Last spring the Wall Street Journal ran a story with a headline that perfectly summed up an issue most U.S. companies are struggling with: “Corporate boards are still mostly white, mostly male—and getting even older.”
At Fortune‘s Brainstorm Tech in Aspen, Colo., on Wednesday, a panel of experienced board directors tackled the question of how to change the composition of corporate boards and why doing so is critical.
“I have seen diverse boards help drive diverse management teams, which help drive diverse companies,” said Jeff Richards, managing partner of venture capital firm GGV Capital. “I believe a huge point of leverage for us as an industry is to get the board dynamic to change.”
David Trujillo, partner at TPG Capital, said that his company used to go to all of the big executive search firms to help find directors for its portfolio companies. “It was the same list of people for every board, and it was always a bias of to serve on one of your boards, they need to have been on a board before,” he said. “We had to totally break that.”
In August 2017, the company put together a task force and laid out the diversity statistics for all 250 of its portfolio companies globally. Trujillo said the company also started to tie compensation to whether deal partners had improved the diversity of their boards. As a result, he said that 35 women have been added to TPG portfolio company boards within the last year or so.
TPG also compiled an internal database of 700 potential director candidates, the vast majority of whom have never served on a board before. “It’s breaking into that network of the next generation that tend to be a bit younger and just finding an incredible wealth of talent,” he said.
Amy Chang, SVP and general manager of Cisco Collaboration and a P&G director, says she also has a list of strong female board candidates. “Whenever I get asked for a board I just don’t have time for, this list has all of these fabulous women,” she said. She added that there are four women who now have successfully gone on boards as a result of some of those conversations.
Richards said getting portfolio companies to consider fresh talent for board seats “is a huge point of frustration for us.” He said that of GGV’s 125 portfolio companies in the U.S., at least 80% have an open independent board seat. Richards said that GGV will introduce companies to “people we think are phenomenal board candidates, and year after year those roles go unfilled.”
When portfolio companies are ready to add a board member, he said they’ll say the want Sarah Friar, who’s the CEO of Nextdoor and the former CFO of Square. “I go, ‘Sarah’s fantastic. She’s amazing. She’s on the board of Walmart and Slack, but she’s pretty busy running Nextdoor,’” he said. “‘How about these six other women who are VP or director level at Google or Facebook?’” Even though that woman might be running a P&L 100 times the size of the startup in question and is managing hundreds of the people, the founder will come back and say, well, she’s never been on a board before.
“Part of what we’re trying to do is give more first-time board members a shot,” Richards said. “If we’re going to change the ratio, we can’t keep going back to the same people that are already sitting on six other boards.”
Hilarie Koplow-McAdams, a venture partner at NEA, said that not only does she refer women to board seats but she also helps them write their “board narrative,” which helps explain why their skill set would make them a good director. “For a lot of the candidates we all think about, they’re not necessarily seeing themselves as potential directors,” she said. “Then we have to onboard them well.”
Chang said being the first woman on a board can be a challenge. “When you’re the only woman, you’re supposed to represent the point of view of all womankind,” she said. “That’s a big burden. I can’t represent the entire female gender. Nor should I have to.” She said once there are four women, you stop thinking about gender altogether.
Christa Quarles, Fortune Brainstorm Tech co-chair and former OpenTable CEO, who sits on the board of Kimberly-Clark, said that when the company added its fifth woman to the board, all of the women celebrated being able to talk business in the ladies’ room. “Men have been having conversations in the men’s room for generations, she said, “and we just had enough critical mass to have a conversation in the ladies’ room.”
More must-read stories from Fortune Brainstorm Tech 2019:
—A.I.’s hidden biases continue to bedevil businesses. Can they be stopped?
—Land O’Lakes CEO: Big data is helping farmers deal with climate swings
—How Spotify “playlisting” turned an unknown artist into a star
—U.S. risks falling behind in crypto, warns ‘Crypto Mom’ SEC commissioner
—Verizon executive calls for federal privacy rules on 5G
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