Twitter (NYSE:TWTR) has finally added a woman to its board of directors post-IPO. Unfortunately, this tardy move rings hollow. Social media's power is its transformative influence on the Internet, allowing more close human connections than ever before. For that reason alone, you'd think companies like Twitter would be particularly inclusive and wise about their management and board structures.
Look around the Internet -- it's by no means a man's game. At Twitter and many companies in the tech industry, that doesn't seem to be the case. There's a serious shortage of females in the top ranks, and this shortfall flies against simple common sense no matter where you look.
Deja vu all over again
In a bizarre case of deja vu, Twitter didn't deal with its all-male board until after the IPO, and only after pointed criticism of the fact. It could have been avoided had it been paying attention to a certain other IPO. Social media industry bro Facebook (NASDAQ:FB) attracted criticism about its lack of women on its board of directors before it went public.
Facebook responded by putting Chief Operating Officer Sheryl Sandberg on its board of directors. Despite the "better late than never" tinge, it's at least a step in the right direction.
Marjorie Scardino's appointment to Twitter's board of directors is legitimately a heartening move. She has an impressive resume and surely will add the value of diverse experience to the board. She has worked as an editor and reporter for The New York Times and she also served as CEO of Pearson (NYSE: PSO) from 1997 until last year.
Still, given Facebook's high-profile controversy and criticism, Twitter should have known better than to wait until after it went public. Even more pitiful, the excuse was myopic, hackneyed, and sadly canned -- basically the old "shortage of qualified women" excuse.
Is the tech industry hanging out too much with grandpa? Particularly tech companies like Twitter should nip diversity shortfalls in the bud long before people even start noticing -- and criticizing.
Thinking deeply about the word "assume"
Cognitive diversity makes groups smarter. Businesses of all kinds should be interested in adding people who will make their own operations and decision-making more robust and effective. Homogenous groups too easily fall into groupthink, caught in a tiny box of what they know and perceive. It's like preaching to the choir.
In industries like tech, resplendent with "brogrammer" jokes these days, one might assume females aren't there because they're not interested in the field at all. Maybe what women really aren't interested in is fighting their way in and struggling for recognition.
Even beyond tech, though, the lack of female leaders may not always even be for consciously cruel reasons. While, unfortunately, conscious bias still exists, so does an arguably more insidious one: unconscious bias. It's particularly difficult when individuals have no clue their perception is skewed.
Great managements and boards should challenge themselves to truly look for real, deep-down merit, even if it comes in different forms and styles. We can always examine our own hearts and ask ourselves if we're making unconscious assumptions we weren't even previously aware of.
On a brighter note, we can find some companies improving on these issues.
Shaking up the status quo
Just this week, General Motors (NYSE:GM) named Mary Barra as CEO once Dan Akerson resigns. Barra is viewed as a logical, competent internal choice, having successfully served as the company's global product head. She has played a significant role in getting the company's wheels back on instead of falling off.
She's also the first woman to head up a massive auto company, so this might not be seen as the most expected move. That's pretty awesome for an old-school company.
Another interesting industry with a surprising number of females in high places: defense contractors. Lockheed Martin (NYSE:LMT) and General Dynamics (NYSE: GD) both have female chief executive officers.
Lockheed Martin has a whopping four females on its board of directors, including CEO Marillyn Hewson. In the grand scheme of America's mostly white male boards, Lockheed is a major anomaly.
Although General Dynamics has only one woman other than CEO Phebe Novakovic, the aforementioned Barra happens to be the other female director.
A Bloomberg article covering Barra's ascent at GM points out an interesting fact: About 20 women with science backgrounds are heading up companies in the S&P 500. While that's still a low number, it's another one of those steps in the right direction. After all, 10 years ago only nine women, regardless of fields and backgrounds, served as CEOs of S&P 500 companies.
Applying scientific method
In just one example, last year a Credit Suisse report, "Gender Diversity and Corporate Performance," showed that over the previous six years, the shares of large-cap companies with female board participants outperformed their counterpart companies with 100% male boards of directors by 26%. Small and mid caps enjoyed 17% outperformance.
This was no tiny, insignificant sample, either. The research group examined 2,360 public companies.
This outperformance reached beyond the vagaries of stock-price fluctuations, too. These companies exhibited stronger fundamental factors, such as higher returns on equity, lower leverage, and higher valuations.
Tech has disrupted many industries over decades. Why can't it disrupt old, anachronistic assumptions that just don't make sense -- and according to a lot of research, won't even work? Good corporate management strategy is about far more than short-term stock price hinged on old ways. When considering potential investments, long-term investors should consider intangible but essential factors -- like common-sense inclusion and the intelligence of diverse groups.
Check back at Fool.com for more of Alyce Lomax's columns on environmental, social, and governance issues.
Alyce Lomax has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Facebook. It recommends General Motors and owns shares of General Dynamics and Lockheed Martin. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.