The number of non-executives appointed from minority groups has dropped significantly year-on-year, according to a new study.
The 2023 UK Spencer Stuart Board Index shows that non-white appointments among new non-executives are down 44%. The number of women appointed among new directors is down from 60% to 51% while the number of foreign directors appointed is down from 52% to 36%.
The Spencer Stuart study looks at the UK’s top 150 companies. The report says: “Against a backdrop of unprecedented and destabilising events over the past 12 months, many boards have been opting for experienced and proven hands over new and more diverse talent.”
There has been some progress. A hefty 60% of boards now have a woman in one of the top four roles on their boards—chair, CEO, senior independent director (SID) or CFO. That’s up from 50% last year.
The number of female chairs is up from 20 last year to 22 this year. Female SIDs are up from 32% to 35%, while women chair 68% of remuneration committees and 64% of sustainability committees.
Spencer Stuart says efforts to address the boardroom gender balance may be tailing off. Some 53% of companies have reached the target of 40% female representation on board, up from only 46% last year. The number of female non-executive directors has seen no change, remaining at 46%, though the number of female SIDs is the highest on record at 52%.
Although the number of newly appointed directors from an ethnic minority background has dropped, only six FTSE 100 companies failed to meet the original Parker Review target of having at least one non-white director by 2021.
Of the 53 companies from outside the FTSE 100 examined, 41 had met the target. Parker had called on FTSE 250 companies to reach the target by next year. Overall, nine out of 10 of the 150 companies included in the survey had a single director from a minority background.
The number of boards creating an ESG or sustainability committee has increased and now stands at 55, up from 46 last year, though precise names for the committees vary, as do their remits. Spencer Stuart notes a pay differential: chairs of sustainability committees appear to earn an average of £27,016 for their work, while corporate social responsibility chairs earn an average of £21,482 and ESG committee chairs lag behind on £19,228.
CEOs appear to be spending less time in their roles, the survey finds. Average tenure is now at 5.3 years, down from 5.8 last year. Average non-executive tenure is where it has been for a decade: at 4.2 years.
However, 11% of non-executive chairs have stayed in post longer than the recommended limit of nine years. Waiting for CEO succession to finish or bedding down an acquisition are among the chief explanations.
Uncertainty gripping global business is not only affecting consumers; boards appear to be reacting too. It remains to be seen whether this is a long lasting trend or merely a blip.