Last year, Niki Christoff, a senior Salesforce CEO, had the opportunity to join the board of directors of a listed company with her day job. Being a director of a public company is an honor, and the invitation indicates that she is ready to break into a club that has long been dominated by men.
Me. Christoff, Salesforce’s senior vice president for strategy and government relations – and according to Fortune magazine – and one of the ’25 most powerful women in politics’ – tended to accept the invitation. Therefore, she asked permission from Salesforce.
That’s when things got complicated.
“I was told that Marc Benioff’s policy is that only his direct reports may serve on profitable boards,” she told me, recalling her conversation with Salesforce’s attorney general, referring to the founder and CEO of the company, mr. Benioff.
I said, ‘Well, I’m just going straight to him because I understand that the policy on his face is not discriminatory, but given how few women and people of color report directly to Marc, there is a divergent impact on those groups. So if I talk to him, he will give me an exception, ‘she said, telling the general council.
Me. Christoff sent an SMS to mr. Benioff, who publicly campaigned for the creation of a culture of inclusion and was one of the first managers in Silicon Valley to try to end the gender pay gap.
Despite his progressive views, Mr. Benioff does not move.
“It’s our policy – it’s our perspective that people at Salesforce should focus on Salesforce,” he said. And so, ‘No’, she said he told her.
Me. Christoff took over the role of the board and was fired by Salesforce.
Mr. Benioff sends back an SMS: “I’m so disappointed!” punctuated with a heart emoji, when she told him she was planning to take the role.
Me. Christoff’s story highlights one of the biggest unspoken challenges facing companies’ efforts to diversify their boards: many of the largest companies in the country do not allow their employees to become outside boards, especially those below the highest rank.
As so many employees try to overcome the barriers to promotions at their own employers, it creates a kind of systemic barrier to the diversification of boardrooms.
And with companies facing growing calls from investors and society to diversify their boards, a new fault line is being exposed in the US business industry: should companies abandon their managers?
Ms Christoff is keen to address the matter. “People do not know that this policy exists, and it is not just Salesforce that has this policy,” she said. ‘It is not uncommon to limit board service to senior management. And highlighting the issue for me feels important from an equity perspective, but also from a business perspective. ‘
According to state law, all public companies in California must have at least one female board member and one from an underrepresented community. Nasdaq has proposed a rule that all companies listed on the stock exchange must disclose the diversity of their boards and have at least one wife and one director who identify themselves as an under-represented minority, or Goldman Sachs, LGBTQ, said that he will not take a company. public, unless its board has at least two directors who are not straight, white men.
Although 59 percent of the new directors at S&P 500 businesses were women or ethnic and racial minorities last year, turnover in board seats, according to recruitment firm Spencer Stuart, is limited, so progress in diversifying boardrooms remains slow. (The average board has 11 directors, with a typical tenure of eight years.)
Women now make up just under 30 percent of the directors at the largest listed companies, while ethnic and racial minorities make up about 20 percent. When appointed to a board, candidates from these groups are more likely to be directors than white men, less likely to be current or former CEOs, and are more likely to be younger.
Mr. Benioff’s policies at Salesforce are not uncommon. Many companies, especially technology companies, restrict membership of corporate governance, in part because they are concerned that it may distract employees from their core responsibilities. (Companies tend to impose fewer restrictions on joining charities.)
“I know that all of our 57,000 employees would like to join a board of directors,” he said. Benioff told me. “Unfortunately, it is not durable.”
“It’s not easy,” he continued. “All 57,000 Salesforce employees cannot arbitrarily join the boards of other companies – it is too much risk and complicated for a company of our size and scope.”
He said that while he realizes that it can be helpful for the development of certain employees, it can generally be “very distracting.” He added, ‘I may have been wrong. We continue to evaluate our policies. ”
Steve Jobs, the founder of Apple, also did not believe in outside membership except for himself: he sat on the board of Disney after buying Pixar, which he founded. (His successor, Tim Cook, is on Nike’s 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 a visit to Mr. Jobs to inquire about joining an outside board.
Mr. Jobs gives an icy answer: ‘What? You barely cut it here and want to spend your time helping someone else’s company? ‘
In fact, the time commitment to serve on a corporate board is significant. If you count preparation time, travel and meetings yourself, it can take 20 to 25 days a year, or more if there is a crisis.
Few companies have explicit rules regarding outside directorships, but decide on an ad hoc basis whether to allow an employee to accept the position or not.
But it will be difficult to find, for example, Amazon employees who serve on outside boards.
This can have a good reason: one of the reasons companies regularly prevent employees from joining outside boards is because it can cause a conflict of interest. Given the number of businesses Amazon is in, this can be a particularly powerful reason.
There is also what some CEOs call ‘the branding problem’. Many high-profile companies are concerned that smaller businesses want to harness the will of the larger brand through board appointments. Certain businesses and certain industries can also be considered a reputation as risky.
This was apparently at least one of the concerns at Salesforce in the case of Mrs. Christoff. The company that invited her to join the board is MedMen, a listed cannabis company.
And then there are thorny internal power dynamics that appear to be present in some companies. When lower-level employees are invited to be on the board amid the urge for more diversity when their superiors are not asked, it can cause resentment, some executives said.
Either way, companies have to contend with the new reality that a wider range of their employees are being sought for directorships. And in some cases, it can benefit employers and not only add diversity to the outside business, but also new perspectives and diversity of thought.
‘Is it important for the professional development of a manager to have service outside the board? This is for many senior executives, ”said James Drury, a longtime corporate management and executive search consultant, who has placed many in top management. “Because until they sit on the board of a board, they do not understand the nature of the questions being asked in their own boardroom.”