Lack of ethnic diversity in boardrooms ‘will hinder trade deals’

New research suggests a lack of ethnic diversity in some of the largest companies in the UK. What effect will this have on post-Brexit Britain and could it pose difficult questions for future trade deals?

Ethnic diversity issue in UK boardrooms
A lack of ethnic and gender diversity in the boardrooms of the UK’s biggest companies could hamper government plans to strike post-Brexit trade deals with countries outside Europe, the head of a executive search firm Green Park has warned.

Ethnic minorities under represented in FTSE 100 positions

Green Park’s latest, annual leadership survey shows that 58 per cent of FTSE 100 boards still have no ethnic minority representation, and that the number of ethnic minorities holding chairman, chief executive or chief financial officer positions at Britain’s largest listed firms had dropped 18 per cent over the year.Raj Tulsiani, Green Park chief executive, commented, “In light of the UK’s decision to leave the European Union, and our desire to increase trade with non-EU countries, the ongoing inability of our leading companies to attract and retain leaders from East Asian and African backgrounds should be a matter for serious concern.“The UK’s aspiration to be outward-looking and open to business with the non-European world is hardly enhanced by the continued lack of challenge in the boards of our leading companies, still statistically and behaviourally dominated by men of similar cultural and educational backgrounds.”The survey also found that women only held six per cent of the top 300 boardroom posts and that there were no females from ethnic minorities serving as chief executives or chief financial officers in FTSE 100 companies.There are three non-white chairs of FTSE 100 companies and four non-white chief executives, according to the survey. Six of the chief executives are women but Green Park found a white woman was twice as likely to reach a top three position at a FTSE 100 firm than an ethnic minority male, and 20 time more likely than a minority female.

Signs of added diversity in the FTSE 100 over the next few years

Mr Tulsiani said there might be signs of a future improvement with an increase to five per cent of ethnic minorities in the so-called “leadership pipeline” – the highest figure among FTSE 100 firms in four years.He added, “These are not the times for group-think and mono-cultural boards. In a world where access to top talent from abroad may be increasingly limited, it would be foolish for major enterprises to continue to ignore talent from under-represented groups.“The reduction in female leaders in so many industry sectors is a worrying trend, especially as it coincides with the first rise in BAME (black, Asian and minority ethnic) representation in four years. Given the need for greater cultural empathy in a post-Brexit Britain being able to move forward sustainably will become an increasingly important element of brand trust in the eyes of the public, regulators and institutional investors.“What we are seeing is a trend to ‘tick the boxes’ in diversity recruitment. FTSE companies have had initiatives to improve gender diversity on the board, but now appear to be focusing more on improving their pipelines of future leaders from ethnically diverse backgrounds. The organisations that succeed will adopt a more inclusive overall recruitment strategy, rather than addressing each initiative in isolation.”
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Baroness McGregor-Smith CBE, vice-chair of DRIVE, Green Park’s social enterprise, and author of Race in the Workplace, commented, “Despite the report showing that every industry in the FTSE100 still needs to do better with proportional diversity, the findings provide actionable baseline data for the index to improve their leadership’s diversity, moving them closer to achieving the diversity dividend.“This report’s data paints a clear picture of current-state diversity across the index and can be used to pro-actively take diversity conversations to the boards of our leading companies to show minority communities that they are a priority to the companies they work for.”Last year, the government-backed independent review by Sir John Parker recommended that no FTSE 100 board should be exclusively white by 2021.For related news and features, visit our Brexit section.

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