Board diversity matters – how can you achieve it?

Achieving diversity at board level has been a long-standing challenge for organisations across all sectors. However, the growing spotlight on ESG has reinvigorated the discussion around building a diverse board, leading organisations to again consider what a diverse board means for them and how best to achieve it.

The Hampton-Alexander review set a target of 33% female representation on FTSE 350 Boards, executive committees and direct reports by 2020. However, latest figures show that many organisations have not reached this target. Furthermore, there are few women in the roles of chairs, chief executives, and the C Suite working in these businesses. Instead, women were often in nonexecutive or support function roles.

Of course, diversity is not only a gender-based issue. The Parker Review set a target for every FTSE100 Board to have one director of colour by 2021. This should also be embedded in the FTSE250 by 2024. However, by early 2020, only six people of colour were chairs or CEOs in the FTSE100.

We must also consider diversity in its widest sense. Social mobility, representation of LGBTQ+ people, and people with physical and mental health conditions are all important aspects of board diversity. By addressing the under-representation and intersectionality of gender, race and social deprivation within board make up, we can build stronger and more effective organisations to deal with challenges and ensure long term success. Boards should also consider how their make up reflects their key stakeholders and customers, to ensure brand alignment with strategy.

Low levels of diversity can lead to ‘onlyness’ – where only one person in a boardroom has a certain characteristic or life experience. This can in turn, create a dynamic in which it is hard to challenge groupthink and the status quo. By setting higher diversity targets, we can reduce the reduce this.

Research shows us that the more diverse a board, the greater the culture is for innovation and new ways of thinking, which in turn improves decision making and performance. Different perspectives bring different ideas.

Longevity of board members is another area of consideration. By creating new positions, and regularly refreshing the make up of the board, you support new ideation and prevent leadership and strategy from becoming stale.

There are many advantages to a diverse board, but changing board composition can be complex. So, what practical steps can boards take to recruit diverse candidates?

The challenge in recruiting diverse applicants is often exacerbated by the practice of recruiting by word of mouth and personal recommendation. And according to the Charity Commission, 81% of charities recruit for trustees in this manner. So, how can we address these factors?

• Adopt different external recruitment approaches, allowing the targeting of non-traditional applicants for roles. Social media is a great way to engage a different demographic.
• Leverage the benefits of increased remote working and technical solutions to reduce the requirement for onsite presence and encourage working age applicants with current real-world experience.
• Consider the timing, format and duration of meetings, to ensure that they are inclusive in design and do not alienate people who hold full time roles elsewhere.
• Create an additional role on the board. By creating an additional seat, you can proactively recruit without waiting for members to rotate off.
• Look to co-opt individuals for specific projects or tasks who provide diversity in skill sets and experience, if they can’t commit to a full-time role. This is particularly common for technical skills such as digitalisation or IT.
• Implement a young director programme, which provides an opportunity for novices to shadow experienced non executives and learn the workings of the role without the legal responsibilities of a formal appointment.
• Within organisations, encourage open debate around diversity and promote an inclusive culture.
• Implement reverse mentoring and ally programmes to give senior managers a pool of people to develop and provide effective succession planning to key board level roles.

Understanding where your board currently stands by conducting a board diversity audit is a useful first step. By reviewing the composition of your board against the wider organisations, the demographics of the people you serve and benchmarking yourself against others in your industry provides insight into areas for improvement.

If you are interested in exploring board diversity in more detail, please contact Liz Wright or Karl George.