Legal & General warns FTSE 100 firms over lack of ethnic diversity- The Boardroom Diversity Paradox

Last week I learnt of the news that Legal & General, the U.K.s biggest fund manager, has warned FTSE 100 companies with all white boards that it will vote against those that fail to diversify their leadership teams by 2022.

Diversity is now the buzzword.  However, when one scratches beneath the glossy packaged PR stories and inclusivity hashtags we find that very little has changed in the financial sector with regards to increasing the diversity of their most senior staff.

I started working in the city almost 20 years ago and in that time progress has occurred at a snail’s pace. It saddens me that a young black person entering our sector may still come up against the very same systemic and attitudinal barriers I myself faced almost two decades ago.

Whilst I welcome Legal & General’s brave move wholeheartedly, and am hopeful the rest of the industry will follow, when it comes to increasing the diversity of the UK’s top boardrooms the chicken and egg paradox springs to mind. I say this because until firms commit to diversifying their actual recruitment strategy and their associated supply chains, .i.e. executive search, the existing road blocks to diversity will remain.

Having run an executive search firm I would say that, wouldn’t I? But think about it. There has always been a symbiotic relationship between executive search and the board rooms they recruit. We are the very people who suggest candidates for key positions, and unconscious “people like us” bias can unintentionally skew the end result of recruitment campaigns, despite the very best of intentions.

Many firms have made incredible efforts to attract talent via graduate recruitment. However, the end result is neither representative of UK society nor anywhere near stated target and thus urgent improvement is required.  However, I don’t think this is necessarily the main obstacle to increasing the number of BAME board members.  Getting candidates into the financial sector ie ‘through the door’ is only half the problem, it’s what happens afterwards that needs to be addressed.

Many UK financial institutions are continuing to set their senior hiring parameters on the terms that they are familiar with; the same terms that senior decision makers were hired on historically. In short, perpetuating the practice of hiring people like themselves. It’s an understandable pattern; mitigating the risk of the unknown. But it also limits diversity and results in homogenised boardrooms.

Despite targets, initiates and ambitions, almost 40% of the FTSE 100 still have all white boards. So, you will appreciate how much work there is still to do. The Sir John Parker Review recommends that each FTSE 100 board should have at least one director of colour by 2021; and each FTSE 250 board should have at least one director of colour by 2024, and I say…..no chance!  Not unless there is a profound and significant shift in how blue chip companies think about their recruitment practices and the development of their existing talent. 

Diversity isn’t about tokenism or ticking boxes, it is about hiring the very best talent by looking outside of the traditional places. It defies social and geographic barriers to encompass non-traditional recruitment methods; everything from access programmes and mentoring schemes to hiring senior people from different industries.

Softly, softly does not work: This is a call to action. Now is the time.