A call for more diversity on Silicon Valley tech boards

Twitter ceo Dick Costolo at the NYSE to launch the Twitter IPO.
Adam Jeffery | CNBC

Silicon Valley is the nation's hub for technology advancement, innovation, dynamic thinking and progressive politics. But when it comes to America's leading technology companies in Northern California, the composition of their board of directors is anything but diverse.

The issue of lack of women in corporate boardrooms gained some traction this year after Twitter received some flak for not appointing a woman to its board before the company's IPO. Facebook executive Sheryl Sandberg also raised this gender issue in her popular book, "Lean In."

Now, two outspoken corporate governance experts are expanding their discussion beyond women. They argue Silicon Valley's tech companies need to add more African-Americans, Hispanics and other minorities to Silicon Valley's tech boards.

"It's a boy's club," said Vivek Wadhwa, a fellow at Stanford University's Arthur & Toni Rembe Rock Center for Corporate Governance.

Silicon Valley's top CEOs "surround themselves with friends and allies who will go along with whatever they want," Wadhwa said.

Change ultimately will have to come from shareholders, and he questions whether stock owners care enough about the issue to agitate and challenge the status quo.

It was Wadhwa who set off a maelstrom, after he openly criticized Twitter's CEO Dick Costolo for not appointing any women on the Twitter board ahead of the company's much-publicized IPO in November. Ultimately, Costolo and the Twitter board bent to pressure and added ex-CEO of Pearson Marjorie Scardino to its board.

Another vocal advocate of board diversity has been Jeffrey Sonnenfeld, senior associate dean for executive programs at Yale University's School of Management. Unless public and private pressure for diversity increases, there will be no impetus for the boards of technology companies to represent their diversity of employees and customers, Sonnenfeld said.

"There's a premium on youth, white male and it's sort of a throwback to an era we should be long past, which is the macho world of the giggling boys, with the hackers sensibility that somehow we are living in a pure meritocratic world," Sonnenfeld said. "There's a lot of mythology about the meritocracy that prevails in Silicon Valley as if every other industry is filled with politics and they're the only ones that filled with careers driven through competence and merit," Sonnenfeld said.

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But if you look closely at the boards of major tech companies, the number of women on their boards is limited.

Among the S&P 100 companies, an average of 19.9 percent of their boards were composed of women in 2013, according to Fenwick & West, a law firm that focuses on technology and life sciences. That figure was up from an average of 10.9 percent in 1996. The analysis was part of a survey on gender diversity released on Dec. 11.

In contrast, a survey of the top 150 Silicon Valley companies (as defined by The San Jose Mercury News) found an average of 9.1 percent of their boards were composed of women, up from an average of 2.1 percent in 1996, according to Fenwick & West.

The study focused on women in tech boardrooms.

But Wadhwa and Sonnenfeld hope the focus on lack of diversity in tech boardrooms will broaden to focus on the absence of African-Americans, Hispanics and other minorities.

Sonnenfeld and Wadhwa said there needs to be more pressure on these companies to be more inclusive, and for their top management and board members to raise awareness about their biases.

Sonnenfeld says part of the problem is that those working in Silicon Valley tend to think of themselves as progressive people, who don't harbor prejudices found elsewhere in American society.

"Strangely, Silicon Valley still has the prevailing view that they don't need to watch for human bias, because somehow we screen and filter based on sheer expertise, competence and demonstrated performance, and that's not entirely true," Sonnenfeld added.

And Wadhwa says he doesn't believe Silicon Valley's top companies will do anything to change unless it becomes a public embarrassment for them.

"I doubt Twitter would have hired a female board member this year, if the spotlight wasn't on them. The fact they went to the IPO with an all-male board shows the ignorance—and arrogance that Silicon Valley executives display," Wadhwa added.

Twitter executives have said they are sensitive to the issue but have been challenged by the relatively low number of women with sufficient tech qualifications.

Wadhwa say he has raised the issue of the lack of African-American, Hispanic and Asian-Americans on boards and executive management with technology executives. He says the first step is to raise awareness, and as there is more vocal public pressure, he's confident these companies will find it in their best interest to be more inclusive and advocate diversity at all levels of their companies.

—By CNBC's Mark Berniker and Josh Lipton.