How Not to Be a Token Board Member: Diversity in Leadership
Corporate boards are gradually diversifying, but in 2021, only 36% of S&P 500 and Fortune 500 companies had three or more female directors, according to Catalyst. In biotech, the percentage is even lower. In 2020, the Biotechnology Innovation Organization (BIO) reported that only 18% of its members’ directors were female and 14% were people of color. BIO’s 2022 report was unable, however, to gather a sufficient sample of demographic data to analyze board demographics to assess any changes.
Diversity of all types is crucial on boards, but what is more important is that each board member adds tangible value. They mustn’t be tokens.
To learn how women and underrepresented groups can improve their chances of being asked to serve on boards of directors, BioSpace spoke with Dian Griesel, perception analyst and president of DGI & Silver Disobedience Inc., which offers consulting on how to live one’s best life at any age; and Terry Coelho, EVP, CFO and CBO of CinCor and member of the board for First Wave BioPharma.
BioSpace (BSP): Why aren’t more women on corporate boards of directors?
Dian Griesel (DG): It’s hard to be on a board if you haven’t worked at the executive level.
Terry Coelho (TC): That legacy issue (of people with the requisite experience) means the pool is smaller.
BioSpace’s 2020 U.S. Life Sciences Diversity & Inclusion Report found that only 14% of respondents identifying as female felt that opportunities for promotion at their companies were fair, while 24% said that employees of all backgrounds are encouraged to apply for higher positions.
BSP: How is being a board member different from being on the management team?
TC: Many very strong professionals have been in the boardroom to make a presentation, but have not really seen how the dynamics of the board work. Sitting on a board is different than sitting on the management team. You’re not there to manage the minutia and the organization’s progress. Being a board member is about being a strategic contributor.
BSP: Having C-suite experience is important, but are other types of assignments also valuable?
TC: In my case, having a finance background was important because a lot of boards are looking for audit committee members and audit chairs. You needn’t be an accountant, but you need to understand the financial statements and have had financial responsibility. The compensation committee tends to be a bit more flexible. If one member has dealt with compensation, the board tends to be satisfied. (Other positions need more general experience.)
BSP: What can women – people, really – do to make themselves more qualified to become board members?
DG: Non-profit organizations often are willing to take on (inexperienced) board members.
TC: Consider starting in a volunteer or non-profit organization. It’s not the same as a corporate board in terms of the requirements, but you get to sit at the table and learn more of the dynamics behind boardroom considerations.
BSP: Assuming a person is well-qualified and has held C-suite roles, is there anything more to be done to prepare?
DG: I advise people to conduct a full networking audit, not just of who you can connect with and bring to the board, but who you can bring in to help when the company has a crisis or needs to close a deal. Also, you need to determine whether you are truly independent. Are your crisis skills strong? Differentiate what you bring to the table.
A board member has to bring a lot of attributes to the board – knowledge, connections, educational acumen and a demeanor that is calm and collected under pressure. There are plenty of people who belong on a board, and plenty who don’t. You need to know what the role is and how you fit into it. No one wants to be part of the club just because of their gender.
BSP: Since companies tend to prefer board members with prior board experience, how can a person gain that first board appointment?
TC: Use your network and find sponsors who could recommend you for board roles as they come up. Mention (your interest in serving on a board) to different external partners, such as banks and executives from other companies, and ask them to keep you in mind if they hear of opportunities. There are also board recruiters, but many board positions are filled through networking.
BSP: What should a person do before pursuing or accepting a particular board position?
DG: A lot of people – women especially – get very excited when they have a chance to join a board, but they really need to ask themselves how qualified they are for that specific board. What are your capabilities? What do you know about the industry, the company and its culture? Where does your expertise tie in to that organization? That level of confidence about what you know and what you bring changes the dynamic in a boardroom quickly.
BSP: What do new board members need to understand about this role?
DG: Understand your fiduciary responsibility to the shareholders. Board members have a responsibility to the shareholders, first and foremost, even if that means supporting a merger…and stepping aside.
Board members also need to understand their role as oversight, versus working on the day-to-day operations, as well as the differences between the functions – CEO vs. president, for example – and the role of the chairman of the board. It’s important to not be a Monday morning quarterback and inadvertently mess up the process. Also, learn about the committees and know what you are eligible for and, also, what you are not well-suited for.
BSP: How does board member liability factor into the decision to join a board?
DG: There is liability insurance, but board members can be sued. With potential liability in mind, think about how committed you can be to this company and what that commitment – and that liability – may mean to your career trajectory. Just look at the Twitter situation right now. The board originally opposed the offer (by Elon Musk to buy Twitter. A recession began and now the board is trying to force Musk to buy the company).
TC: Liability shouldn’t be your first criteria, but it should be considered before you accept a position. Discuss this during the interview for the board position. It’s very important to check that the company has directors’ and officers’ insurance in place, what it covers and its limitations. Also, look back at the filings and reports to see whether there have been any major lawsuits or issues with the Securities & Exchange Commission (SEC) in the past.
BSP: Thank you both for sharing your expertise with BioSpace.