“Inertia is a powerful force,” says Ron Cohen, M.D., CEO of Acorda Therapeutics. “Unless some disruptive energy is applied to change the trajectory of something you believe needs to be changed, you will wind up on the same trajectory forever.”
This is why when Cohen was elected to chair the Biotechnology Innovation Organization (BIO) in June 2015, the first thing he did was change the name. “It used to be the Biotechnology Industry Organization,” he reminds. The name change was to reflect the essence of what biotechs and biopharmas do. But innovation isn’t just about science. “It encompasses how we conduct business, grow, and organize people to make a positive impact in the world,” he adds. During one of his first BIO board meetings, Cohen had a realization as he looked around the room. Fewer than 10 percent of BIO’s approximate 100-member board were women. Far fewer were people of color or other categories identified as being diverse. As such, Cohen initiated conversations on the topic of diversity. “The majority of the board agreed that BIO should be taking a proactive approach in promoting diversity within its own industry,” he states. Why?
For starters, BIO has a foundational belief that diversity is strength, as it provides for multiple viewpoints. “We are an industry that succeeds based on innovation, which requires ideas hailing from a variety of diverse perspectives,” he affirms. But BIO also was aware of a number of studies indicating that across all businesses, companies having more diversity among their leadership and boards actually tend to do better (on average) for shareholders. (For more insight on the business case for diversity and inclusion, check out information highlighted from a recent study conducted by McKinsey, Delivering Through Diversity). To that end, BIO established the workforce development, diversity, and inclusion (WDDI) committee.
WORKFORCE DEVELOPMENT, DIVERSITY, AND INCLUSION – DRIVING OUTCOMES
The WDDI was initially chaired by Julie Gerberding, M. D., EVP of strategic communications, global public policy, and population health, and chief patient officer for Merck. One of the first outcomes brought forth by the committee is the following set of principles and definitions (published June 2017).
a. Diversity is defined as the wide-range of similarities and differences among persons and perspectives, and follows guidelines established by the U.S. Equal Employment Opportunity Commission.
B. Inclusion is defined as the process of creating a business culture and environment that recognizes and effectively leverages the talents, skills, and perspectives of diverse employees.
C. Workforce development is defined as the process of ensuring all employees have the opportunities to develop the capabilities and skills required to meet the challenging needs in the biotechnology industry.
Simultaneous to the publication of the principles, BIO announced Helen Torley, M.B. Ch.B., president and CEO of Halozyme Therapeutics, would succeed Gerberding as chair of WDDI. “After establishing these principles, the committee had to determine what we were going to do to actually make a difference,” Torley shares. “Biotech has been talking about diversity for years, but that hasn’t resulted in any meaningful progress.” Working with other members of the committee, Torley set out to establish a set of goals.
HELEN TORLEY, M.B. CH.B. President and CEO, Halozyme Therapeutics
“Biopharma has pretty good diversity at entry-level positions, but we saw an opportunity to do better at senior-leadership roles.” This would require metrics to measure progress. According to Torley, at the time, BIO didn’t have any really good diversity metrics other than gender, so that is where the WDDI committee first focused its efforts. “Our first goal is to increase gender diversity in C-suite and functional leadership positions from 25 to 50 percent by 2025,” she states. The second metric involved WDDI setting goals for BIO member companies with regard to gender diversity on their boards. “Our second goal, also by 2025, is for women to have moved from comprising about 10 percent of biopharmaceutical company boards, to women holding 30 percent of biopharma board-level positions,” she shares.
BIO intends to increase its numbers in other areas of diversity as well, such as ethnicity, LGBT, and race. But doing so requires benchmarking where biopharma companies are presently. For that, the committee sent a survey to all BIO member companies (approximately 1,000), inquiring about their approach to diversity and inclusion. Do they have an HR team focused on it? Do they have a separate diversity and inclusion office? What types of programs do they have in place for career development of diverse candidates? These are only a few of the types of questions the survey will contain. “The survey’s results will not only help us gain insight into the current makeup of diversity within biopharma, but more importantly, teach us what companies are doing to advance diverse candidates into leadership,” she states. But this survey isn’t going to be one and done. She says the goal is to do them annually to determine if BIO programs are having the desired effect, and if not, determine what needs to be changed. But when it comes to diversity, BIO isn’t leaving biopharmaceutical companies to fend for themselves.
THE RIGHT MIX MATTERS – HOW BIO IS HELPING BIOPHARMA EXECUTE ON DIVERSITY
In April 2019, BIO launched the “Right Mix Matters” campaign to provide specific tools to accelerate gender, racial, ethnic, and LGBT representation on biopharmaceutical company boards, in C-suites, and in functional leadership positions. “The initiative includes a website [www.rightmixmatters.org] that presently has two tools: a diversity and inclusion tool kit and a BIO board list,” says John Maraganore, Ph.D., CEO of Alnylam Pharmaceuticals and current chair of BIO. The tool kit contains a variety of resources, ideas, and practices currently used by biopharmaceutical companies toward becoming more diverse and inclusive. “A lot of BIO member companies are smaller in size, so we had a task force collect some diversity and inclusion best practices already developed and used by biopharmaceutical companies, which are being provided as templates that can be accessed and incorporated into companies with limited resources,” Maraganore elaborates. For example, one of the tools included is a section on employee recruitment and how to handle unconscious bias.
Built similar to a model currently used in the tech industry, the BIO board list is a searchable database of candidates available for company board seats. “CEOs and individuals with board experience are eligible to become endorsing members and can nominate people they believe are ready and capable of serving on boards, but perhaps not having previous board experience,” he continues. “People also can nominate themselves for this talent platform, though they will need to be endorsed by an endorsing member.” Leaders within BIO have been encouraging board members to nominate talented individuals, and already the database has more than 50 nominees. “While we hope this initiative gets more diverse candidates into the pool, it is up to those using the resource to determine who is the best candidate for their organization,” he concludes.
THE BUSINESS CASE FOR DIVERSITY AND INCLUSION
McKinsey has been examining diversity in the workplace for several years. In its latest report, Delivering Through Diversity(January 2018), the company reexamined the business case for diversity and inclusion, building on its previously published research, Diversity Matters. Here are some of the findings.
The statistically significant correlation between a more diverse leadership team and financial outperformance previously demonstrated continues to hold true, even when expanding the data set to 12 countries and more than 1,000 companies globally.
Companies in the top-quartile for gender diversity on executive teams were 21 percent more likely to outperform on profitability and 27 percent more likely to have superior value creation. The highest-performing companies on both profitability and diversity had more women in line roles (i.e., those that directly advance an organization [e.g., sales]) than in staff roles (i.e., those that support the organization [e.g., human resources]) on their executive teams.
Companies in the top-quartile for ethnic/cultural diversity on executive teams were 33 percent more likely to have industry-leading profitability. That this relationship continues to be strong suggests that inclusion of highly diverse individuals — and the myriad ways in which diversity exists beyond gender (e.g., LGBT, age/ generation, international experience) — can be a key differentiator among companies.
The penalty for bottom-quartile performance on diversity persists. Overall, companies in the bottom quartile for both gender and ethnic/cultural diversity were 29 percent less likely to achieve above-average profitability than were all other companies in our data set. In short, not only were they not leading, they were lagging.
On gender, while there is plenty more to do, some companies lead the way in both absolute average diversity and representation in top-quartile — Australia, U.K., and U.S. companies make up over 70 percent of this group. On ethnicity, there is less global progress, but South African and Singaporean companies have a higher representation in the top-quartile versus overall representation in data set, suggesting material progress on ethnic diversity.
RON COHEN, M.D. CEO, Acorda Therapeutics
There are several lessons learned from the 17 leading diverse and inclusive companies studied by McKinsey. For example, more diverse companies are better able to attract top talent; improve their customer orientation, employee satisfaction, and decision-making; and secure their license to operate. While progress has been slow on average, individual companies have made real strides in improving diversity and inclusion outcomes and have been effective in using these results to influence business outcomes. From their experiences, McKinsey identified four imperatives for delivering impact through diversity and inclusion:
CEOs and leaders must articulate a compelling vision, embedded with real accountability for delivery, and cascade it down through middle management.
Diversity and inclusion priorities must be explicitly defined based on what will drive the business growth strategy. Leading companies do this in a data-driven way.
Initiatives in pursuit of diversity and inclusion goals should be targeted based on growth priorities, and investments made to “hard- and soft-wire” (e.g., policies, procedures, training) the programs and culture of inclusion required to capture the intended benefits.
Diversity and inclusion initiatives should be tailored to the relevant business area or geographic region context to maximize local buy-in and impact.
McKinsey stresses that correlation does not demonstrate causation. However, the statistically significant relationship observed between greater levels of diversity in the leadership of a large corporate organization and financial performance should prompt action. The consultancy encourages companies to examine the case for diversity and inclusion at their business. While designing an effective diversity and inclusion strategy is no small undertaking, the potential benefits of stronger business performance seem well worth the effort.