Boards are making progress in representational diversity—slowly. In March 2022, the UK Government-backed Parker Review published its most recent findings on ethnic diversity on UK boards and celebrated that 89 of all FTSE 100 companies met the target to hire at least one board member from an ethnic minority group. Over half of FTSE 250 had met the target as well, making the initiators hopeful that FTSE 350 companies will reach their targets in two years’ time.
However, most boards in the UK and around the world are still overwhelmingly white. In addition to the data from the Parker Review, our 2022-2023 Global Board Diversity Tracker finds that among Russell 3000 companies white board members still hold 81 percent of directorships. To discuss this sobering reality, we partnered with the Executive Leadership Council to gather more than 40 board-ready executives (majority of those ethnically diverse in the UK) to share their thoughts on increasing visibility, getting noticed, appointed and integrated into boards.
Very few attendees believed that significant progress has been made on ethnic diversity on UK boards, describing it as “non-existent,” “abysmal,” and “painful.” While the vast majority of attendees (91%) felt ready or partly ready to join a board today, only one-third of attendees currently serve on a corporate board. For most, the triad of visibility, opportunity and access to often all-white boards was a major barrier to board service. While some commented that certain gatekeepers preferred experience over talent, others said it was more about knowing where they could express interest in joining a board, getting connected and having their talent recognized.
The panelists led an inspiring discussion about the challenges of getting nominated for a board, the qualifications necessary to be selected, what “good” looks like once you are on a board and finally, how to drive inclusion in the boardroom.
It´s a “two-way street”
While it is a given that a certain level of executive and board experience are prerequisites to board service, networking—especially outside your usual circles—is just as important. As one of our panelists put it, the process of joining a board is a “two-way street – you’re also offering something that the board wants.” Widening your circles and honing the unique skills you bring to the table are essential in preparing to be a board member. What’s more, bringing a clear sense of your own values to the board will distinguish one candidate from the next. According to one of our panelists, it can take a few years of preparation to find the right board or be approached to join one, making it all the more important to see whether there’s an alignment of values between candidate and board.
Be the “grit in the oyster”
“There has to be someone who is ready to say things that nobody else will say,” one attendee noted. While everyone on the board should be guided by the same purpose, ideally new board members bring with them fresh perspectives, acting as the proverbial grit in the oyster—offering new ways of thinking or challenges to ultimately help the board make better decisions. Directors who have diverse backgrounds and experiences can bring fresh points of view and unlock new ideas.
Additionally, as a new director, it’s also important to remember the difference between management and oversight. “Your ability to influence is directly related to your ability to have a respectful relationship with the people in the room – not because you’re the smartest person in the room and you’re going to tell them what they need to know,” says one participant. As a Non-Executive Director, you have only influence, no executive power, which is why building trust with the other board members is crucial. It takes some time to learn how to “switch off the executive button.” There is more emphasis on listening and guidance – and relying on the executives to get the job done.
Gender diversity improving but ethnic diversity lagging
In the last decade, there has been significant progress in getting more women on boards. Our Global Board Diversity Tracker found that women hold 27 percent of board positions worldwide, up by 3.7 percent from 2020, marking the fastest improvement in the percentage of women on boards in 10 years. For people of color, the gain has been far less. One reason is due to insular networks. While everyone likely has a personal connection to a woman, this is not true for ethnicity. Due to the “proximity principle,” people tend to move in circles they are used to, and gaps in knowledge are often filled with stereotypes. What’s more, is that different ethnicities have different success profiles on boards. Our Board Tracker showed increases in Black and Asian directors but minuscule increases for Middle Eastern, North African and Native American board members.
Time alone won’t solve the lack of racial and ethnic diversity on boards – a different intervention is needed. One panelist sees the need for a “top-down push,” whether through setting higher targets or legal requirements, though another attendee warned that we need to be careful of saying “we need one of these.” The magnitude of the problem was highlighted by one of the participants, who broke down the numbers for the UK. The chair, CEO and CFO are the three highest positions in any FTSE 100 company. There are 297 people who are now filling these positions. Only 10 of these 297 people are members of a racial or ethnic minority. None of these 10 people are Black. One attendee said, "There is something we need to get right, and it will need extreme measures."
In summary, on the “supply” (i.e., talent side) there are important steps that senior executives should take to pursue their first board role. Note: these are no different for board seekers who are not from minority groups.
- Expand and diversify your networks
- Find the board that will most value your particular skills and experiences
- Be prepared to clearly articulate your value add (i.e., the contribution you can bring to the board you are pursuing)
On the “demand” side, the boards should make diversity an explicit objective in every board recruitment and part of continuous succession planning – this should not be limited to just asking recruitment partners to present diverse talent, but also expressing a clear story about what type of diverse perspective is missing on the board, taking time for regular self-reflection through board effectiveness reviews on the inclusiveness of board’s own behaviors, and making a commitment to unequivocally and visibly lead DEI agenda both in the business and externally. “Seventy percent of board placements are done through relationships not search firms,” shared one board member. “We need to get to know people differently.”
There is still much opportunity unlocked by boards from diversity: there representation of under-represented minorities has a mile to go for ethnic diversity, LGBTQ+, even female talent pools, but even more importantly most boards are still in early learning curve of becoming truly inclusive teams to benefit from the diversity.
It is, of course, understood that even after making these changes both on the supply and demand side, the results will not show overnight. Yet if we want to drive sustainable change, we need foremost the leaders to take bold steps to embrace the difference.