Race equity — the latest developments and priorities for boards

Key learnings

• In 2016, only 47 companies in the FTSE 100 had an ethnic minority board member; today, 96 of those companies have reached the target set by the Parker Review.
• The Parker Review has asked organisations (listed and private) to set their own targets for December 2027, for ethnic minority senior managers.
• Ethnic minorities make up 25% of undergraduate students, 10% of entry-level positions, and 3% of senior management positions or roles of Chair/CEO/CFO in the FTSE 100.
• There are practical steps you, as a director, can take in your organisation to drive change — read on to learn more.

 

With thanks to David Tyler (Chair, PZ Cussons, Jojo Maman Bébé, Domestic & General, The Parker Review; formerly Chair Sainsbury's 2009-19) and Sophie Chandauka MBE (Chair and Executive Founder, Black British Business Awards and Head of Americas Risk Management & Intelligence, Meta) for joining us to discuss how directors can improve race equity in their organisations.

Why are board directors interested in this?

Firstly, they’re human, and as human beings they care about equality of opportunity and fairness. Sitting alongside this moral argument is a compelling economic argument. In the UK, about 1/6 of the population is from an ethnic minority background; therefore, to exclude these people means foregoing access to and insights from a considerable portion of the market.

What is the current state of ethnic diversity in UK boardrooms?

In 2015, the UK’s Department of Business, Energy, and Industrial Strategy commissioned the Parker Review Committee to assess the state of ethnic diversity in boardrooms. In a 2017 report, the Review set a target of at least one board member from a minority ethnic background by 2021 for FTSE 100 companies and 2024 for FTSE 250 companies. This saw success in the FTSE 100, which went from only 47 companies having a director from a minority ethnic group in 2016 to 96 in 2023.

There is still a long way to go until race equity is achieved. Most of this increase has come from a greater number of ethnic minority NEDs; whilst there are many more NED roles than executive or chair roles, there are relatively few ethnic minority chairs or executive directors. In December 2022, there were 317 roles as Chairs and Executive Directors in the FTSE 100 and 31 of them were held by people from ethnic minorities: 6 as Chairs, 7 as CEOs, 9 as CFOs and 9 as other Executive Directors. It appears, however, that very few of them were Black. In the FTSE 250, there were 34 ethnic minority directors in roles as Chair and Executive Director: 5 Chairs, 14 CEOs, 10 CFOs, and 5 other Executive Directors.

In December 2022, there were 317 roles as Chairs and Executive Directors in the FTSE 100 and 31 of them were held by people from ethnic minorities.

What targets have been set for UK boards to meet by 2027?

In its 2023 report, the Parker Review established a series of voluntary targets (and dates by which these should be completed), expanding the scope beyond the boardroom to include senior managers of organisations. It asks organisations to consider the geography of where they operate to come up with targets that are meaningful for them. If successful, this will help to strengthen the pipeline of ethnically diverse leaders coming up through organisations. Additionally, the 2023 update’s targets include a selection of over 50 private companies, which marks the first time the Review has moved beyond its focus on FTSE-listed organisations.

If successful, this will help to strengthen the pipeline of ethnically diverse leaders coming up through organisations.

What are the challenges faced by those from minority ethnic backgrounds? And what can directors do about them?

People from minority ethnic backgrounds encounter a range of challenges during their career, including:

• Poor progression.

  Many organisations struggle to translate their pipeline from middle management into more senior executive positions.

  So what can directors do about this? 1) As recommended by the Parker Review, set targets and report on progress; 2) Ask your organisation whether there are any programmes to support under-represented groups, and whether (once in post) there is any support to ensure their success; 3) Question work allocation to ensure the highest profile and most exciting projects are shared equally amongst colleagues of all backgrounds.

• Microaggressions.

  Often flying under the radar of white colleagues, it is the thousand cuts of microaggressions that exhaust and demotivate those who are from ethnic minority backgrounds. We heard stories of legal secretaries consistently leaving their black partner’s work until last; of clients repeatedly asking questions of the white (male) colleague in the room when the work had been presented by a black woman; or even of the black partner being removed from the account at the client’s request for someone else “more appropriate”. And we heard how easy it is for white people to miss it; and for such behaviours to be batted away as “they didn’t mean it like that”.

  So what can directors do about this? 1) Personally have no tolerance and call it out; 2) Recognise that official whistleblowing procedures may be met with distrust, and so to surface these issues a series of “a day in my shoes” style discussions can be more powerful; 3) Where complaints are made, give the complainant the benefit of the doubt and treat them with compassion.

• Discrimination in hiring.

  Many people from minority backgrounds encounter some form of bias when going through recruitment processes. Furthermore, often people of colour receive lower offers, which contributes to the ethnicity pay gap. Many people from minority backgrounds encounter some form of bias when going through recruitment processes. Furthermore, often people of colour receive lower offers, which contributes to the ethnicity pay gap.

  So what can directors do about this? 1) Ask whether your organisation anonymises CVs & applications before they’re reviewed; 2) Consider bringing together leaders who are hiring to explain their decisions to a wider group; the pure impact of explaining a rationale will help to combat unconscious and conscious biases.

• The race conversation.

  Many people have been brought up “not to notice” differences to avoid being rude, and many find the language used to discuss race challenging. This has the unintended consequence of silencing the race conversation. Meanwhile, those from ethnic minority backgrounds can feel hamstrung discussing race at work, not wanting to be “a troublemaker” or be seen as a single-issue advocate.

  So what can directors do about this? 1) Practice and get comfortable talking about race, and ask yourself whether you can be one of the captains of industry advocating for change; 2) Enquire as to whether diversity and inclusion groups in your organisation have resources and senior engagement (or whether it’s a group of junior volunteers working on top of their primary role).

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