Balancing The Boardroom
13 April 2017
British businesses have a diversity problem. Balancing the boardroom has long been an issue for many companies.
Many executive positions are not being filled by a diverse enough range of candidates. This, in turn, means that companies are being driven by a perspective that does not reflect the make-up of the general population. A lack of differing career paths, skills and mindsets can have a detrimental impact on the capabilities, performance and perception of an organisation.
Diversity of thought, experience, expertise and perspective ensures a balance of opinion and a broad mix of contributions as part of the decision-making process.
In the case of female, LGBT and non-white board members, the need to encourage diversity cannot be a case of tokenism. Many businesses feel they are ‘diversity exhausted’ though, and simply cannot find candidates to balance the boardroom. This does not absolve businesses of their responsibilities – senior leaders must strive to put together a boardroom that is reflective of their customer base, their work force and the population at large.
As it stands, women represent just one sixth of senior executives listed in large British companies. An even lower percentage of women held the most senior financial roles at these companies – just 6% of executive committee jobs.
Clearly, this is a serious issue that stems from a number of factors. Women have been fighting a glass ceiling in terms of equal pay and opportunities for decades. Having come later in to the workforce historically, there is a general feeling that women “need to prove themselves” before they can be considered for promotion - and this feeling often comes from the women themselves.
The issue of career breaks to raise children also poses a problem. Whilst women take time off, men accelerate their careers and keep up with any necessary developments.
If we look at the empirical data, the benefits are clear: studies have shown that companies with women on their boards outperform those with less gender diversity on their boards in terms of
- share price
- other financial metrics including return on equity.
Other studies have found that having more women in the boardroom, and their impact on decision-making, can enhance shareholder value.
Boards should be looking at skills set – not just job titles – when it comes to recruiting. An important factor in the decision-making process is the expertise and perspective an individual can bring – this cannot be achieved if everyone round the table is from a similar demographic as this can lead to group-think.
That’s not to say that any given group of people would not have differing opinions and experiences, but there needs to be more career journeys and ways of thinking brought to the table.
The same issues extend to ethnic diversity. The Parker Review found that just 1.5% of FTSE directors are non-white, which fails to reflect the 14% of non-white workers who make up the British workforce. Boardrooms are, therefore, unrepresentative of their work forces, supply chains and customer bases. Surely this means they are not always making prudent business decisions?
Having an ethnically and culturally diverse boardroom is an even more pressing matter as Britain seeks to secure trade deals within the EU, in Arab states and in Asia in the wake of Brexit. Businesses like to trade and negotiate with people who they feel could represent their interests and values. This cannot happen if there is no sense of shared experience.
It could be said that the corridors of power are worn out with the same size of shoe. This needs to change in order to be reflective of the female, trans, LGBT, Black, Asian and Eastern European population that make up the British workforce.
This isn’t a tick box exercise. This is about recognising and embedding the value and potential of diverse thought, experience and backgrounds. For many companies, it’s about being respectful to their customer base and their workforce, as well as tackling the ever-changing face of modern Britain.
If businesses want to thrive in the global market, there needs to be a genuine and vigorous attempt made at balancing the boardroom.
HR Consultancy is a specialist at helping businesses to recruit a diverse workforce at senior management and board level. Contact Barry Lee for more information on how we can help.
Written By Barry Lee