Life Sciences boards recruiting more women, but lack of robust talent management slowing diversity
However, although an increase from 12% to 16% in female board members in the past two years looks good, the rise is due to existing women board members taking on more roles within the board. As a result, the global executive search firm urges that more must be done to encourage chairs to recruit new and experienced female life sciences experts to their boards.
RSA’s survey, “The RSA Group Non Executive Directors’ Survey 2014,” aims to understand what motivates independent board directors in their roles, what makes them attractive to companies, and how their demographics and backgrounds impact corporate decision-making. The survey results reveal that the number of women is on the rise, while the age of the average non-executive director (NED) is falling. One in six men serving as NEDs in life sciences companies today are in their 40s, but female board members who contributed to this study are all over 50.
Boards value experience and strong personal contacts
According to RSA’s research, boards value experience in the industry (70%) above all else when recruiting NEDs. Commercialisation expertise, experience with partnerships, and strong personal networks are the next-most-desired traits for an independent life sciences board member. However, boards seeking new NEDs do not tend to cast a wide net to find professionals with these qualifications. Instead, nearly 3/4 (72%) of NEDs report relying on their personal networks to get their first board appointments. This is perhaps unsurprising when one-third of survey respondents are concerned that their companies do not have succession plans in place for replacing independent board members.
Companies need to broaden the search to find the best NEDs
“Best practice shows that diversity and expertise are vital to effective corporate governance,” commented Nick Stephens, Chairman of RSA. “This means chairs should stop relying on closed networks and limited talent pools to find and develop their next generation of non-executive directors. Companies with independently vetted and trained non-executive board members benefit from new perspectives and a wider range of experience in making the most of commercialisation opportunities.”
Although NED recruitment in the life sciences has a way to go before it reflects best practice, RSA’s research shows that public companies are unsurprisingly conducting far more extensive and thorough searches for their NEDs in order to comply with UK Corporate Governance Code requirements. Public companies also pay their NEDs, on average, three times as much as private companies pay their independent board members.
Boards need to more thoroughly vet their NED candidates
However, boards of both public and private companies are not universally fulfilling their responsibility formally to assess the competence of each director annually. According to RSA’s research, just 1/3 of respondents say their boards take a rigorous approach to appraisal and assessment.
“I meet with world-class independent board members every day,” said Stephens. “It amazes me that more companies don’t apply the same rigour to finding and hiring these folks as they do in staffing their executive teams or safeguarding their intellectual property. Experienced NEDs with deep industry knowledge and thorough contact books are every bit as valuable to life sciences companies as strong COOs or innovative new therapies.
“This research should serve as a reminder to life sciences companies – use a robust search-and-selection process to choose your board, and you will reap the benefits of robust experience and independent advice,” concludes Stephens.
This research was conducted amongst 153 non-executive directors who represented 352 private, public and charitable boards. Please note: not all candidates answered every question. Data was collected between April 2014 and July 2014.