DIVERSITY DEFICIT ROBS TOP FIRMS OF BUSINESS OPPORTUNITIES, STUDY SHOWS
According to Green Park study, among the 289 executive roles just 10 were held by people from ethnic minorities.
Britain’s biggest companies have been warnedthat they are missing out on business opportunities because of the “diversity deficit” at the top of their organisations, where only a handful of senior roles are held by women or ethnic minorities.
A new analysis into the 100 top individuals at each of the 100 largest UK companies found that only three of the chairmen (there is only one woman chair in the FTSE 100) were not white, all but five chief executives were white and all but two of the finance directors were white.
“Viewed from this perspective, the top leadership of the FTSE 100 remains almost exclusively male and white,” the report –backed byTrevor Phillips, a former chair of the Equalities and Human Rights Commission – said.
Chuka Umunna MP, shadow business secretary, said a future Labour government could introduce quotas to improve diversity if firms did not make progress themselves.
“The continued existence of a glass ceiling for women and ethnic minorities in our boardrooms is undeniable and unacceptable. Whilst advances on non-executive appointments in recent years have been welcome, progress on executive positions has been lamentable,” Umunna said.
Phillips, who is launching the report by Green Park headhunters in New York, called on companies to tackle the issue as they would any other business problem and do their own audits of their diversity.
“They have to come up with an explanation and a remedy to it and treat it like any other business problem,” said Phillips, who is a board advisor to Green Park and chair of its diversity analytics arm.
One issue highlighted by the report is the absence of any individuals of Chinese descent holding executive positions in Britain’s top 100 boardrooms.
“As China grows to the largest consumer market in the world, and as the United States becomes a majority-minority society, the fact that two-thirds of our business companies have all-white executive teams – and apparently not one person of Chinese descent – should set off a big red flashing light that we aren’t equipping ourselves to compete in these markets,” said Phillips.
It was self-defeating, he said, that so few women held senior full-time roles. Proposals from Lord Davies for 25% of FTSE-100 boardroom seats to be held by women by 2015 has pushed the proportion up to 20% – from 12.5% three years ago. But most of the positions are held by non-executive directors with the percentage of full-time directors standing at 7.2% up from 5.5% when Davies set the target three years ago, according to the latest data from the Professional Boards Forum’s BoardWatch.
A formal update on the progress towards the Davies targets is due next month and Vince Cable has been writing to the remaining all-male boards to encourage progress. A spokeswoman for the business secretary said: “Vince has always maintained that as we restructure our economy, encouraging companies to tap into the broadest pool of talent available is paramount. Ensuring that those who sit around the top tables of our companies are more diverse is not about political correctness, it makes business sense”.
According to the Green Park study, a dozen women were found among the 289 people holding the positions of chair, chief executive or finance director, while just 10 positions at this level were held by people from ethnic minorities. In the next layer down, the top 20 roles at each firm including non-executive directors, non-whites represent 5.1% of roles. While in the next layer, the top 100, the proportion of non-whites is 6.2%, which the report said did “not hold out much promise of improvement at the higher levels in the near future”.
Of the firms analysed, Standard Chartered was found to be an outlier with 33% minority presence in this top 100 – the so-called pipeline – which the report said might be explained by its operations in Asia and the Middle East.
Boards with gender diversity do not necessarily have ethnic diversity. For instance companies in the national resources sector are the most ethno-culturally diverse but the least diverse when it comes to gender balance.
The Green Park Leadership 10,000 actually includes 8,218 individuals, as some companies did not have 100 senior executives.
This article was first published in the Guardian Newspaper on February 10, 2014