How can businesses embrace boardroom diversity?

Companies need to recognise the long-term value of diversifying their workforce or risk being left behind, says Arun Batra

Covid-19, the killing of George Floyd and the Black Lives Matter movement have spurred open and honest conversations around racial equality and black representation in the workplace. The stark disparities within business and society can no longer be ignored and it’s vital that companies are taking tangible action to drive meaningful change.

The Parker Review and the Hampton-Alexander Review have provided important benchmarks of the progress that has been made to date for both racial and gender equality in the UK’s biggest companies. They have also helped to identify some of the remaining barriers to progress and the actions that need to be taken. 

The 2016 Hampton-Alexander Review set a target for 33 per cent representation of women on FTSE 350 boards and in executive committee and direct reports by the end of 2020. The 2017 Parker Review called on FTSE 100 companies to appoint at least one ethnic minority director to their board by the end of 2021 – in an initiative entitled One by 2021. 

Positive progress has been made – the target for women on boards was met ahead of the deadline, with strong engagement from FTSE firms. However, in terms of ethnicity, around 50 FTSE companies didn’t participate in last year’s survey for the 2020 Parker Review; of those that did respond, 59 per cent of FTSE 350 boards were all white. For the FTSE 100, over a third (37 per cent) had no ethnic minority directors. 

One year to go

As the 12-month countdown begins to the Parker Review One by 2021 target, businesses cannot afford to shy away from transparency on the makeup of their boards. Being open and honest on this issue is a crucial step to diversifying the boardroom. For years we’ve known that diversity of thought and perspective is imperative to growth – this is even more the case during the challenges of Covid-19, where there are new uncertainties and no precedent to follow. We’re in uncharted territory and the long-term recovery from the current global health crisis will require companies to leverage the strengths of all their people. 

Reporting and transparency

The impact of events in the US and the Black Lives Matters movement have no doubt increased the focus on black and ethnic minority representation in the workplace. The Parker Review and key findings in the 2017 Race Disparity Audit, continue to focus minds on the progress that still needs to be made – along with a number of new commitments, charters and campaigns that have emerged in recent months.

Expectations on this agenda will continue to increase and reporting on diversity metrics, engaging with external organisations, and sharing best practice, will be crucial to up-rooting racial inequality. It will also provide the data needed to identify some of the barriers to progress, and where changes need to be made. 

Attracting top talent

Employers that can show genuine determination to shift the dial on ethnic minority representation at leadership level are likely to resonate strongly with prospective new recruits. This is vital when it comes to attracting and retaining the best talent. 

Additionally, having diverse role models at the top of an organisation can help inspire future generations of talent, creating a culture within a business where all people feel they can succeed. Such a culture can help nurture a productive workforce, which ultimately is an important input to achieving business growth.

The year ahead

We’re seeing more engagement and interest from business leaders on diversity and racial equality than ever before, with widespread recognition of the need to accelerate progress. Good intent is emerging in new areas and there is a stronger appetite across the business community to work together to achieve the change we want to see. Embracing the value and importance of boardroom diversity will be critical in the long term and those that fail to do so risk being left behind. 

Arun Batra is a partner at EY, CEO of the National Equality Standard and adviser to the Parker Review