Yahoo Finance What Uber’s Board Can Learn from Starbucks
One of the major turning points in the Uber saga came during a staff meeting on June 13.
"There's a lot of data that shows when there's one woman on the board, it's much more likely that there will be a second woman on the board," Uber board member Arianna Huffington told the audience.
Her fellow director David Bonderman responded: "Actually, what it shows is it's much likely to be more talking."
The comment, first reported by Yahoo, cost Bonderman his board seat. It also perfectly illustrated Huffington's point. Having more women on Uber's board would have discouraged that kind of shockingly inappropriate remark. More important, it would’ve discouraged the toxic culture for women that in large part led CEO Travis Kalanick to resign yesterday.
Uber added its second female board member only this month--Nestl?’s Wan Ling Martello--reaching what Nell Minnow, an expert on corporate governance calls the tipping point. "It takes one woman to make a motion and the second to second it," she explains. "The idea that there are two suggests it's not tokenism."
Fortune recently profiled , a company whose board composition starkly contrasts with Uber's. Four of Starbucks' 12 independent directors are women. That's 33% of the board if you count just the independent directors or 28.6% if you count the CEO and executive chairman, who also sit on the board. Those numbers surpass the averages for Fortune 500 companies, where 21% are held by women. Three of the four women on Starbucks’ board are women of color. For a sense of how rare that is, a recent Catalyst study found that minority women hold just 3.8% of all Fortune 500 board seats.
Uber and Starbucks are in much different businesses, but they're both consumer-facing operations with many thousands of employees or contractors working for them. Starbucks' board attempted to reflect the diverse customer base it wanted to serve and the employees it wanted to hire. "It's what Starbucks stands for," said Ariel Investments president Melanie Hobson, who has been a director since 2005. "We want to be a place where everyone feels comfortable."
At Uber? Not so much.
Fortune interviewed Starbucks director and Hearsay Systems CEO and founder Clara Shih in May, and her comments were prescient. "This is a company that lives its values to its very core," she said of Starbucks. "To be honest, I think Silicon Valley is missing a lot of that leadership." She added, "I don't need to recite all the examples in Silicon Valley where's there's been a dearth of moral courage and leadership, but it's just such a stark difference." She noted that traditional companies have a lot to learn from Silicon Valley but one area where Valley companies can learn from companies like Starbucks is culture and leadership and "what that really means to build a business and legacy."
(As an interesting side note, Uber watchers are speculating that one-time Starbucks director Sheryl Sandberg could be considered as a possible replacement for Kalanick. Sandberg gave Shih’s name to the executive search firm when she stepped off the Starbucks board.)
The financial results of having more women on boards are tangible. An analysis by MSCI over a five-year period between 2011 and 2016 found that U.S. companies that began the period with at least three women on the board had median earnings per share gains of 37%. Companies that began the period with no female directors saw their earnings per share decline by -8% over the course of the study.
Having more women on boards also tends to mean more oversight for the CEO, says Larry Fauver of the University of Tennessee's Corporate Governance Center. Female directors attend more meetings of the board and of the compensation committee and do more monitoring, he says. "They are more involved," he explains. "When the CEOs are performing worse, when more women on are the board, they replace the CEOs more often."
Starbucks is far from flawless. Its lead director is a man and two of its three board committees are headed by men. Its most senior leadership is overwhelming white and male. And though Starbucks often takes a leadership role on social issues, it’s not always perfect on the ones that matter most to women. Its store employees, for example, get only a third of the paid maternity leave that corporate employees receive.
But startups may want to take notice. It might benefit them to build a board from the start that looks a little bit more like Starbucks’.
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