsetting board dynamics, Kasriel responds, “the whole point of adding a new director is to change board dynamics!