Company Matters’ report, released this week, into diversity on FTSE SmallCap (SMC) and AIM listed company boards shows a familiar picture. Compellingly summarised in its own title Boardroom Inertia?, it identifies some progress made—but glacially slow in nature.

For me, the comparison made between the FTSE SMC/AIM and the FTSE 350 is an interesting one to consider. The data shared by Company Matters shows that on most metrics the FTSE SMC/AIM companies lag behind the FTSE 350. The report identifies 16% all-male boards, compared with less than 1% in the FTSE 350 (two companies)*. The gap on ethnicity is even more stark—poor performance in the FTSE 350, with over a third all-white boards, is dwarfed by the 74% and 84% all-white SMC and AIM boards respectively.

But stop to ask yourself, why is this is the case? On many measures, it may be fair to expect the largest companies to be streets ahead of the smaller firms. Greater economies of scale, large teams and more resources are clear advantages.

Yet diversity is an area which does not require huge investment, and increasing your diversity percentages is arguably easier in a smaller team, requiring fewer rounds of recruitment. Diversity is also an area with very strong evidence of its beneficial impact on business performance.

Biggest does not need to be best in this field. It’s easy to assume the FTSE 350 are “better” overall on diversity as those top firms have more enlightened thinkers, who can better access cutting-edge leadership knowledge to bring in effective diversity and inclusion practices. While I have the pleasure of working with many individuals in those leading firms who are knowledgeable and committed through our corporate partnerships, it would be naïve to suppose their expertise and passion is the only reason for progress.

Indeed, Women on Boards also has corporate partnerships with many smaller companies with equal commitment to enhancing diversity. I have ensured our offer is adaptable and affordable for different types and size of organisation precisely because I know that diversity is not just a concern for the “big fish” in the listed pond.

Increased profile and scrutiny

In many European countries and some US states, larger companies have boardroom diversity that is markedly ahead of their smaller competitors. This is for the simple reason that those large companies are subject to quotas. This is one of many of the obvious drawbacks of a quotas approach, which the UK has resisted.

Instead, we have given painstaking profile and scrutiny to diversity on the FTSE 350 boards. Many bodies have contributed to this, and importantly investors are now putting their money where their mouth is—as Company Matters reference—at least, with regards to the FTSE 350.

The FTSE SMC and AIM listed companies have made less progress simply because less attention has been paid to them. This is why Company Matters’ report is so welcome and needed. Another important point Company Matters make is the backsliding we have seen in the FTSE 350 and huge variation between firms masked by the overall figures.

It would be a dangerous error to suppose we have reached diverse and inclusive practices being “business as usual”. I believe it is vital we continue with and extend ongoing and high-profile scrutiny of diversity in all our leading firms. Congratulations to Company Matters for playing an important role in that with this report.

Fiona Hathorn is CEO of Women on Boards UK.

*On 19 February, 2021, after this article was published, the 30% Club released figures showing there are now no longer any all-male boards in the FTSE 350.