Good progress made but room for improvement. That's the verdict on the FTSE 100 after publication of the latest batch of data by the Parker Review looking at ethnic diversity in the top UK listed companies. It has been widely reported by the media as you might expect. Personnel Today highlights the negative – that nearly a fifth of FTSE 100 companies lack board-level ethnic diversity and how progress is slow. They quote Sir John Parker, Committee Chair, who says how, in his view, corporate Britain is becoming more comfortable with boardroom diversity and how he hopes companies will align with the business case that underpins the review – more on that point shortly. People Management highlights the positive – that ‘significant progress’ that’s been made with four in five top listed companies now have at least one ethnic minority board member but they go on to quote a number of experts who agree that more needs to be done to develop the talent pipeline. Ann Francke, chief executive of the CMI, makes the point that those businesses that have managed to improve diversity had seen the benefits of that which are better financial performance and ability to attract and retain talent. Those are two big wins and they're not confined to the FTSE 100. So let’s look at this in more detail. Susi Donaldson is currently helping a number of clients with their diversity strategy. She joined me by video link from Glasgow:
Susi Donaldson: “Yes I think the business case for having an ethnically diverse workforces is self evident. This is not just the right thing to do, it's an absolute commercial imperative and I think there's a growing realisation that this doesn't just fall within the remit of the HR team, it very much needs to flow from the top, from board level and boards have an absolutely pivotal role to play and a need to be strategic and holistic in their approach to these issues. They need to really, I would say, embed racial diversity, equality and inclusion into their business's DNA in terms of their business strategy, their values and their culture. So they need to look at it in terms of raising awareness, gathering data, examining the recruitment practices, and also taking accountability."
Joe Glavina: "So as I understand it Susi, you're approach is very much in line with Parker's recommended approach for FTSE companies to be taking."
Susi Donaldson: "Yes absolutely. The principles contained in the Parker Report and also in the McGregor Smith Report, are relevant to all businesses. There are many more smaller listed companies and there are tens of thousands of private employers across the UK who have a far greater impact on the UK corporate landscape and on the lived experience of employees in the UK than then the FTSE 100 companies".
Joe Glavina: "Parker specifically refers to HR, and the role they have in this, but it's not confined to HR is it?"
Susi Donaldson: "No, as I say, it's absolutely essential that this flows from the top and boards should be absolutely instrumental in the development and implementation of their racial diversity, equality and inclusion policies. We need to ensure that they're role modelling the correct behaviours, there needs to be executive sponsorship for these initiatives and it needs to be embedded into the company's overall strategy. So I would say it should be a standing item on the board agenda, for example, and there should be the key performance indicators. Board members could be involved in various mentoring schemes, for example, and also should be encouraged to be open about how they progressed to the senior levels within the within the organisation."
Joe Glavina: "So what's your key message Susi. One point for HR to focus on?"
Susi Donaldson: "I think it's absolutely critical to have the data. If you don't know what is going on within your organisation you can't take steps to improve your policies and procedures, there's no measurement there for you, there's no reference point. So I think the first step is for organisations to gather the data and then once they have the data they can set aspirational targets and have some accountability. So many of our clients, for example, at the moment are in the process of collecting their diversity data and traditionally, because it's sensitive data, special category data under the GDPR, companies would do this on an anonymous basis but I think there's a growing realisation that this sort of data has much more value if it can be linked to the individual. For example, many companies are now gathering the data through their HR systems and where it can be linked to the individual it means that you can track progress in terms of diversity, so you can track the effectiveness of your policies and procedures, your succession plans and talent programmes and promotion schemes in terms of the different diversity strands and that feeds into your target setting. Equally there are a lot of organisations for example who are proactively reporting on their ethnicity pay gap even though it's not yet a mandatory requirement and, again, that sort of initiative just helps to shine a spotlight on the issue of ethnic diversity, helps them to understand what's happening within their organisations and to devise their initiatives accordingly."
It was Ernst & Young that reported the results of the latest Parker Review data earlier this month. It's based on voluntary submissions showing the state of affairs as at 2 November 2020. You can read that press release, and access the full report from there. We've put a link to it in the transcript of this programme.
- Link to Parker review press release