Improving the Diversity of Biotechnology Boards

Finding the right person to join a biotechnology board can be a challenging process as the workforce is highly qualified, there are long development cycles, significant risk factors, and regular requirements to raise financing to fund trials or support commercialisation. With these characteristics in mind the talent pool quickly becomes relatively small and can start to lack in diversity.

The Challenge

Though gender diversity is only one aspect of workplace diversity, Wexford Hayes recent ASX-listed Healthcare and Biotechnology Board Remuneration Report found there was only 9% representation from females on the boards of small biotechnology firms (market cap under A$100m) with 63% of the companies reviewed not having any female representation. The report highlights both the challenge and opportunity the sector has in relation to diversity of boardroom talent.

Progress on improving the diversity of biotechnology boards remains slow and though most Boards agree that diversity is important for the last 3 years female representation remains in the range of 9-11%.

One of the factors that may be contributing to the challenge, is that in general terms, the smaller the organisation is, the more likely that personal networks will be leveraged to appoint a non-executive director rather than investing in an externally managed process.

Although an internally led process can result in the appointment of a known and trusted director, a significant issue from a public market standpoint is the strength of governance and the objectivity that this approach affords to investors. Furthermore, there is the risk that recycling the same internal network of individuals will result in less diversity of experience in the boardroom.

The Solution

When considering who would be the right appointment for a Board, as well as ensuring both the talent pool is diversified and governance improved, several factors should be considered.

1. Assess

Assess the current Board of an organisation, identifying the skills and knowledge gaps that will shape the requirement of the new member.

2. Awareness

As the organisation travels through different stages of development, there needs to be an awareness that Board members must be capable enough support those changes, or when required the Board needs to be refreshed.

3. Investing

Investing in a Board search can ensure a rigorous and objective process is used to appoint the right candidate for a Board, which supports strong governance and diversity.

4. Focusing

Focusing on the core matters relevant to shareholders’ interests, such as allocation of funding across pipelines, strategic partnerships, or diversification of shareholder base, meaning that the search for potential candidates is both diverse but suitably tailored to specific needs.

5. Expanding

When assessing the right ‘fit’ for a Board-level appointment, consideration of industry specialists who have the requisite practical experience is a given, as their specialised knowledge and ability will add value. However, when expanding the talent pool, there are other types of candidates that could be considered. For example, candidates outside the industry who have experience of transforming developing companies could be considered as that knowledge may be of benefit in the growth stage of development.

The Opportunity

Biotechnology boards have an opportunity to improve the diversity of their boards but to do so will need to consider expanding their search outside of their immediate network, consider candidates outside of their sector, and invest in a transparent process.

Ultimately the Board needs members who can adapt and help an organisation through change and development. If the non-executives on a board are diverse enough in their backgrounds, skills, and knowledge, then the Board will be in a strong position to provide leadership for that organisation.