Nearly all of the 100 largest publicly listed firms in the UK now have at least one minority ethnic director on their boards, revealed the most recent update from the government-backed Parker Review, which was established in 2017 to increase diversity in Britain’s boardrooms.
By the end of 2022, 96 companies in the FTSE 100 index had at least one director with an ethnic minority background, according to a voluntary poll of those companies.
Moreover, the boards of nearly half (49) of these 96 companies now include more than one director from a minority ethnic group.
This represented an improvement over the previous year, when just 89 organisations had achieved the goal, but it also shows that some of the best companies in Britain still have all-white boardrooms.
The FTSE 100 target set in 2017 “has effectively now been reached,” according to David Tyler, the current chair of the Parker Review committee.
He added: “We have long argued that companies benefit from ensuring that succession planning and management development plans include the development of ethnic minority executives.”
However, only seven people from ethnic minority backgrounds currently hold the role of chief executive of a FTSE 100 company, one more than a year earlier, showing the progress has been slower in boosting diversity in executive roles.
Nine people hold the position of chief financial officer, while six more ethnic minority executives serve as the chair. People from racial or ethnic minorities hold around 10 per cent of these high posts.
Tyler emphasised that voluntary targets for racial and gender diversity have been found to be more effective than mandated targets.
“Most countries in Europe, particularly when it comes to gender, have mandatory requirements to have a certain percentage of women on their boards,” he explained.
“We have made more progress in the UK than most of those countries have through mandatory targets. And I think this approach is working well, and I’m not aware of anywhere else in Europe where there are targets for ethnic minorities. I hope that it is a model that other countries might want to follow in future.”
The Parker Review has set new targets, requiring FTSE 350 companies to set a percentage target for senior management positions occupied by ethnic minority executives by the end of 2027.
The target of having at least one ethnic minority director on the main board and the target for the percentage of ethnic minority executives in senior management teams have both been established for 50 of the top private corporations in the UK by December 2027.
It has also made recommendations for some of the challenges and opportunities that companies face while achieving the targeted percentage. Some of them are as follows.
- Set out a plan to be achieved over a number of years as data collection can take time to establish.
- Aim to achieve a minimum of 80 per cent ethnicity data in order to ensure the great majority are included on board and executives in senior management.
- Request ethnicity self-identification from employees as part of their onboarding activities when they start at the company.
- Encourage employees to self-identify during annual talent processes, such as engagement surveys, performance/promotion cycles.
- Send reminders out alongside key announcements throughout the year, including business updates, new people strategies, or the launch of relevant initiatives.
- Explain how self-identification can help to meet the ED&I strategy and company priorities.
- Take feedback on board from a range of stakeholders that will highlight any additional barriers to be considered.
- Include clear instructions, including links where possible, for employees to provide their data. The goal of having one board member from an ethnic minority background was given to FTSE 100 companies four years to achieve, while the FTSE 250, the next level of stock market corporations, was given until 2024.
