The Diversity and Effectiveness in FT350 companies, published on 20 July by the UK's Financial Reporting Council (FRC in conjunction with London Business School, Leadership Institute and SQW found:
- Building and maintaining diversity requires proactive planning, concrete actions and consistent prioritisation
- Diversity is a long-term, multi-stranded journey where progress in one area is not a guarantee of progress in another
- There is still have a long way to go to fully access the diverse talent in the UK population.
There has been a step change over the past decade with UK Listed company boards becoming more diverse than ever before, primarily as a result of the Hampton Alexander review and more recently the Parker review.
The report concluded that to maximise these benefits boards should recognise that change takes time and that diversity without active inclusion is unlikely to encourage new talent to the board.
The main findings of the research concluded that:
It is the responsibility of the Chair of a board to drive inclusion.
Regulators and companies must focus on collecting more data on the types of diversity, board dynamics and social inclusion
the Nomination Committee itself should be diverse and have a clear mandate to work with search firms that access talent from wide and diverse pools.
The greater representation of women in the boardroom is reshaping culture and dynamics and benefiting businesses from a social justice as well as a performance perspective
FRC CEO, Sir Jon Thompson said:
“The FRC wants to see companies which thrive in the long term and both benefit the economy, society and reflect its make-up. I want to see boards invest time and energy in making diverse appointments not to achieve a target but because it will have a positive impact on their business. The UK Corporate Governance Code makes it clear that board appointments should promote diversity and we want to see nominations committees reporting on progress.
I am pleased that this research supports the need for companies to set clear targets and report against them as a means to improving diversity. Many companies only set targets for gender and to a lesser degree ethnic diversity. We support the proposal that nominations committees should be diverse and have a mandate to work with executive search firms that will find talent from diverse backgrounds.”
London Business School Leadership Institute Academic Director, Randall S Peterson, said:
Board diversity should be a priority for every organisation. Successful boards care because they want to perform as a team in service of their organisation, and in service to the world.
Diversity takes many forms. The findings of the report remind us what is at stake: diversity is not just a numbers game with regards to who is on the board, how board members interact really matters.
You can read the full report HERE