JOSHUA BUTCHER (with contributions from Samantha Johnston)
Boardroom diversity has been a discourse of increasing notoriety over the past few decades. However, while the majority of scholarly attention has focussed on the aggregate level, little analysis has been specifically directed at the technology industry. This is an area of significance, not merely due to technology’s prominence as the biggest industry in the world, but more consequently because such imbalances in tech can lead to disproportionately serious consequences. These industry specific concerns are coupled with a recent resurgence of diversity legislation being introduced globally at the national level.
Inequality at the top of tech
Despite reported progress, there is a lack of boardroom diversity amongst the biggest technology companies. A primary quantitative analysis conducted for the purposes of this project confirmed this. The statistical analysis explored board composition on the companies on the Forbes Digital 100 which provides an annual ranking of the 100 biggest technology companies globally. Using only publicly available board composition data, it emerged that only a quarter (25.7%) of board seats for companies on list are held by women. Whilst this striking statistic indicates that women are underrepresented relative to society as whole, this percentage is in-line with the global average for female representation at board level which stands at 23.3%. The global average for female boardroom representation is widely considered dismally suboptimal and thus anything aligned with this low benchmark is equally insufficient. Particularly when considered in contrast to many developed economies such as New Zealand, France, and Norway where female representation across all sectors has reached 45.5%, 43.8% and 39.1% respectively.
Perhaps most strikingly, only one single company on the Forbes Digital 100 boasted more female representation than male; Vivendi, the French media conglomerate, which itself only had a marginal 6:7 male to female ratio. The remaining 99% of companies have boards dominated by men and a staggering 10% of companies still have all-male boards. These statistics unearth a frightening trend that, despite the constantly heralded progress being made towards gender parity, there remains significant gender inequality at the very top of the tech industry.
Why boardroom equality matters
Sustained academic arguments for boardroom inequality are almost non-existent. In contrast, there exists a plethora of rationales for boardroom equality that are not necessarily mutually exclusive. Ranging from the simplest doctrines of feminism and social equality put forward by the acclaimed historian and feminist Professor Mary Beard, to the quantitative business case idioms most notably posited by the distinguished Professor Susan Vinnicombe and colleagues. However, boardroom gender imbalance at the top of tech requires specific attention, not just because technology remains the biggest industry in the world by market cap, but because unlike in other industries such imbalances have the disproportionate possibility of perpetuating a society of structural inequality.
The world in which we reside is increasingly governed by algorithms defined and written by the biggest global tech companies. These codes influence almost every aspect of our lives from anything as simple as buying our morning coffee to getting a job or buying a house. Yet men account for 75% of the decision-makers at the very top of these companies, ultimately determining these algorithms and the long-term strategic direction of these corporate goliaths. This is a grave concern – particularly as evidence suggests technology designed by a skewed sample of the population will ultimately reflect that skewed perspective, leading to tangible consequences.
“[B]oardroom gender imbalance at the top of tech requires specific attention … such imbalances have the disproportionate possibility of perpetuating a society of structural inequality.”JOSHUA BUTCHER, LLM STUDENT AT NEWCASTLE LAW SCHOOL
Thus, as technology’s influence on society continues to proliferate exponentially, the disproportionately devastating consequences of inequality at the top of the biggest companies in the industry becomes ever more significant. Whilst the impact on a morning coffee routine is unlikely to cause much anguish, the same cannot be said for the other examples given above. It is therefore imperative that more academic attention is paid to this issue and, above all, meaningful progress is made towards greater boardroom diversity in the technology industry.
Addressing the imbalance
Most scholarly attention has focused on aggregate level approaches to unilaterally improve female boardroom representation. This is echoed by the empirical data which shows striking similarities between the level of female representation on boards of companies on the Forbes Digital 100 from the same country.[i] This was true across all nations represented, indicating a correlation between the country of incorporation and the level of female boardroom representation. Furthermore, the variation in the level of female representation between different countries was significantly higher than that within each country.[ii] This is unsurprising given the cultural and regulatory differences of each jurisdiction. However, it does affirm that boardroom representation in the tech industry does not exist in a microcosm immune from outside influences.
So what might explain this disparity in female representation between countries? Whilst a myriad of regulatory instruments exist at the national level, two distinct approaches are routinely adopted to address the boardroom gender imbalance that invariably exists. By and large, countries either opt for a neo-liberal voluntary target approach (boastfully first employed by the UK) or a hard legislative mandatory quota alternative (first introduced by Norway in 2008). Whilst the efficacy of the two approaches is a voraciously contested discourse, there are certainly merits and drawbacks to each.
Considering the companies on the Forbes Digital 100 list, it is interesting that the countries that adopted mandatory quotas typically have higher levels of female boardroom representation. These include, but are not limited to, France, Germany, and Australia whose average female representation level sits at 44.2%, 42.3% and 41.7% respectively, exceeding the global industry average. In contrast, female representation on company boards from countries taking a voluntary approach varied far more. From the particularly low levels seen in China, Mexico, and Japan (where average female representation sits at a dismal 7.4%, 7.7% and 11.5% respectively), to the much better levels of female representation seen in Canada, the Netherlands, and the US (which stand at a much loftier 37.5%, 32.4% and 31.9% respectively).
Whilst it is therefore difficult to statistically dispute the efficacy of the mandatory quota, it is vitally important to iterate that these statistics should not be the only measure of success when it comes to boardroom diversity. Representation statistics, whilst providing a useful indicator to monitor progress and make comparisons, do oversimplify boardroom diversity to figures which arguably overlook elements such as the meritocracy of appointments and tokenism. Whilst these distinct approaches are employed at the aggregate level, it is interesting to observe how different legislative approaches appear to be impacting the technology industry.
Legislation in Silicon Valley and the significance for big tech
One common characteristic of the two approaches is that both are applied unilaterally. The technology industry has not faced disproportionate scrutiny from a legislative standpoint, but a recent regulatory amendment in California has arguably altered this. California introduced Senate Bill 826 in 2018 and in so doing implemented the first mandatory quota in the US. This is a proportionally progressive gender quota requiring publicly traded companies in the state to – by the end of 2021 – have at least one, two or three female board members depending on their size, with non-compliance leading to significant fines. It is of note that California extended its mandatory quota approach in 2020 to also include other underrepresented communities.
Whilst this quota has been imposed indiscriminately at the aggregate level, California’s uniquely high concentration of technology companies could result in an especially significant impact on the level of female representation in the technology industry. California is home to almost one-fifth (19%) of the Forbes Digital 100 list. This is by far the highest concentration of big tech companies into a single forum. Except for the US more generally, of which California alone accounts for almost half (48.7%) of the companies on the list.
In the few years since Senate Bill 826 passed into law, female representation in California across all industries has increased substantially (by 66.5% between 2018 and 2020 alone). However, when we consider the companies on the Forbes Digital 100 specifically, the average level of female representation for companies in California was only 0.6% higher than the level of female representation in the tech industry across the US. This might suggest that the mandatory quota is not progressive enough to have a significant impact on the technology industry. This is reinforced by the fact that, at the time of writing, only two companies out of the nineteen on the list need to take action before the end of 2021 in order to adhere to the regulation. In contrast, as of 2020, only 183 of the 650 public companies in California actually met the 2021 requirements, meaning that whilst Senate Bill 826 in its current form is arguably not progressive enough to significantly impact big tech, it is conversely too extreme for the majority of companies in the aggregate.
Despite this, California must be applauded for taking decisive action and encouraging progress (however small) towards greater boardroom diversity, even if it has not significantly impacted big tech just yet. The coming months will be particularly interesting as the December 2021 deadline approaches. Whilst there is clearly a significant way to go towards gender equity in the technology industry, progress is being made – and although the ultimate success of this legislative provision still remains to be seen, it is entirely plausible that such provisions will be used to bring about the significant change that is needed in the future.
[i] Namely, relatively low standard deviations averaging 0.079.
[ii] This returned a relatively high standard deviation at 0.142.