A lot has been reported about diversity in recent years, particularly when it comes to the progress, or lack thereof, made at board level. In June, Forbes revealed that among the companies listed on the S&P 500, there are no longer any all-male boards, with women making up nearly half of the 500’s newly-appointed directors and 10% being women of colour.
Despite this, progress has been slow. In the UK, The Guardian reported that FTSE 100 firms were being accused of dragging their feet on diversity targets ahead of the 2021 Parker Review deadline, which gave them four years to appoint at least one non-white board-level director. It stated that, as of February 2020, only 53 of Britain’s largest listed firms on the London Stock Exchange have at least one director from an ethnic minority, according to the Parker Review’s second annual update. While it indicates a small increase from the 49 companies that had met the target since the review launched in 2017, it’s clear that more needs to be done.
Omni’s Resourcing and Talent Planning Survey 2020, delivered in partnership with the CIPD, found that 41% of the people professionals and senior HR leaders surveyed recruited a more diverse workforce over the last 12 months compared to the previous year, with 52% having a formal diversity strategy in place. Despite these improvements, there’s considerable variation in efforts to attract diverse board-level candidates, with only 39% slightly or not at all active in this area.
What’s stopping this progress we ask? It’s well proven that board diversity is not only a societal imperative, it matters for a company’s financial performance. McKinsey’s recent report reaffirms yet again the strong business case for both gender diversity and ethnic and cultural diversity in corporate leadership—and shows that this business case continues to strengthen. The most diverse companies are now more likely than ever to outperform less diverse peers on profitability. An important reason is that diverse representation at the executive and board level leads to diversity of thought, and improves decision making.
Inclusion and diversity matter more than ever during this global pandemic, and now, as companies seek to navigate numerous challenges few have faced before, including a Covid-19, , changing consumer demands, and widespread protests regarding racial inequality, they should be seeking more ways to ensure greater racial and, of course, broader diversity at the very top happens.
Here are some recommendations for organisations looking to improve board-level diversity:
- Move the accountability. Companies should place their leaders and managers at the heart of their D&I efforts and not reply on HR or Resourcing to take the lead. They should strengthen their inclusive-leadership capabilities and emphatically hold all leaders to account.
- Critically evaluate your organisation’s brand to see how attractive it is to diverse candidates. What changes can you make to your brand and your culture to help attract, select, develop and retain more diverse employees?
- Build a strategic approach to attracting and developing diverse candidates to fill senior positions. Consider targeting attraction strategies for people with characteristics that are underrepresented in particular roles.
- Evaluate your recruitment activities to assess which are most effective in broadening your talent pools.
- Review your internal mobility and create transparent processes that enable equity of opportunity and ensure a level playing field for internal promotion and secondment/project opportunities.
- Develop programmes like career returners and mid-career change to help broaden your talent pool and diversify people’s skills.
- Be honest and openly acknowledge your shortcomings and how your board level objectives will improve inclusion within your organisation.
Now more than ever, it’s crucial for organisations to achieve greater diversity on boards to access more diverse thinking into board-level decision making and deliver better performance. If you need any further encouragement, bear in mind that even back in 2017 Mckinsey reported that diverse companies in the top-quartile for ethnic/cultural diversity on executive teams were 33% more likely to have industry-leading profitability. Now’s the time to take action.
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