Sir John Parker is the chair of Carnival Corporation and Laing O’Rourke. He chaired the boards of multiple organisations throughout his career, including Anglo American, Pennon Group, Ombu Group, National Grid, Mondi, National Grid, and Babcock International. Sir John was also a NED for the UK Government Cabinet Office and oversaw the Parker review of ethnic diversity within UK boards.
After the Parker Review, ethnic diversity on boards improved very slowly — until last year, when the pace picked up. Why?
That shape of curve — with a slow beginning then a sudden increase — was to be expected. The average board has ten members and NEDs can serve up to nine years, which means that not every board is going to recruit every year — and it therefore takes time for change to propagate. So, I'm not really surprised by the gradual start; I’m surprised that we’ve already got as far as we have in these past five years.
There are 998 directors reported on in the FTSE 100. 118 of them are non-white — that’s around 12% — and, amongst these, 46% are women. So, while we aren’t there yet, NEDs in the FTSE 100 are now much closer to reflecting UK society — which is a genuine improvement that we have to give FTSE 100 chairs credit for.
Often, to effect change, the important thing is planting the flag — and we learnt this with the Davies Review on women on boards. It had the same sluggish beginning, and the great cry back then was, “The talent isn’t there.” Today, we’ve reached 35% of female board members, and more and more are moving to chair roles after honing their skills as NEDs or committee chairs over the past decade. That natural progression just needed time — and I think the same will happen with ethnic diversity.
Quotas can be helpful to bring about change, but they are a divisive tool. What’s your view?
A woman told me once, “Quotas are for fish.” So, I’m conscious that mandatory targets can indeed be divisive — including amongst those they’re intended to support.
“A woman told me once, ‘Quotas are for fish.’ So, I’m conscious that mandatory targets can indeed be divisive.”
Whichever side of the debate you’re on, I believe two things remain true:
- First, no matter the issue at hand, you need to have a clear target. I prefer aspirational goals, but the important thing is having these goals in the first place — otherwise, progress just doesn’t happen.
- And second, boards should reflect the world they operate in — even if that’s for purely commercial reasons. We’re in a period of rapid demographic change, and a mere nine countries — all outside of Europe — will deliver half the growth in world population between now and 2050. How will that affect your business? How will that affect the talent pool you have access to? If the chair and the CEO aren’t monitoring and understanding these demographic changes, and reflecting them in the boardroom and the composition of their board, then they’re not doing their job — quotas or not.
In a crisis, how do you stay true to your values while also meeting your organisation’s immediate needs?
It’s not easy, and you have to be upfront about that. When Covid hit, the first thing I said to my boards to prepare them for this was, “We are now going to be faced with some unfathomably difficult decisions.” For a company, liquidity is the lifeblood — run out of cash and it’s “Good night, nurse” — so a crisis is always going to be a balancing act between what you’d like to do in an ideal world and what you have to do to remain solvent.
“A crisis is always going to be a balancing act between what you’d like to do in an ideal world and what you have to do to remain solvent.”
However, you’ll only find that balance and know how to make those unpalatable decisions if you’re guided by your values in the process. To give you an example: at Carnival, we suddenly found ourselves with zero revenue while our 85,000 members of staff — who are from 45-or-so different nations — were spread all over the world, just as airlines were shutting down. It was absolutely obvious that we were not going to leave anyone stranded. So, we transported our people back home in our own cruise ships — and you can imagine what a logistical operation that was.
In these situations, the CEO will be under enormous pressure and a good chair should be a sounding board and a mentor — and take some of that weight off the CEO’s shoulders so that he or she can keep these values front of mind.
Are boards out of touch with society? If so, how can they re-engage?
The world of business has never been great at communicating the good that it does. And it’s not getting any better, as the jobs of CEO and chair are becoming increasingly demanding — governance is more intense; stakeholders are more varied; media stories are more instant… — which leaves those in charge with even less time to talk about these positive things that their organisations do.
And yet, business can probably deliver more to society than government in many areas. If I go back to my days at National Grid: for 10 years we brought young offenders into work — well over 2,000 kids over that period. The reoffending rate, if we left them in jail, was horrific: 75%. Our rate was 6%. And it’s a similar story with Anglo American, where we had the biggest AIDS programme in Africa. Tests were offered to all of our 90,000 people every year, and we provided those who needed it with the best drugs — including for their families.
“It took me a long time on my leadership journey to recognise my power to make change and to influence. But the reality is that the power that the board exerts on a company’s values and behaviours is immense.”
Where boards can change things for the better is by having a serious, fresh look at ESG and what it means for their company. Setting ESG-related goals is an important step, but it’s not enough. You also have to ask, “Are we going to hit these targets through taking a hit to our profits or by making them a by-product of managing our company well?” Only the latter will make the good you do both permanent and visible.
It took me a long time on my leadership journey to recognise my power to make change and to influence. But the reality is that the power that the board exerts on a company’s values and behaviours is immense. A committed CEO will drive those values down through the chains of command — but the boardroom has to get it right first.