The Status of Ethnic Diversity on FTSE Boards

It’s five years since the 2017 publication of the first report into Ethnic Diversity of UK boards by Sir John Parker and the Parker Review Steering Committee.?

Over the last five years, we have seen changes in diversity and inclusion within listed companies, and it is a huge success that the target of "One by 2021" on boards of FTSE 100 organisations has almost been achieved. As of today, 94 FTSE 100 companies have met the target. But while much has been achieved, there can be no grounds for complacency, and it is clear that more needs to happen.

In this podcast, Dr Sabine Dembkowski talks with David Tyler, who has recently taken over from Sir John Parker as Chair of the Parker Review.?

David Tyler is currently the Chair of Domestic & General, The White Company and Imagr. He is an experienced Chair, having also served in this role at several other companies, including Sainsbury's, Hammerson and Logica.

His experience in executive and non-executive roles covers the consumer, retail, business services and financial services sectors. His executive career from 1974 to 2006 was spent in financial and general management in Unilever, NatWest, Christie's and GUS.??

Since 2007, he has had a non-executive career, having chaired seven companies and been a NED at Experian, Burberry and Reckitt Benckiser.

David Tyler (then Chair of Sainsbury's) joined the Parker review committee when it was started in 2015. He happily accepted the invitation to participate in the review under John Parker as co-Chair and is now honoured to be asked to continue his work after John's retirement.?

?Some of the key takeaways of our conversation include;

"I hope listed companies can be a beacon for other organisations"

Since 2017, the number of FTSE 100 companies with someone from an ethnic minority background on the board has doubled, from 47% to 94%.?

In terms of directorship, this has also doubled, from 8% to 16% of all directors. The FTSE 250 has also seen an increase to 55% of companies with someone from an ethnic minority on their board. However, progress is needed over the next two or three years at FTSE 250 companies where the target is to have at least one person from an ethnic minority on the board by the end of 2024.

"What's important is the mindset's changed"

David outlines how diversity is important in a wider cultural sense. The benefits of diversity around the board table are now largely accepted, with many companies wanting to show their employees and outsiders that people from ethnic minorities can succeed. This makes a huge difference, both in terms of recruitment and keeping employees motivated. He hopes that non-listed companies and other organisations are seeing these changes in the listed company arena and moving in the same direction.?

However, the most recent version of the Parker report shows that while progress is being made, this does not mean that issues around diversity are completely solved. David identifies the five most important points that need to be addressed.

"Only when you have the data can you do something about it"

Firstly, companies need to know their diversity data, which means that people need to self-declare how they identify using the Office of National Statistics ethnic grouping to gather data. This enables a company to monitor percentages of any particular group of people, such as those at executive committee level.?

Without this data, it is impossible to measure your position and progress, understand who is leaving, progressing well in the company, and why. Without the data, decisions can become more anecdotal rather than analytical. Only when you have the data can you do something about it.?

"Show the direction you're going"

Secondly, targets for minority ethnic participation need to be set – and not just at board level, which the Parker review focused on. These targets need to be declared to investors and other interested parties and reported on a regular basis, perhaps annually.?

"You don't have to reinvent anything"

Third, David feels the heart of what companies need to do is to create,if they don't already have it, an inclusive culture throughout the organisation. This is a culture where everybody feels safe, secure, and valued and where everybody experiences fair and happy working conditions - from the bottom of the organisation to the top. A culture where everybody has the opportunity to achieve their potential, irrespective of their ethnic background.?

To achieve this, he says great care needs to be taken to create opportunities for people from ethnic minorities in the recruitment process, in succession planning once they're in the company, and training and development. He believes you don't have to reinvent anything to help that talent pipeline, only to use the measures that already exist, like mentoring people from ethnic minorities, coaching them, sponsoring, shadow boards, etc.?

"From little things, big issues can arise"

Fourth, David warns that 'microaggressions' must not be tolerated. Examples of these might include ignoring people from a different ethnicity, not looking them in the eye, interrupting them, and allowing inappropriate or even hurtful "banter," and so forth. Good companies should not tolerate such behaviours, and David believes they should "come down on it hard" because big issues can arise from those little things.?

"Get the tone from the top set in the right way"

Finally, he advocates that management needs to be seen as driving this issue forward from the top, believing that if people in senior positions show they are working at this, others will follow their example. If the Chief Executive or the Chair do not seem to be putting their shoulder to the wheel, others will not join the programme with as much enthusiasm.?

"Try and establish good relationships"

David describes his belief that relationships are key. He advocates that whenever crossing paths with someone from an ethnic community who impresses you, whether internally within the company or externally, you should always bear that name in mind when recruiting. At the right opportunity, include them in a long list, adding those names to those coming from headhunters.??

Whether new board members are from an ethnic minority or not, David reiterates that you need to make sure all feel welcome and go through a really good induction process. This should include the opportunity of having one to one introductions and time with everybody else on the board. He feels that directors who are white, like himself, should really try and establish good personal relationships with new colleagues, not being afraid to ask about their experiences earlier in their lives and career and how their ethnicity affected their progress. These topics should not be shied away from.

This is something David did while at Sainsbury's, and he believes that whether this is done at board level or the shop floor, these conversations can always be beneficial. Equally, he emphasises how board members from ethnic minority backgrounds need to integrate and be involved in every debate, as opposed to focusing on one single issue. The key thing is for each member to integrate themself in being a helpful, productive member of the board, focusing on the relevant business issues that engage them, and being involved in every key Board debate.??

"We're not just about making profits, we're trying to be good contributors to society as a whole"

David's argument is that companies with significant diversity are increasingly likely to be more successful and profitable than those without, because they will have wider and more informed debate. There will also be less potential for 'groupthink.'?

He believes that diversity is good for both a company and its shareholders, not simply for ethnic minorities, but also for different gender and other aspects of diversity. He feels this is how companies reflect the society we live in better. Thus, people can feel comfortable contributing effectively to an environment of fairness and justice, something he thinks is important for companies.

David believes that companies can contribute overall to the cohesiveness of broader society if they have diverse people in positions of influence by demonstrating that people can succeed irrespective of their ethnicity or background.

The three top takeaways from our conversation are;

1. Companies that are more diverse are more likely to succeed because there is more room for debate and less potential for 'groupthink’.'
2. A more diverse company reflects a more diverse society. It is not just about profit but also about contributing to society, showing that anyone can succeed, and encouraging more people to engage.
3. This can both enhance the economy and make companies more competitive.
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