Boardroom diversity report shows need for data collection

You may have seen the headlines last week - there are currently no black executives in any of the top three roles at Britain’s 100 biggest companies for the first time in six years. This is the research on boardroom diversity carried out by the recruitment and diversity consultancy Green Park which has been reported by the Guardian. It shows the number of black leaders at FTSE 100 firms has stalled since it first reported in 2014 and has now dropped to zero. It also shows that just 10 of the 297 people in the top three roles of FTSE 100 companies have ethnic minority backgrounds. Black representation at the top of British businesses looks unlikely to improve in the near future, with the number of people in the leadership pipeline also decreasing, from 1.4% to 0.9%. Personnel Today also reports on the data and quotes  Trevor Phillips, Green Park’s chair, who said there is no shortage of qualified candidates to fill these roles if companies are willing to look and yet ‘the snowy peaks of British business remain stubbornly white’. Green Park is one of the co-founders of a new campaign aimed at tackling the issue of organisations hiring ethnic minority talent for “diversity window dressing” and then excluding those same people from key decisions which are taken by a leadership team which is all male or all-white. The campaign is pushing for any spending decision above 1% of turnover being made by a diverse group and, if that’s not possible, the fact should always be reported to the board and noted in the company’s annual report.

So what is our take on this latest data and the steps employers are taking, or not taking, to address the obvious imbalance? Helen Corden does a lot of work in this area with a number of FTSE companies. She joined me by video link from Birmingham. I put it to Helen that this is startling research:

Helen Corden: "I think this is startling research and what it does show is that organisations, companies, haven't grappled properly with this issue yet. It's clear that this issue of under representation of black people at board level, and even below board level, really needs to be grasped and organisations do something about it. An organisation isn't going to solve the problem at board level if they haven't also looked at the issue below board level because they need that pipeline of talent to be able to come through. In our experience I think one of the big blockers, and one of the big issues, that companies really need to address now is the collection of data. We know that there are a lot of companies out there who still aren't collecting the data around the ethnic breakdown of their workforce and without that data they can't analyse the data, they can't see what representation they have, and as a result they can't put in action plans to deal with any potential barriers to progression, whether that's to middle management or senior management and up to board level. So there are a number of reasons why organisations aren't collecting this data. Many are just putting it in the 'too difficult' box, they haven't got the HR systems in place yet to be able to gather that data, they're worried about data protection issues, they're worried about response rates from their employees, but really this is an issue that they need to grapple with, especially in light of the fact that there is increasing pressure on the government to introduce the ethnicity pay gap reporting regime which will, in some ways, mirror the gender pay gap reporting regime. With the introduction of ethnicity pay gap reporting companies will have to do this so they should be taking the initial steps now around the data gathering to ensure that they're in a good place once those regulations are introduced.”

Joe Glavina: “Two questions on that Helen. What’s your best guess on the timing of any new law on ethnic pay gap reporting and, secondly, will it be a 'copy and paste exercise' for HR given they already done this for their gender pay gap?"

Helen Corden: “In terms of timing, the consultation in relation to the regulations closed in January 2019 so we're now two years on since the consultation closed and we still don't have any response to that consultation and we still don't have any draft regulations. We've obviously had the COVID pandemic that has impacted on the introduction of the regulations but pressure is increasing on the government to respond to the consultation and to produce draft regulations. If you ask me for my best guess as to when these regulations will be produced in any draft form or when employers may have to start reporting, it's probably likely that the earliest snapshot date that companies will have to look at would be April 2023 which is obviously another two years from now but there's a lot of work that organisations will need to do to get ready for the introduction of these regulations, not least putting in place the data collection exercise which we've already referred to. In relation to the regulations themselves, is there's going to simply be a copy and paste exercise from the gender pay gap regulations? In some respects yes, in some respects no. One of the biggest issues is in relation to how the pay gaps are calculated, what categories of data should be looked at? Obviously, with the gender pay gap regulations, it was quite straightforward, you were looking at the average pay of men versus the average pay of women. Here, should you be looking at the average pay of white people versus the average pay of those from a BAME background or should you be breaking down the categorization even further? This is one of the big issues which the government is grappling with because if you just do it white versus BAME then that can disguise many issues which are relevant in relation to particular categories of individuals. So for example, black people or Asian people, they have potentially different barriers in recruitment, in progression, and if you just use the capsule category of beam, those potential barriers would not be evident."

Helen has written in some detail about the limited progress being made on boardroom ethnic diversity – that's evidenced by last year's Parker Review which Helen said, at the time, would increase the pressure for mandatory ethnicity pay gap reporting and that is what we are seeing. You can find that article on the Outlaw website.