A series of recent studies examining diversity and financial performance have fueled a growing insistence among big-name private equity firms, pension funds and money managers that their investees hire and promote more diverse talent up the ranks – or risk losing their clients’ capital.
BIO launched a Workforce Development, Diversity and Inclusion (WDDI) Initiative last year, and a key part of our initial push has been to study and communicate the business case for diversity to the biotech community.
Halozyme CEO Helen Torley, who chairs BIO’s WDDI Committee, penned an op-ed in Stat today noting that two of the world’s largest asset managers and America’s largest public pension fund have all recently increased their scrutiny of board diversity. These major Wall Street players are making investment and proxy voting decisions based on the diversity represented on their portfolio companies’ boards of directors. They are responding to a growing body of evidence that suggests that inclusive leadership on boards and in C-suites shows up on the corporate bottom lines.
As the op-ed notes:
In the biotechnology industry, only 10 percent of board of director slots and 7 to 9 percent of CEO positions are filled by women, according to a national survey by Liftstream, and half of all biotech boards don’t have a single woman.
Most CEOs and board chairs prefer to make big hires from within their trusted professional networks. Often, those networks are disproportionately white and male. Some companies will only appoint new directors with a direct connection to a current member of the board. As a result, there are ocean-sized pools of diverse, untapped talent – women, minorities, and LGBT executives – who have the skills to lead but lack the cozy relationships required to get their shot. …
Investors make their living by rigorously evaluating complex data sets and acting accordingly. They aren’t coming around on diversity to make a political point. They’re acting on evidence that suggests homogenous corporate leadership structures stifle innovative thinking, demoralize staff, and hinder the acquisition of talent. And this comes at a discernable cost to the bottom line.
Every CEO who wishes to continue receiving investments from some of the largest players in the financial services sector should hear and heed this message. In 2018, diversity makes both dollars and sense.