Guest blog: UK firms failing to improve diversity in boardrooms

Dec 21st '19

A recent study by consultancy Green Park found that improvements in diversity among FTSE 100 firms is ‘flatlining’.


The research found that only 3.3% of FTSE100 Chairs, CEOs and CFOs are black, Asian and minority ethnic (BAME) – a number that has shown no improvement since 2014.


In some areas, BAME representation has actually fallen. In the top 20 roles of Board and Executive Committee members, the number of BAME individuals has dropped from 8.8% in 2018 to 7.4% in 2019.


And because the last year has seen zero growth in the number of BAME executives immediately below board level, there is concern that the pipeline for future leaders has also stalled.


Trevor Phillips, Chair of Green Park and former head of the Equalities Commission, responded to the findings by saying that ‘people of colour seem to be super-glued to the corporate floor’.


There was slightly better news on gender diversity: in the year to August, there was an increase in female representation on boards, although women still occupy only 28.8% of director roles.


Why does diversity matter?

Diversity – whether assessed by gender, ethnicity, socio-economic background or other criteria – matters in the boardroom as it does elsewhere. Its importance on boards has long been recognised.


Ensuring a range of views is represented in the boardroom helps directors to make rounded decisions. Diversity can counteract some of the behavioural biases that can hinder good choices.


It can also ensure you have a broad mix of perspectives on the issues you discuss, something that’s been recognised as one of the 10 things you need for a successful board.


What can firms do to improve performance here?

The report calls on firms to appoint a chief diversity officer; half of US companies have already done this. Failing to do so, the report claims, will see companies face ‘commercial risk, regulatory attention and losing key talent to global competitors’.


This might help firms to develop the succession plan and pipeline they need to ensure that BAME individuals – and other under-represented groups – have the opportunity to reach the top echelons of the business.


Give your board the best chance of appointing the right people

Make sure you’re not making excuses for your lack of diversity. Are you using one of the top 10 reasons firms give for having no women on the board, for instance? And make sure you’re not making appointments for symbolic value.


And of course, even with a diverse team in your boardroom, there are other challenges to overcome to run a shipshape board. Meetings need to have a clear purpose and be chaired effectively. Your members need to have a focus on strategy, and be well-prepared for meetings in order to make the most of them.


Source: Simplifie


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