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Parker Review: UK companies should improve the ethnic diversity of boards

Every FTSE 100 company board should have at least non-white director by 2021 and each FTSE 250 Board by 2024 in a bid to boost ethnic diversity at the top level of British companies. This is the recommendation of a review of UK boards led by Sir John Parker.

The review found that currently out of 1,087 director positions in the FTSE 100, only 8% of positions are held by directors of colour, of which 1.5% are UK citizens, despite the fact that 14% of the total UK population is from a non-white ethnic group which is up from 2% in 1971. Seven companies account for over one-third of directors of colour in the FTSE 100, whilst 53 of the FTSE 100 do not have any directors of colour at all.

The report also recommends that nomination committees of all FTSE 100 and 250 companies should require their human resources teams or search firms to identify and present qualified people of colour to be considered for board appointment when vacancies occur and that the relevant principles of the Standard Voluntary Code of Conduct for executive search firms, in the context of gender-based recruitment, should be extended to apply to the recruitment of minority ethnic candidates as Board directors of FTSE 100 and 250 companies.

To ensure that talent is not lost but instead nurtured the review recommends that FTSE 100 and 250 companies should develop mechanisms to identify, develop and promote people of colour within their organisations to build a pipeline of board capable candidates. Additionally, it is recommended that existing FTSE 100 and 250 board directors should mentor people of colour within their own companies to ensure their readiness to assume senior managerial or executive positions internally, or non-executive Board positions externally.

The review also suggests that companies should encourage and support candidates drawn from diverse backgrounds, including people of colour, to take on board roles internally, for example within a company’s subsidiaries  as well as board and trustee roles with external organisation such as for educational trusts, charities and other not-for-profit roles. These opportunities, the report suggests, will give experience and develop oversight, leadership and stewardship skills.

Sir John Parker, who was appointed in 2015 to chair the industry-led review, said: “The Boardrooms of Britain’s leading companies do not reflect the ethnic diversity of either the UK or the stakeholders that they seek to engage and represent. Ethnic minority representation in the Boardrooms across the FTSE 100 and 250 is disproportionately low.

“Many business leaders would agree that Boards that embrace gender and ethnic diversity benefit in their decision making, by drawing on an array of skills, experience and diverse views. We hope the recommendations made for consultation, will heighten awareness of the growing pool of talent in the ethnic community, and help to strengthen boardrooms across the UK and keep corporate Britain at the forefront of global business.”

government supports ethnic diversity improvements

Margot James backs Parker review recommendations

The UK government’s Business Minister Margot James welcomed the report and backed its findings saying: “People of colour are in general more likely to go on to higher education compared to their white peers. Yet this research shows they are less likely to be in leadership positions in business.

“Whether due to failures in recruitment, or lack of internal opportunities or outright discrimination, the result is the same. Business and society at large are losing out on talent. This isn’t necessarily because of discrimination. But it is about culture change, about breaking bad habits.”

A consultation period will now open for comments to be taken. A report containing the final recommendations and findings of the review will be published in 2017.

What do you think?