A Hidden Hurdle in Efforts to Diversify Boardrooms

A Hidden Hurdle in Efforts to Diversify Boardrooms

Last spring, Nikki Kristoff, a senior Salesforce executive, was offered the opportunity to join the board of a publicly traded company, along with her day job. Being a director of a public company is a corporate badge of honor, and the invitation indicates that he is ready to break into a men-dominated club.

Ms. Kristoff, Salesforce’s senior vice president for strategy and government relations – and one of the “25 Most Powerful Women” in politics Fortune magazine – Wanted to accept invitation. So he sought permission from Salesforce.

Then things got complicated.

“I was told that Mark Benioff’s policy is that only his direct reports can work on profitable boards,” he told me, recalling his conversation with the General Manager of Salesforce, the company’s founder and CEO, Mr. Mentioned Benioff.

“I said, ‘Well, I’m going straight to her because I understand that the policy on her face is not discriminatory, but given how some women and people of color report directly to Mark, one of them There is a disproportionate effect. Group. So of course when I talk to him, he will give me an exception, “he said as he told the general counsel.

Ms. Christophe sent a text message to Mr. Benioff, who creates a culture of public inclusion and was one of the first officials in Silicon Valley to try to end it Gender pay gap.

Despite his progressive views, Mr. Benif did not ring.

“He said, ‘This is our policy – this is our vision that Salesforce people should be focused on Salesforce. And so,’ no, ‘she said she told him.”

Ms. Kristoff played the board – and was fired by Salesforce.

Mr. Benioff read, “I am so disappointed!” Dil has a break with the emoji when he reveals that he planned to take the role.

Ms. Kristoff’s story highlights one of the biggest challenges facing companies’ efforts to diversify their boards: Many large companies in the country do not allow their employees to join external boards, especially Not below the senior most rank.

With so many employees trying to remove promotion barriers on their own employers, this creates a kind of systemic hurdle to diversify boarding.

And companies that are facing calls from investors and society to diversify their boards, a new mistake is unfolding in the corporate world: Should companies allow their managers to spread their wings?

Ms. Kristoff is eager to address this issue. “People don’t know that these policies exist, and it’s not just Salesforce that has this policy,” she said. “It is not uncommon for senior management to ban board service. And so I find it important to highlight that issue from an equity perspective, but also from a business point of view.

By state law, all public companies based in California must have at least one female board member and one member from at least one community. Nasdaq has proposed a rule that all companies listed on the exchange must disclose the diversity of their boards and must have at least one woman and one director who holds a minority or LGBTQ identity as Goldman Sachs , Has said that it will not take a company public unless its board has at least two directors who are not straight, white people.

Although 59 percent of new directors at the S&P 500 companies were female or ethnic and racial minorities last year, according to the hiring firm Spencer stuart, Business in board seats is limited, so progress is slow in diversifying boarding. (The average board consists of 11 directors, whose tenure is eight years old.)

Women now have fewer than 30 percent of directors in the largest listed companies, while ethnic and racial minorities make up about 20 percent. When they are hired on a board, candidates in these groups are more likely to become directors for the first time than white men, are less likely to be current or former chief executives, and are younger.

Mr. Benioff’s policy in Salesforce is not uncommon. Many companies, especially technology firms, have restricted corporate board membership, in part, because they worry that this may divert employees’ attention from their core responsibilities. (Companies place fewer restrictions on joining the charity board.)

“I know that all of our 57,000 employees would love to join a board,” Mr. Benefi told me. “Unfortunately it is not sustainable.”

“It’s not easy,” he continued. “Not all 57,000 Salesforce employees can voluntarily join the boards of other companies – this is too much risk and complex for a company of our size and scale.”

He said that while he considered it to be helpful for the development of some employees, it could be completely “highly distracting”. He said, “It could be wrong.” We are continuing to evaluate our policy. “

Steve Jobs, Apple’s founder, did not believe in out-of-board memberships, except for himself: he bought Disney’s board after buying Pixar, which he founded. (His successor, Tim Cook, is on Nike’s board.)

In Adam Lashinsky’s book “Inside Apple: How Americans Most Admired – and Secret – Company Really Works”, Andy Miller, Apple’s vice president for mobile advertising, is told about Mr. Jobs’ exit.

Mr. Jobs gave an icy answer: “What? You are barely cutting it here and you want to spend your time helping someone else’s company? “

In truth, the time commitment to serve on the corporate board is sufficient. This can be from 20 to 25 days in a year, or more if there is a crisis, counting preparation time, travel and own meetings.

Some companies have clear instructions that they can govern outside the direction, instead of whether to allow an employee to take the position on an ad hoc basis.

But you’ll be hard-pressed to find, for example, Amazon employees serving on outside boards.

There may be good reason for this: One of the most frequently cited reasons is that companies prevent bar employees from joining external boards because it can create a conflict of interest. Looking at Amazon’s numbers, this may be a particularly powerful argument.

There is also what some CEOs call a “branding problem”. Many high-profile companies are concerned that smaller companies want to appropriate the good will of the big brand through board appointments. Some businesses and some industries may also be considered risky from a reputable viewpoint.

It seems that there was at least one concern in Salesforce in Ms. Christoph’s case. The company that invited him to join its board is Medmen, a publicly traded cannabis company.

And then there is a prickly internal power dynamic that comes to the fore in some companies. When officials said lower-level employees are invited on boards amid a push for greater diversity, it could prevent resentment, some officials said.

However, companies must grapple with the new reality that a wide range of their employees are being sought for direction. And in some cases, it can actually benefit employers, adding not only diversity to the outside company, but new perspectives and diversity of thought for their own good.

“Is out of board service important for an executive’s professional development? For many senior executives, ”said James Drury, a longtime executive search consultant who has placed many on the top boards. “Because as long as they sit on a board director’s seat, they don’t really understand the nature of the questions being asked in their own boardroom.”



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