Defining the problem:
• Too many companies consider ‘one and done’ to be an acceptable threshold for appointing diverse candidates to the board of directors. These companies, although credited with adding some diversity, are not fully benefiting from it; to do so they must have a critical mass of at least 3 diverse candidates.
• Boards are not moving towards a critical mass of diverse directors quickly. For example, at the current pace of change, it would take the biotech sector until 2036 to reach 30% women on boards.
• Just one woman board member renders a company’s board diversity very fragile because when they leave, the board returns to being all-male, which is contributing to 40% of all-male boards in the UK and 42% in the US. The sustainability and transformative impact of board diversity is being missed by boards currently.
• Women are dramatically under-represented as directors serving on the boards of biotech companies, with just 1 in 7 directors a woman.
• For boards to reach critical mass, the boards need to reach 30% women directors (or at least 3 per board), and only 7% of private biotech companies currently have more than 25% of women on their boards. In a study of Californian public life sciences companies, 12% were found to have reached that threshold.
• Currently there is an insufficient level of board refreshment occurring on the boards of many biotechs, resulting in static boards absent of important skills and perspectives. Some 31% of directors have served over 9 years, and often used benchmark for independence, and 14% are over the age of 70.
Women are very clear that when they join a board as the only woman, it is challenging to have the impact and influence that they’d ideally like. They are often joining a board where they have been appointed as the first-ever woman on that board and many do report being perceived as the ‘diversity appointment’, which lengthens the time it takes to establish their legitimacy and effectiveness. Where women are on a board with at least one other woman, the strength of their voice grows and they are able to be more impactful. However, research suggests it is only when three women are on the board together that the value of their contribution to the board’s matters is optimal. This 30% (or 3 directors) number is the aspiration of so many advocates for more diversity on corporate boards. Less than this engenders a compromise solution to board diversity, lessening the possible performance of the directors and the board.
Liftstream providing a Solution:
We continually monitor the life sciences sector to identify and track companies who do not have a critical mass of women on their boards. This analysis contributes to our published studies, as well as enabling us to engage with companies who may require additional women on their boards.
Our analysis also provides opportunities to track the longer-term performance of companies who have added women to their boards, particularly those with more than one woman director. It gives us the opportunity to look at longer-term analysis and the relationship between gender diversity on a company board, and the benefits for companies.
Comprehensive and continual research of boards right across the global life sciences sector allows us to build up strong market data and intelligence around where women directors are currently serving on boards.
We work closely with Chairman, the nominations committee and CEOs to outline the distinct advantages of board diversity and to implement a clear plan for increasing the number of women on the board over time. This includes looking at the current board composition and any planned or encouraged turnover among existing directors.