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Is there a pay-gap in your company?

 

Women are not seeing as many higher-range pay raises as men, and fewer women than men also report being compensated fairly. In our recent study of Massachusetts’ life sciences cluster published with MassBio, we found gender-specific differences which showed that women are more likely to receive a pay rise in a range of 0–2% and 2–4%, whereas men prevail in the 4–6%, 6–10%, and >10% categories.

Interesting disparities come to light when taking into consideration the level of employment. With the exception of contributor level (when an individual is performing technical or operational responsibility independent of supervisory responsibilities), a greater proportion of men had a pay rise in the range of 6% and more. This shows that when progressing through the career ladder, women are likely to secure smaller pay increases. This clearly illustrates a gender disparity, which, when accumulated over time, contributes to a gender pay-gap.

Not surprisingly, across most levels of employment, women view compensation as less fair, compared to men. Furthermore, segmenting the data by company size, we found that women working in large companies (>1000 employees) are the least satisfied with the fairness of the compensation, followed by women working in small and medium-sized enterprises (SMEs) (~40% and ~30% respectively report it is unfair). In both cases, a smaller proportion of men reported unfair pay (27.8% and 20.9% in large and SME companies respectively).

The data shows that overall, women are on the wrong side of the compensation bias. Whether it be real or perceived, women are disadvantaged in their attainment of the level of compensation awards seen by men. This has far-reaching implications for the sector, and for individual companies. The level of transparency, fair process, and equality must be addressed if talented women are to be retained and progressed in the life sciences talent pipeline.

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What is your post-IPO plan?

 

Preparing a board and management team for the journey towards becoming a public listed company requires extensive planning to ensure that they are ready for all that being public throws at them. Leaving this too late can have negative implications for the company because the company’s leadership could be insufficiently skilled, the cadence of change becomes too high, and the disrupted board continuity can weaken the company’s governance.

Therefore, it is reasonable to think that companies preparing for IPO and becoming public would exhibit a more progressive approach to board composition and governance. After all, the benefits of boardroom diversity are well evidenced and have been widely discussed for quite some time. Additionally, public companies are overall viewed as promising businesses, and one would hope for a more progressive boardroom culture. Furthermore, the scrutiny of public companies should push the boards towards increasing the participation of women.

However, in our study of companies that conducted IPO between 2012-2015 in the USA we found that the gender composition of the boards was consistent with the previous findings and show that cumulatively women hold 10.9% of the board seats. This data clearly shows the scale of the situation as the number of board directors reached 1289 directors, with just 140 board positions occupied by women. Although the 177 companies studied might have chosen to apply changes to their boards in the run-up to IPO, the representation of women on the board at IPO is consistent with the market average and implies that women were not a considerable part of any pre-IPO inflow to the boards.

Nevertheless, we found that in the post-IPO period, perhaps driven by public scrutiny, the companies from 2013–2015 IPO years indeed introduced changes to their board composition, and the number of diverse boards (having at least one seat held by a woman) increased. However, having analysed whether women were consistently present on the board every year after IPO, we found that the number of diverse boards decreased, even below the level of IPO. This shows that boards have so few women on their boards (often only one, with an average board size of 7.5), that if one woman director leaves, it contributes to noticeable fluctuations in the number of diverse boards. This effect is a result of a lack of critical mass.

This also shows that despite embarking upon a board transition, although being increasingly educated about the benefits gender diversity, the group of new public listed companies which filed for IPO within 2012–2015 showed very little progress in incorporating gender diversity into the leadership and governance system of their boards. Any small improvements observed do not translate into a sustainable, effectual or transformative change to the system which currently prevents boardroom gender diversity in the biotech sector.

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Has your board reached a critical mass?

 

Over 50% of biotechs across US and European markets have all-male boards [1]. Also, in only 7% of biotech companies, more than a quarter (25% or more) board directors are women. More importantly, our data show that biotech boards have so few women directors (often only one, with an average board size of 7.5), that if one-woman director leaves, it contributes to noticeable fluctuations in the number of diverse boards.

This effect is a result of a lack of critical mass. The critical mass principle suggests that in order for a diverse board to out-perform that of a single gender, there must be a high enough number of women (i.e. 3, or 30% of total number), for female members of the board to be seen as individuals and not as ‘diversity figureheads’.

This number is significant because initiatives like the 30% Club and also the UK’s Davies Report signal that achieving over 25% of women on boards across the industry would create adequate internal market diversity to become self-perpetuating. In biotech, this would signal a transformation in 93% of companies.

This level of gender diversity on the boards will clearly require a significant shift in culture in biotech but will offer important advantages. Building a critical mass of women on boards would not only enhance performance results of companies but would dampen the effect of losing women from boards through normal turnover. Greater numbers of women directors per company’s board would bring a sustained level of gender diversity that would be culturally transformative. Nevertheless, although a sustainable change in boardroom diversity seems hard to achieve without creating the critical mass, efforts of companies to add women board directors can contribute to an overall change.

In fact, a cumulative analysis of newly public biotech companies (IPO 2013-2016) showed that the number of boards that had at least one woman did grow. The change between 2013 and 2016 shows that 9% more companies had at least one woman on the board, signifying that for the first time in any of our studies, the number of all-male boards in studied companies was below 50%. This must be taken as a positive signal.

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Are you taking the right path?

 

As Liftstream aims to tackle the implicit challenge of progressing women up the career ladder to the C-suite and board, understanding the functions in which they work is important in determining why they might not be scaling the ranks towards the top.

In our study of Massachusetts Biotech Cluster published with MassBio we found that manufacturing, a function quite often cited as being male-dominated, proportionally had 6% men working in it, and only 2% women. Men also were proportionally better represented in engineering, IT, sales, development, finance, marketing and business development. Women, on the other hand, were proportionally better represented in research, legal, human resources, admin, PR, and operations. Finally, we found that 4 times as many men as women occupied positions in the Executive Committee (8% men vs 2% women).

These subtle differences may suggest that the career pathways women are taking are, in aggregate, less likely to guide them towards the position of CEO, therefore closing off the most obvious path to the boardroom. If one aim is to introduce more women into the CEO position, then their functional experience must be contributing to this. We need to encourage women to participate in functions where they have not traditionally done so in large numbers. To do so, companies should seek to implement balanced recruitment and promotion measures for all functions, intentionally making all functions more diverse and therefore more attractive to women and men. Equally this means that functions with disproportionately high numbers of women working in them should balance these functions with more male employees.

Liftstream uses evidence to shape the future workplace of life sciences companies. #ElevateMyBio

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Should you separate the role of CEO and Chair?

 

The Chairperson and CEO are the power-axis of most company leadership structures. There are arguments for and against combining the CEO and Chair roles. Clearly, the vacancy of a Chair position provides an opportunity for the CEO to consolidate power by combining both posts. This allows the CEO, who has the greatest influence on a company’s culture, to begin to set the cultural tone from the board too. Whereas, the presence of an independent Chair allows the board to create a value system and to task the CEO with delivering it across the organisation.

Liftstream, along with many experts of corporate governance, is an advocate for splitting the role of CEO and Chairman, but we also advocate reviewing individual context to explore the company’s needs, strengths and weaknesses, as well as environmental factors – all of which would help to determine the right governance model. However, a trend for more independent governance is winning out across the biotechnology industry, placing combined CEO/Chairs very much in the minority. In our study of San Diego public biotechnology corporate boards, we found that 82% of companies have split the CEO and Chair roles, a figure which is consistent with the year over year increase in this role separation witnessed across broader indices. Similar statistic was also reported in our 2017 study of 177 biotech companies which conducted an IPO in the USA between January 2011 and December 2015.

Companies which are enlightened to the benefits of good governance and split CEO and Chair roles, often show a stronger commitment to diversity. This, as some commentators suggest, is what leads to these companies outperforming their peers. We believe we found a confirmation of this hypothesis in our study of the boards of directors as biotech companies transfer from private to publicly listed. Within the group of companies which had separated the role of CEO and Chairperson, diverse boards were the majority. Additionally, a larger proportion of all-male boards had the role of CEO and Chairperson combined. For the first time, we have found a clear link between separating the Chair and CEO roles and increased gender diversity of the board.

We can conclude that separation of the Chair and CEO contributes to an enlightened board presiding over an inclusive and diverse culture, and similarly, we see the effect of the culture on the financial performance of the companies with diverse boards. This mandates the need for continued research to establish the degree to which the power and cultural dominance brought by unifying the Chair and CEO roles shapes board diversity, versus the diverse board which chooses to separate these functions.

Liftstream uses evidence to shape the future workplace of life sciences companies. #ElevateMyBio

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Why don’t you simply ask?

 

Opportunities for women to move into leadership positions are not materialising as frequently as they are for men: C-suite women are much less likely to be contacted for a potential board position than C-suite men. In our survey of companies within Europe and the US, we found that 59.4% of C-suite men but just 16.0% of C-suite women have been contacted in relation to non-executive director (NED) positions.
Biotech companies use two main routes to appoint new board members: personal networks, and executive search firms. Among many factors influencing the boardroom appointments, the two most common are the lack of structure in the recruitment practices of many Start-up and SMEs (which frequently results in appointments from within the immediate network of today’s leaders), as well as the presence of unconscious bias. Unconscious or unintentional bias is shared by both men and women. Awareness of bias, however it is termed, is low amongst today’s biotech leaders, despite the existence of established processes and tools for reducing such unconscious prejudices in our decision making. The onus is on individual leaders to question their approach to the hiring process and to put in place processes to minimise unconscious bias.

 

 

Additionally, our research did find that in some instances women are turning down leadership opportunities and that they do so more frequently than men. Caring responsibilities, outside of the workplace, remain more of a deterrent for women who might be seeking such positions than their male equivalents; however, a larger factor affecting a woman’s decision to turn down board positions is the current biotech leadership environment, its setting and culture – which continues to ensure a male-dominated leadership team.
Despite this variety of factors, our research indicates a general belief, amongst those in biotech leadership that: ‘the door is open for women on boards, but they don’t want to step through it.’ Such an attitude will not lead to an increase in female NED appointments. To improve composition and diversity of experiences of biotech boards companies must evaluate their approach to recruiting and promotion and take steps to ensure that the natural and unconscious biases that we all have are not causing sub-optimal hiring decisions.

Liftstream uses evidence to shape the future workplace of life sciences companies. #ElevateMyBio
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Liftstream signs up for UK Government’s Voluntary Code of Conduct for Executive Search Firms

Author: Karl Simpson, CEO, Liftstream – Feb 12th 2018

The UK government some years ago (2011) introduced a Voluntary Code of Conduct for Executive Search firms, which was implemented by the Department of Business in the wake of the Lord Davies Review, an initiative, or pre-cursor to quotas, that targeted increasing the participation of women on FTSE 100 boards. It was also an effort to bring to the table an important group of stakeholders – Executive Search firms – in the battle to introduce more women to senior executive positions. However, by 2013 sign-ups to the code had been underwhelming and the then Business Secretary – Sir Vince Cable commissioned Charlotte Sweeney to conduct a review into executive search practices and why more firms had not pledged their support for the code.
At the time, as a member of the Associate of Executive Recruiters, I was very close to the discussions about the design and introduction of this code. Alongside this voluntary code, there is an Enhanced Code of Conduct for Executive Search Firms.

I decided at that time, that Liftstream would not be a voluntary signatory to the code. I reached that decision for 3 reasons. Firstly, being a signatory to any voluntary code, of course, does not require you to have to meet the standards set out, albeit you should enter into it with the right spirit. At Liftstream, we have always taken a high-integrity approach to the service we deliver, and on diversity we have challenged ourselves to over-achieve client or market expectations. Secondly, the code had largely been drafted with only gender diversity in mind. It did not in its earlier manifestations, state any requirement for race and ethnicity, which I considered to be setting a rather low-bar. Thirdly, the drafting and administration of its contents were designed with strong influence from the larger global search firms, and the reward (approval to the enhanced code list), was aimed at creating an elitist list of approved search firms. Therefore, in my view, a code aimed at fighting the consequences of elitism and promoting meritocracy, was in of itself enabling the behaviours it was designed to combat.

However, 2017 bought another revision of the code, this time prompted by the findings and recommendations of both the Hampton-Alexander Review into women at the executive level in business, and the Parker Review which focused on race and ethnicity. For the first time, the code makes provisions for a commitment by search firms to fill their candidate-lists with a fully diverse range of candidates.

Because of this latest effort to raise the standards of the executive search industry, I am pleased to now sign up to this voluntary code of conduct, and to allow it to guide our activity henceforth. Like any code of its type, I recognise the imperfections, the possible impracticalities of some of the guidelines. Our hope is that we’ll continue to set our own standard for others to follow, however, to keep a check on these, we’re pleased to work to those set out by the Voluntary Code of Conduct.

To read the code to which Liftstream is now a signatory please read here the Voluntary Code of Conduct for Executive Search Firms. https://ftsewomenleaders.com/wp-content/uploads/2015/07/VOLUNTARY-CODE-OF-CONDUCT-FOR-SEARCH-FIRMS-NOVEMBER-2017.pdf

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What would make your employees stay?

 

Human capital, in almost all companies, is the resource with the greatest potential to deliver the company’s success. Therefore, understanding how to maximise the potential of every employee in the company is of great value to any discerning leader. Constantly bringing talent in from the external market has significant implications that directly impact a company, and so a well-designed and effectively implemented human capital strategy, which focuses on the sustained development of the workforce, is critical. The main goal of such a strategy should be to cultivate a rich and balanced pipeline of potential leaders capable of taking the company forward.

In contrast with this view, our research into companies and individuals in Massachusetts showed that for mid-level roles (Director, SD, VP, SVP), where early leadership skills are seeded and grown, candidates are sourced, in the main, from external sources. This indicates that the internal pipeline of leaders is insufficiently and inefficiently utilised.

Therefore, we also asked life sciences professionals about the aspects of work they value most when considering whether to remain working for their current company. Although the same top 10 factors were chosen overall by men and women, we found that the order of importance was different, revealing gender specific priorities. Within the top 5 factors, women prioritised co-workers and career progression, while men favoured work environment and pay and rewards. Looking at gender-specific differences, we found that women value recognition and flexible working more than men, while men place more importance on work environment, pay and rewards, organisational stability and making a difference.

Although factors such as gender diversity of the board and inclusion were outside of the top 10 ‘core career priorities’ obtained by the analysis of all individuals overall, these factors increase in importance for women as they progress up the career ladder, reaching 12% and 38% at the C-level and board level respectively. Reports from men show an opposite trend where both board diversity and inclusion decrease to 0% at the board level.

In order to improve retention of individuals currently employed within a company, organisations need to examine their current practices and assess the sentiments of individuals working in these companies. By doing so, they should be able to improve understanding of key issues that lead to employees, especially women, dropping out of the leadership pipeline, and design bespoke retention strategies.

Liftstream uses evidence to shape the future workplace of life sciences companies. #ElevateMyBio

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Has investment changed your board?

 

Preparing a board and management team for the journey of growing the company requires extensive planning to ensure that they are ready for all that journey can throw at them. Leaving this too late can have negative implications for the company because the company’s leadership could be insufficiently skilled, the cadence of change becomes too high, and the disrupted board continuity can weaken the company’s governance. In our previous study of 1,491 therapeutic and diagnostic small and medium companies (Diversifying the Outlook – The X&Y of Biotechnology Leadership), we showed that women held 11.2% of board seats (Europe) and 9.7% in California and Massachusetts. But does that change as companies grow and raise sequential VC funding?

In our ‘Investing in Biotechnology Management’ report we analysed the gender mix of the board of directors of 110 companies which achieved funding in the period of 6 months. In doing so, we identified that of the $4518.1m total funding, some $2576m or 57% of funding was awarded to companies with all-male boards. This offers a stark contrast with funding raised by companies with a board of directors of 50% or more female representation, which saw only $60m of funding achieved.

 

 

We also looked at the level of funding by stage of investment and analysed whether that funding had been raised by a gender diverse board of directors, or single gender all-male boards. In doing so, we saw that with early-stage investing, Series A and B, where investment totals were also proportionally high, the money invested into companies with at least some level of female representation at board level was above 50%. This indicated, at least in part, that the presentation of a gender-mixed board did not deter investors and also women board members were indeed sitting on boards of companies that were perceived to be of higher-risk. However, further analysis showed no correlation between greater levels of gender diversity and organisational maturity. In many senses, there is a greater presence of diversity in companies at Series A and B, which perhaps shows improving gender diversity in company formations, although this would need a further study of a larger number of early-stage companies.

Since a board of directors has the responsibility for the financial health of the company and governing capital for maximum shareholder returns, there is a need for the board to evaluate how the lack of diverse thinking impacts their performance. In our ‘A Public Reality For Women In Biotech Boardrooms’, we clearly showed a direct evidence of business advantages of diversity on boards. Using the list price at IPO of each company and a share price at a unified end-point, we evaluated percentage share price change for each company studied. Then, by grouping the companies by those which have no women on their board, and those with at least one, we compared their aggregated share performance. On average, share prices of companies with diverse boards increased by ~19%, while share prices of companies with all-male boards decreased by ~9%, showing 28% difference!

For diversity to become part of the cultural fabric of the company, the Chair and the board must set the right tone on diversity. Equally, the CEO must promulgate this throughout the organisation. Often, where a woman is a Chair and/or CEO, you will see improved levels of gender diversity. Where men occupy both positions, the cultural cascade clearly faces considerable challenges.

 

Liftstream uses evidence to shape the future workplace of life sciences companies. #ElevateMyBio

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Is your company losing out because of bias?

 

Unconscious or implicit bias is shared by both men and women. Research has consistently shown that women also display an explicit bias towards both men and women (Brookes, 2014; Reuben, 2012). When biases subconsciously influence candidate selection or promotion, decisions made can result in workplace inequalities. Numerous social experiments have been performed which demonstrate that simply changing the gender on a resume/CV impacts upon the decision to hire a candidate (Moss-Racusin, 2012). Unconscious bias training and courses that are designed to help people identify their own biases and act upon them, are increasingly being employed by large corporates, but do they work? To see a positive outcome of these initiatives across the organisation, leaders should get more engaged in working out how that bias originates and affects their organisations.

 

Is your company losing out because of bias?

 

Data suggest that individuals and organisations can begin to reduce unconscious bias in a hiring or promotion process by doing two things. The first involves laying out a structure that is subsequently adhered to, and the second, increasing accountability in decision making (Google Ventures, 2014; Uhlmann, 2005). In the first approach, executives who are making the hiring decision write down the specific skill sets that they believe are required to do the job; simply making a list which should then be referred to throughout the hiring process. Ideally, the list of skills and experiences would have been compiled by a group of people making the hiring decision – it is very important that this is done by the decision makers, not HR. Each candidates’ profile and performance in the interview is then applied to the requirement list – everything that is not on that list and was not identified when initiating the process should not be considered. The decision is then made based on the requirements for the position and not influenced by personal bias. The second approach is about increasing accountability for a decision. The CEO or executive team describes the specific reasons why one candidate has been selected and why the others have not. Even if this isn’t a group decision, even writing down a decision has been shown to reduce bias in decision-making. These approaches cost nothing to implement and are accessible to all.

Liftstream uses evidence to shape the future workplace of life sciences companies. #ElevateMyBio

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