By: Sarwar Alam
ETHNIC minorities continue to face barriers in the workplace, although a review has found an increase in representation in boardrooms, a leading diversity and inclusion expert has said.
The Parker Review found that there are 12 ethnic minority CEOs in the FTSE 100, up from seven in 2022. Additionally, there are seven ethnic minority chairs, which marks an increase from six. However, overall, only 13 per cent of senior management at the top 100 firms are ethnically diverse.
Among the UK’s top 50 largest private companies, only 44 per cent have at least one ethnic minority director on their board, compared with 96 per cent of FTSE 100 firms and 70 per cent of those in the FTSE 250.
Baroness Oona King is currently the chief diversity and inclusion officer at Uber. She was former prime minister Gordon Brown’s advisor on equity, inequalities, and diversity and has also held Equality, Diversity, and Inclusion (EDI) roles at Channel Four, YouTube, and Google.
“The only way we will make sustainable progress is to do it at an industry level. Fundamentally, EDI is collective work. No one leader, no one company is going to solve some of the intractable problems or challenges around EDI on their own. I worked on the ACT report – it’s a blueprint for leaders who want to see what action they can take – we can all do better,” King said.
The Parker Review was commissioned by the government in 2015 when it found the proportion of ethnically diverse personnel in UK boardrooms to be “disproportionately low”. The 2023 review found some positive changes among the top 350 companies. People from ethnic minority backgrounds now hold 19 per cent of all director positions in the FTSE 100, a rise of one percentage point from 2022.
The number of companies with more than one ethnic minority director rose from 49 in 2022 to 56 in 2023. However, there is still no ethnic minority representation in four out of the top 100 companies, same as last year. Of the remaining FTSE 250 companies, 175 had ethnic representation on their boards, compared to 148 companies in December 2022. The proportion of ethnic minority directors was 13.5 per cent, but among the 50 largest private companies, this was only 11 per cent.
“We’ve seen continued good progress this year on ethnic diversity across FTSE 350 boards. For the first time, we have authoritative data on ethnic minority representation in senior management, revealing that 13 per cent of FTSE 100 and 12 per cent of FTSE 250 senior management teams are from ethnic minority backgrounds,” said David Tyler, the chair of the Parker Review Committee.
“The FTSE 250’s progress towards its December 2024 deadline, for at least one ethnic minority director on each board, is encouraging, reaching 79 per cent of those reporting. With the time remaining, we urge those FTSE 250 companies without an ethnic minority director to do what they reasonably can to reach the target,” he added.
Laura Sanderson, UK lead and EMEA co-lead of executive search firm Russell Reynolds Associates, said it was encouraging that almost all FTSE 100 boards have ethnic minority representation, when in 2016 less than half did.
“However, today representation remains too low in the most senior roles, especially CEO and chair. Between them, these roles set the agenda of the board and the culture of their organisations. They have the potential to create lasting change in their communities, supply chains, and for their customers. Creating diverse teams, and quickly, is a business imperative. We see repeatedly that diverse leadership teams outperform those that are homogenous. Already in the first year of reporting, senior management representation is at 13 per cent. Firms committed to creating change must set targets to reach parity with the UK population, or risk falling behind,” she said.
Among ethnic groups, those who identified as Asian led the way in almost every category, with the black community struggling when it came to representation at the boardroom level. “We should be removing barriers for all communities. Obviously, for some communities, there are perhaps barriers that are harder to kick down than others. The Asian community is very diverse and a huge community itself, within which there are lots of elements of the Asian community that do remain underrepresented,” she said.
“We have to be more nuanced and bring greater disaggregation of data when we’re looking at the prevalence and representation of communities in business. If you take an interest in fairness, you’ll want to work out how to increase the diversity of your workforce. How do you make your culture more inclusive and how do you make your product more accessible and open to as many people as possible? When you do that, you also open up business opportunities, so it’s a win-win,” she added.
Tyler urged companies to look at why there was such a lack of representation from the black community in boardrooms. “Our key concern is that progress is very different in different ethnic groups. Above all, it’s clear that senior representation of the black community is lower than that of others such as the Asian community. We encourage companies to assess the reasons for that in their business and to ensure there’s a level playing field for all communities,” he added.
Seventy-nine per cent of the 222 FTSE 250 organisations that responded to the Parker Review’s voluntary census said they have now met the “one by 2024” target. The Department for Business and Trade conducted the survey with sponsorship from EY.
However, EY’s UK chair Hywel Ball said it was important for organisations not to lose sight of longer-term priorities such as this in the challenging economic environment.
“The Parker Review, and the targets that it sets, provide an important benchmark and objective criteria to increase the representation of ethnic minorities across UK business. Crucially, it ensures that efforts to diversify UK business are led from the top down and that, as leaders, we con tinue to be held accountable – regardless of the macroeconomic climate. At EY, we have a target to increase the proportion of ethnic minority partners in our UK business to 20 per cent by 2025, of which 15 per cent are to be black. As of July 2023, 17 per cent of our partners were from an ethnic minority background, of which 8.5 per cent identify as black or of mixed black heritage. While we are not yet where we want to be, we are steadfast in our commitment and taking action across all parts of our business to continue our progress,” he added.
Last year both listed companies and the UK’s largest private companies were asked to set their own percentage targets for ethnic minority representation in senior management by the end of 2027. The FTSE 100 companies that provided 2027 targets had an average target of 17 per cent – a four percentage point rise on today’s average of 13 per cent. The average target among the FTSE 250 is 15.5 per cent.
Tyler insisted it was crucial for firms to embrace EDI as it would benefit their organisations as well as society as a whole. “First, because boards and senior business people recognise that with a mix of ethnicities, and other diversity around the table, they are likely to have a wider, more informed, and higher quality debate. The danger of being blindsided by groupthink is much reduced.
“Second, they see how a business is likely to understand its markets much better if its own management team reflects the mix of consumers in those markets. And third, they see that companies which embrace all the tenets of our society and people from all backgrounds will gain a competitive advantage over those that
don’t do. At the same time, we also see how this development is good for our society as a whole. When the next generations can see that their identities are equitably represented in the CEO positions, they will be encouraged to believe that Britain truly values meritocracy, this factor should help enhance the cohesiveness of our society,”he added.
Nusrat Ghani, minister of state for industry and economic security, said companies setting their own targets was a step in the right direction.
“I look forward to seeing these numbers – as symbols of the UK’s increasingly inclusive, meritocratic business cultures – continue to progress
in the years to come; UK companies growing ever nearer the productivity that participation of all the talents can bring,” she said.
