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Plaudits, Progress and Partnerships – One important lesson in the push for equality!

 

By Karl Simpson, CEO, Liftstream

Winning is wonderful, it truly is, particularly the recognition which accompanies it. And we are very grateful to have scooped the latest ‘Commitment to Diversity’ award at the Xconomy Awards earlier this month. I commend Xconomy for making this an award category worthy of recognition and I credit all those amazing people, some of which were also finalists, for making tremendous contributions to the field of diversity and inclusion across life sciences.

This year, we were nominated for our work in partnership with the Massachusetts Biotechnology Council (MassBio) and the immediate past Chair of the Board, Abbie Celniker. Beyond the award itself, which is given following an arbitrary judgement by a panel, it delivers to me a clear message that the power needed to push for change and a more inclusive industry lies in partnership and greater levels of collaboration.

It is a privilege to encounter so many people who are deeply devoted to improving the lives of people employed across the life sciences sector, by making the workplace a fairer, more equal and inclusive place. Whatever the motivation for their earnest and noble efforts, they should be commended. As CEO of Liftstream, I am unrelenting in my pursuit of progress on this matter, and I apply my discretionary effort across many areas of the world. That said, I partially knew at the beginning of this mission, and I certainly know it now, that collaboration with other passionate and like-minded people and organisations, would allow me to have a far greater impact and achieve outcomes otherwise unattainable.

Our work with MassBio on diversity has spanned many years and so to have been jointly awarded is a validation of this sustained partnership. MassBio has been a strong partner with great conviction and we’re pleased to have been at their side in this effort. Successively, the organisation has shown a commitment and courage to take the issue on. In the push for greater equality you encounter some strong supporters, but overwhelmingly you are met with dismissive glances, subtle grunts of discomfort and good old fashion resistance. Therefore, MassBio deserves lashings of praise for the stance they’ve taken, especially given their prominence in all things biotech.

Liftstream has been lucky to have many great partners, yet, as I engage with leaders from some organisations representing important stakeholders in the drive for equality in life sciences, I see evidence of some parties wishing to push their own narrow agenda and somehow ‘own’ their chosen issue. However, this is a complex problem, and the report published by MassBio and Liftstream shows just how complicated it can be. There are many interrelated and interdependent elements which contribute to the wide-spread inequality that today severely impacts the careers of women, and even more so the careers of racial minorities.

The drug industry has spent the past 20 years breaking down walls and seeking the best science and the most talented people with the best ideas, wherever these exist. The siloed, narrow focus of companies was abandoned in favour of collaboration and more openness because it was thought it would spur innovation. So far that experiment seems to have been largely right.

And so it must be with another big industry challenge; the deep inequality that currently inhibits the sector from being as competitive, innovative and sustainable as it can be. To solve this problem we need individuals and groups to come together and find common purpose. To set aside the personal motive or any individual recognition that they might achieve, and to focus on a cause greater than ourselves or the organisations which employ us. For in collaboration exists untold promise for solving these deep-rooted and complex problems, and the potential for changing the sector for the current and future generations in a way which will be meaningful and lasting. At Liftstream, our goal was, and remains, progress on equality. It just so happens that our willingness to work with others has brought us plaudits.

 

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Liftstream nominated for Xconomy ‘Commitment to Diversity’ award

For the second year running Liftstream has been nominated as a finalist for the ‘Commitment to Diversity’ award. This year we have the pleasure of being nominated alongside our wonderful partner MassBio and their Chairwoman – Abbie Celniker. the nomination would seem to recognise the research and advocacy work that Liftstream and MassBio have been doing on the issue of gender diversity in the life sciences industry of Massachusetts.

In late 2017 we published the study ‘Opening the Path to a Diverse Future’, a 140-page report that publishes important findings that provide the life sciences industry with a better understanding as to why women are not fully represented at every level of the industry. This has been followed up with actions and advocacy which has received widespread attention.

We are of course proud and honoured to have been nominated. We hope this year we win!!

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Tackling the lack of gender diversity in life sciences by turning the ‘Red Flags’ to ‘Green’

In the past 13 years, I have heard almost every conceivable excuse why a company has neither truly committed to appointing women nor been successful when trying. Many of these are well rehearsed and follow a very similar pattern. Some of them were perfectly illustrated in a recent review by the UK government into the progress of UK companies adding women to corporate boards. This review featured extraordinary comments by Chairmen and Directors of FTSE 350 companies such as “women don’t want the hassle or pressure of sitting on a board” and “there aren’t enough women with the right experience to sit on a board – the issues are extremely complex”, revealing attitudes which stand in the way of better progress. These views echo many of the comments and attitudes I hear across the life sciences sector. I call them ‘Red Flags’, as they deter women from showing genuine interest in joining a company, usually because the underlying sentiment is disingenuous or alarming.
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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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#ElevateMyBio

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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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#ElevateMyBio

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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.

Continue the change and get started!

#ElevateMyBio

critical mass

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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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