Accessibility Links

Diversity in the boardroom: where does the UK stand?

03 / 03 / 2020

Equality, diversity and inclusion are areas of keen interest for us here at Barclay Simpson. Whether it's helping our clients meet their diversity hiring goals or promoting these values within our own teams and recruitment practices, we're always looking for ways to support fairer and more balanced workplaces.

This year is an important time for many diversity initiatives across the UK, with numerous organisations and government-led reviews choosing 2020 as the year to meet key targets.

Let's take a look at where the country stands with some of these goals, especially in relation to boosting diversity in boardrooms, as this has traditionally been a challenging area for organisations.

Gender is still at the top of the agenda

In 2010, Lord Davies began his comprehensive review into board level gender diversity at leading companies. Published a year later, his report set out recommendations and practical advice on how to increase the representation of women on FTSE 350 boards to 25% by 2015.

The FTSE 100 met this target, more than doubling the proportion of women on boards from 12% to 25% within four years. The FTSE 350 fell slightly short at 22%, having faced the tougher challenge of rising from a starting point of just 9%.

This was just the first step in putting gender diversity at the top of the agenda for many leading businesses in the UK.

The 30% Club set targets of 30% female representation on FTSE 350 boards and 30% women in senior management positions at FTSE 100 companies by 2020. The first objective was achieved in September last year (the figure currently stands at 31.7%), while the latter is close to crossing the line at 28.6% as of November.

Meanwhile, the Hampton-Alexander Review, an independent body that builds on the work of the Davies Review, also announced earlier this year that its goal of 33% female representation on FTSE 100 boards by 2020 has now been reached.

These are encouraging stats, with organisations seemingly moving the needle in the right direction. However, as Denise Wilson - CEO of the Hampton-Alexander Review - points out, there is still a lot of work to be done, particularly at the senior level.

"There are over 900 women now serving on FTSE 350 boards, providing an ever-increasing pool of women with substantial board experience. Yet, only 25 women have been appointed into the Chair role, even fewer as women CEOs, and [this shows] little sign of change," Ms Wilson noted.

"The very senior jobs were always going to be the hardest of challenges, however, a stronger focus is now required at every stage of the appointment process to address the reasons why top jobs aren't going to women."

 


Of course, diversity isn't just about gender; there are nine protected characteristics in the 2010 Equality Act to prevent discrimination at work - sex, age, disability, gender reassignment, marriage or civil partnerships, pregnancy and maternity, race, religion or beliefs, and sexual orientation. So, how are the country's boardrooms performing in other areas of diversity?

Ethnic diversity struggles to gain momentum

In 2017, the UK Government launched the Parker Review. Headed by Sir John Parker, former Chairman of Anglo American, the report looked to shine the spotlight on ethnic diversity in the country's boardrooms.

The review found that over half (51) of FTSE 100 companies did not have any directors of colour. In fact, non-white directors comprised just 8% of total directorships, notably lower than the proportion of people of colour in the wider population (14%).

What's more, just seven companies were responsible for appointing 40% of the directors who identified as coming from an ethnic minority group. Just six people of colour held Chair or CEO positions.

"UK companies have made great progress on gender diversity, but we still have much to do when it comes to ethnic and cultural diversity as a business imperative," Sir John said at the time.

The headline recommendation from the review was that each FTSE 100 board should have at least one director of colour by 2021 and the same should be true for every FTSE 250 board by 2024.

Three years have elapsed since then, so have things improved? Unfortunately, not as much as hoped. According to an update report published earlier this month, 37% of FTSE 100 companies still did not have at least one director of colour, while a sizeable 69% of FTSE 250 weren't yet meeting the target.

 


One of the more damning statistics was that there are still only six people of colour who are Chairs or CEOs in FTSE 100 firms, indicating minimal improvement at the very top of businesses. It's perhaps worth noting that the figures are a little trickier to compare this year because of the GDPR rollout, which has meant the Parker Review had to rely on volunteered information rather than public sources. As such, 17 FTSE 100 companies chose not to provide the information.

"We are now less than two years off the first of these target dates, and it is clear that not enough is being done by the FTSE 100 as a whole to deliver," said former Business Secretary Andrea Leadsom.

She nevertheless praised companies and investors for showing increased awareness of D&I in the workplace, including commendable efforts to support a more diverse talent pipeline. The number of companies with no ethnic minority representation on boards has also dropped from 51 to 31.

That said, the Parker Review target of having at least one board member who is a person of colour now looks extremely unlikely.

Beyond gender and ethnicity

The statistics for other areas of diversity, including disability, age and sexual orientation are a little harder to come by. Few, if any, government-led reviews have been conducted in these areas, although the Financial Reporting Council (FRC) did publish a Board Diversity Reporting analysis in 2018.

While the publication doesn't provide research on the diversity of board compositions in these areas, it does offer some insight into how FTSE companies set out, measure and report their progress.

For example, just 56 FTSE 100 firms had a board diversity policy in 2010, all of which related to gender. By 2018, 98% of FTSE 100 and 88% of FTSE 250 companies had a policy, and around one-third covered ethnicity as well as gender.

Furthermore, between 20% and 30% of the FTSE 100 were described as 'best in class', meaning they were far more likely to take a much broader approach to diversity. This included policies related specifically for people from different social and educational backgrounds, those with disabilities and other protected characteristics.

"Some go so far as to target specific aims, for example to support social mobility, carers or former members of the Armed Forces, as part of an agenda of inclusion," the report states.

However, the FRC's latest annual update on the UK Corporate Governance Code showed only one or two FTSE 100 companies reported their approach to LGBT+, age and disability diversity. Separate research from INvolve found that 33% of the top 100 firms fail to specifically mention LGBT+ topics in their annual reports.

Again, the upshot appears to be that businesses are making progress, but perhaps not as quickly as had been hoped.

"We expect to see an increase in more detailed commentary on all aspects of diversity in future disclosures," the FRC said.

"It's not always clear whether there were targets related to diversity at board and senior management level, and if so, what actions were being taken to achieve these targets or wider objectives."

A focus on diversity-led recruitment

Returning to the question in our headline - where does the UK stand on boardroom diversity? The results are somewhat mixed; clearly great progress has been made in many areas of diversity over the last decade, but momentum appears to have stalled.

Positions at the very top, such as Chair and CEO roles, remain elusive for women and people of colour. Meanwhile, a lack of analysis into other areas of diversity, such as disability and sexual orientation, makes it difficult to gauge whether much progress has occurred for these protected characteristics.

Sir John states: "To many, our continuing lack of ethnic diversity looks less like a failure on the part of minority communities to produce competent candidates, and far more like a choice on the part of business to settle for the familiar and traditional recruitment processes."

He may have been speaking specifically about ethnic minority representation, but his comments apply to other areas of diversity as well. Hiring strategies obviously have a crucial role to play when trying to make workplaces more diverse and inclusive.

Every profession has its own challenges and opportunities with diversity, and understanding these nuances is vital to achieving success with D&I recruitment strategies. At Barclay Simpson, we have in-depth insight into recruitment for the interrelated disciplines of governance, which enables us to provide specialist support to our clients as they navigate these markets.

Ultimately, our aim is to help you achieve your diversity objectives, allowing you to capture the benefits that can be derived from a diverse workforce. If you'd like to discuss any of the topics in this article or how we can support your recruitment processes and aims, please contact us today.

Add new comment
*
*
*