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Last Tuesday, TPG Chairman David Bonderman resigned as a director of Uber Technologies, Inc. after making a seemingly sexist comment about women directors. The comment was made at a company-wide meeting to discuss measures to improve the culture of the workplace at Uber, which has been alleged to be male-dominated and tolerant of sexual harassment, discrimination and bullying.
At this meeting, Uber director Arianna Huffington announced the addition of a second woman to the board: Nestlé executive Wan Ling Martello. Ms. Huffington shared that her personal goal has been to increase the diversity of the Uber board “much though I love my white male colleagues.” She also noted that there is a lot of data that shows when there is one woman on a board, it is much more likely that a second woman will join the board. “Actually,” Mr. Bonderman interjected, “what it shows is that it’s much more likely to be more talking.”
Mr. Bonderman has acknowledged, as indeed he should, that his comment was “careless” and “inappropriate,” particularly given the context in which it was made. However, having served as a director of numerous companies, Mr. Bonderman likely based his views on what he has observed first-hand: that adding women to a board often does lead to increased talking in the boardroom. That’s true, and it’s a good thing. But it is not because female directors are more “chatty” than their male counterparts. It is because the addition of women to a homogenous board can meaningfully improve the diversity of skills, experiences and perspectives in the boardroom, thus facilitating greater and more insightful dialogue among directors. The same can be expected if a director that enhances racial diversity or an activist investor who brings new insights and perspectives is added to a board.
Studies have shown that increased discussion and debate resulting from improved boardroom diversity can be highly beneficial. Bringing together individuals with differing ideas, opinions and perspectives can create an environment of “collaborative tension” that results in a more thorough consideration of alternatives, less groupthink, and ultimately, improved decision-making. As noted by Professor Katherine Phillips of Columbia Business School, people work harder in diverse settings to understand and reconcile differing perspectives in order to try to reach a consensus. Directors may not necessarily enjoy the process, but, as Professor Phillips observes, “the hard work can lead to better outcomes.”
Mr. Bonderman has stated that his comment came across in a way that was the opposite of what he intended. It is possible that he appreciates the benefits of a diverse board and only wished to make light of the increased “work” brought about by improving diversity. Regardless of what his personal views may be, it is clear that too many companies are failing to recognize the full benefits that a diverse board can provide given the low number of directorships held by women and minorities. Last year, women held only 21% of all directorships at S&P 500 companies, while minorities held only 14% of all such directorships.
Uber is one company that can undoubtedly benefit from a more diverse board. Its aggressive corporate culture has led to a wide array of scandals that are plaguing the firm, resulting in its CEO taking an indefinite leave of absence and numerous executives being dismissed from the company. Yes, improving board diversity at Uber likely means that there will be more talking in the boardroom. This will be a good thing, and hopefully translates into improved decision-making and board oversight. Given what has transpired at Uber over the past year, all of its directors should see the need for more dialogue and join the conversation.
Jared L. Landaw is a Partner and the Chief Operating Officer of Barington Capital Group, L.P., an activist investment firm.
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