Ellen K. Pao is the author of “Reset: My Fight for Inclusion and Lasting Change,” co-founder and CEO of the nonprofit Project Include, and a start-up investor.
California’s new law requiring public corporate boards to include women is a necessary wake-up call for all companies. The rule will finally bring the 26 percent of California’s 445 publicly traded companies with all-male boards out of the Dark Ages.
But even more important, it sends a strong message to the whopping 71 percent of start-ups across the globe with all-male boards and to private tech companies, where 74 percent of boards are all-male and 93 percent of board seats are held by men: Change now before it’s too late — before you get regulated and before you must scramble for a more diverse board.
Legislators and the public are fed up with corporate inaction and are finally taking a stand. This law rejects the myth of meritocracy that companies have used as a shield to preserve the bias that has effectively blocked qualified women from moving ahead in their careers. Now it’s time for start-ups to act and think bigger by embracing and extending the spirit of the law.
I’m hopeful that more diverse boards will help CEOs lead their companies and that start-ups will become more diverse and inclusive. Boards should be willing to ask their CEOs and management teams the hard questions that so many start-ups and larger companies seem to tiptoe around today.
For example: Why are you comfortable with a gender-only focus on diversity, pay parity, equity distribution and mentorship? Shouldn’t everyone be treated fairly? How are you measuring diversity and inclusion and the impact of diversity efforts? Or are you even measuring them at all? What are your goals for company demographics and for employee satisfaction levels? Why aren’t you able to get to better demographic balance in engineering and management levels? How can you redesign your platform to discourage bias against your users? How do you ensure equitable access?
Think of all the scandals, product failures, harassment and discrimination we might have avoided if public company chief executives and founders had taken diversity and inclusion seriously from their early start-up days. As a venture capitalist, I’ve witnessed CEOs come and go in disgrace, jumping from one company to another. Far too often, they were hired by and had connections to an all-male board. If the board had run real, comprehensive searches with real, comprehensive background checks, it likely would have found better candidates — and avoided tough transitions and companywide chaos.
Today’s start-ups shouldn’t play catch-up on these regulations when they go public; they should take the opportunity to get ahead of the curve and embrace the benefits of diversity. That means going beyond binary gender from the start, which often leaves behind women of color — especially those who are underrepresented in sexual orientation, immigrant status or socioeconomic background. We cannot ignore how race and ethnicity, disability and age can add to diversity. Nor can we overlook the extensive research that shows diversity creates better teams, better decisions and better financial results.
Companies today should consider the impact of intersectionality, where people with multiple underrepresented backgrounds suffer cumulative harm. Thanks to the work of organizations such as the Boardlist, we know there are more than enough qualified women for board seats, including women of color, of all sexual orientations and of all gender identities. Let’s move beyond binary gender to true inclusion.
That also means expanding the effort beyond boards to look at executive teams and managers. These are the leaders who will hire and train the next set of leaders — the ones who will eventually found companies and appoint their own board members.
It is encouraging to see firsthand that many start-ups are adding more diversity to their boards. I hope this legislation sounds a warning call to companies that continue to hire their friends and people who look like them throughout their start-ups. Do the work to make your company truly diverse and inclusive. Times are changing and if you don’t, the government is willing to step in and make you.