So by now we all know that the Facebook IPO mess highlights a plethora of corporate governance problems. But here’s yet another problem that doesn’t bode well for the future of Facebook stock:
Facebook has become much more profitable and innovative since Mark Zuckerberg brought COO Sheryl Sandberg on board. Sandberg brings a diverse perspective outside of the all white-dude mind frame that previously dominated Facebook’s senior leadership. Despite Sandberg’s successes as COO, Zuckerberg has chosen to exclude women from Facebook’s board. So the questions stands: Will Facebook be able to continue to innovate with zero women at the boardroom table, when its demographics are composed of 55% women?
According to the Catalyst report, The Bottom Line, Corporate Performance and Women’s Representation on boards, Fortune 500 companies that had at least three women boards of directors saw on average:
- Return on equity increase by at least 53%.
- Return on sales increase by at least 42%.
- Return on invested capital increase by at least 66%. Diversifying boards also brings different perspectives to companies’ big picture objectives, product development, and problem solving. Companies can’t continue to innovate without diverse leaders at the table.
(Aha! Fortune 500s with least 3 women on the board. I think I might have to try tweaking my portfolio using this principle, and see what happens.)