The Parker Review’s target (set five years ago) of every FTSE 100 company having at least one person from a minority ethnic group on its board has nearly been met.
When the Parker Review was first published in 2017, only 85 out of the total 1,050 directors were from a minority ethnic group. Of this figure, only 2% of director positions held by people from a minority ethnic group were UK citizens, despite the group making up 14% of the total UK population (based on the 2011 census—this is expected to be higher in the 2021 census).
Fast forward to 2022, and despite the disruption of the global pandemic, the latest Review, published last month, shows that 89 FTSE 100 companies have met the Parker target of “at least one by 21” and 94% of companies are expected to comply with this target by May 2022. For the FTSE 250, the aspirational target was for each board to have at least one director from a minority ethnic background by 2024.
Progress here has understandably been somewhat slower—some 55% of companies have to date achieved the 2024 target. The FTSE 250 comprises several smaller companies with fewer board members, less resources, and more concentrated geographic footprints. Progress here will need navigating somewhat different challenges; challenges that the Parker Review Steering Group commit to support FTSE 250 chairs to navigate.
Full spectrum of talent
Certainly, the Black Lives Matter movement that surfaced in the US in the early days of the global pandemic shifted and perhaps legitimised the conversation for greater ethnic diversity across the corporate landscape.
Time will likely indicate that this movement proved to be a catalyst for a step change in the arc towards social and civic justice, giving an added boost to chairs, executive search consultants, minority ethnic professionals and others, to hold companies and boards to account to redress discrimination and bias and represent the full spectrum of talent in society.
It is encouraging to see those leaders and corporate gatekeepers actively seeking to embed diversity, equity and inclusion principles in their employee profile, customer base and investor registers. Diversity strategy formulation, progress measurement and reporting are essential management tools that spotlight key areas providing both boards and investors with the ability to hold the executive to account.
Overall, the case certainly isn’t closed; the goal has never been “one and done”. The Parker Review identifies the work of increasing and maintaining ethnic diversity on the boards of UK-listed firms, encouraging firms to continue to proactively consider the talent pipeline and plan for success, and in working with the government and with the Information Commissioner’s Office to support companies in interpreting and applying data protection restrictions to navigating legal and practical challenges for identifying and monitoring ethnicity and other demographic data.
Next steps for UK boards
Specifically, the next steps for change are clear. First, with the FTSE 100, most board positions occupied by minority ethnic people are non-executive directors (NEDs). Only six CEOs of FTSE 100 companies are from minority ethnic backgrounds; 16 minority ethnic CEOs head FTSE 250 companies. A mere three chairs in the FTSE 100 and five chairs in the FTSE 250 are from a minority ethnic background.
We acknowledge the governance constraints in that many FTSE companies only have two executive director positions (CEO and CFO) yet see this as a focal point—proportional ethnic representation across these substantive roles will be clear indication of success. Additionally, the headline success of minority ethnic appointments at FTSE 100 and FTSE 250 board level can mask the fact that only a minority of those appointees are UK nationals. This begs the question as to whether talent management and succession plans in the UK are proving effective in reflecting the diversity of talent within their organisations.
Central to this is the role that leaders and majority ethnic group members can play in driving this change throughout the organisation. Awareness and capability-building at all levels, starting with the board and the executive committee must be prioritised, opening robust discussions about longer term, sustainable progress.
Leaders, managers, and team leaders of all ethnicities and genders are key actors in what we describe as the “inclusion ecosystem”, the web of individuals, dyads and groups with different roles, identities and positions, who play a unique role in creating and sustaining inclusive cultures for all.
Diversity dynamics
Differential outcomes of employees are not just due to invisible barriers or moments of exclusion faced by the less dominant or minority group, but also due to the invisible opportunities and moments of inclusion.
Majority social group members could increase their awareness of the dynamics at play in both directions that illustrate how even if they are not actively putting hurdles in the way, they may be contributing to systemic inequalities by building teams and cultures that are predominantly, or singularly, nourishing for one group.
For many leaders, especially those from majority groups, the transition to a demographically representative employee profile may well feel uncomfortable and risky. However, if the benefit of building talented teams based on both merit and diversity is to be captured for long-term value maximisation, leaders that ignore the diversity and inclusion agenda do so at their peril.
Doyin Atewologun is director and Diane Chilangwa-Farmer is a consultant at diversity consultancy Delta Alpha Psi.