Last spring, Niki Christoff, a senior Salesforce executive, had the opportunity to join the board of a publicly traded company alongside her daily work. Being a director of a publicly traded company is a symbol of corporate honor, and the invitation indicated that she was about to join a club long dominated by men.
Ms. Christoff, Salesforce’s senior vice president of strategy and government relations – and one of the “25 most powerful women in politics,” according to Fortune magazine – was inclined to accept the invitation. So she asked Salesforce for permission.
That’s when things got complicated.
“I was told that Marc Benioff’s policy is that only his direct reports can serve on for-profit boards,” she told me as she recalled her conversation with Salesforce’s general board, referring to the company’s founder and CEO. , Mr. Benioff.
“I said, ‘Well, I’m only going to speak to him directly because I understand that the policy itself is not discriminatory, but considering that few women and people of color report directly to Marc, there is a different impact on them groups. So, certainly, when I talk to him, he will give me an exception, ”she told the legal advisor.
Ms. Christoff sent a text message to Benioff, who publicly defended the creation of a culture of inclusion and was one of the first executives in Silicon Valley to try to close the gender pay gap.
Despite his progressive views, Benioff did not budge.
“He said, ‘It’s our policy – our perspective is that Salesforce people should focus on Salesforce. And then, ‘No,’ she said that he told her.
Ms. Christoff took over as director – and was fired by Salesforce.
Mr. Benioff replied, “I am so disappointed!” punctuated by a heart emoji, when she told him she planned to take on the role.
Ms. Christoff’s story highlights one of the biggest tacit challenges faced by companies’ efforts to diversify their boards: many of the country’s largest companies do not allow their employees to join external boards, especially those below the top echelons.
With so many employees trying to overcome barriers to promotions at their own employers, this creates a kind of systemic impediment to diversifying meeting rooms.
And with companies facing increasing requests from investors and society to diversify their boards, a new line of failure is being exposed in corporate America: should companies let their managers spread their wings?
Mrs. Christoff is eager to draw attention to the problem. “People don’t know that these policies exist and it’s not just Salesforce that has that policy,” she said. “It is not uncommon to restrict the board’s service to senior management. And therefore, highlighting this issue to me seems important both from the patrimonial point of view, but also from the business point of view ”.
By state law, all California-based public companies must have at least one woman on the board and one from an underrepresented community. Nasdaq has proposed a rule that all listed companies must disclose the diversity of their boards and must have at least one woman and a director who identifies themselves as an underrepresented or LGBTQ minority Goldman Sachs said he would not accept a public company , unless your board has at least two directors who are not heterosexual white men.
Although 59 percent of new directors at S&P 500 companies last year were women or ethnic and racial minorities, according to recruitment firm Spencer Stuart, boardroom turnover is limited, so progress in diversifying boardrooms remains slow. (The middle council has 11 directors, with a typical eight-year term.)
Women now account for just under 30% of directors in the largest listed companies, while ethnic and racial minorities account for about 20%. When hired on a board, candidates from these groups are more likely to be novice directors than white men, less likely to be current or former corporate chairpersons, and tend to be younger.
Benioff’s policy at Salesforce is not uncommon. Many companies, especially technology firms, restrict participation on the corporate board, in part because they fear it may distract employees from their essential responsibilities. (Companies tend to impose less restrictions on joining charities.)
“I know that all of our 57,000 employees would love to join a board,” Benioff told me. “Unfortunately, it is not sustainable.”
“This is not easy,” he continued. “All 57,000 Salesforce employees cannot join other companies at will – it is too risky and complex for a company of our size and scale.”
He said that while he acknowledged that it could be useful for the development of certain employees, in general “it can be highly disturbing”. He added: “I may have got it wrong. We continue to evaluate our policy. “
Steve Jobs, the founder of Apple, also did not believe in outside board members, except for himself: he was on the Disney board after she bought Pixar, which he founded. (His successor, Tim Cook, is on the Nike board.)
In Adam Lashinsky’s book, “Inside Apple: How America’s Most Admired – and Secretive – Company Really Works”, Andy Miller, Apple’s vice president of mobile advertising, is described as visiting Jobs to ask about joining an external council.
Mr. Jobs gave an icy reply: “What? You can barely do it here and want to spend time helping someone else’s company? “
In fact, the time commitment to serve on a corporate board is substantial. Counting the preparation time, the trips and the meetings themselves, it can take 20 to 25 days a year, or more in case of crisis.
Few companies have explicit rules that govern the external board, deciding, instead, on an ad hoc basis, whether or not to allow an employee to take over.
But it will be difficult to find, for example, Amazon employees serving on external boards.
There may be a good reason: one of the reasons most cited by companies for preventing employees from joining external boards is because it could represent a conflict of interest. Given the number of businesses in which Amazon operates, this could be a particularly powerful justification.
There is also what some CEOs call “the brand issue”. Many major companies fear that smaller companies may want to appropriate the goodwill of the larger brand through appointments to the board. Certain businesses and sectors can also be considered risky from a reputation point of view.
That seemed to be at least one of Salesforce’s concerns in Christoff’s case. The company that invited her to be on its board was MedMen, a publicly traded marijuana company.
And there is a thorny internal power dynamic that seems to be emerging in some companies. When lower-level employees are asked to sit on boards amid pressure for more diversity, when their superiors are not being called on, it can generate resentment, some executives said.
In any case, companies need to face the new reality that a wider range of their employees is being sought for management positions. And, in some cases, it can really benefit the employer, adding not only diversity to the external company, but new perspectives and diversity of thought to yours.
“Is it important for an executive’s professional development to have external service to the board? For many senior executives, it is, ”said James Drury, a corporate governance and long-term executive search consultant who has placed many on boards of directors. “Because until they sit in a director’s seat, they don’t really understand the nature of the questions being asked in their own meeting room.”