The COVID-19 pandemic encouraged individuals to rethink their attitudes towards the world of the work – employees want a job that does more than just pay their bills, but that actually provides meaning and purpose to their lives.
Central to being a socially responsible business is genuinely prioritizing diversity, and particularly at the top levels. So how are employers doing around diversity at board and C-Suite level?
The analysis looks at the 252 listed companies that sit below the FTSE350, which is known as the FTSEex350. Women on Boards UK explores at this group of companies there is less focus on them than the top 350 FTSE companies.
Women on Boards UK found that while there has been some progress, improvement has also stalled in some areas and there are still too many companies with all male boards and executive teams.
CEO of Women on Boards UK Fiona Hathorn commented: “The data shows small gains compared to last year, which is a positive indication that UK firms are starting to take boardroom diversity seriously.
“Board diversity is increasingly viewed as a baseline requirement for modern companies, so it’s incredibly disheartening to see stagnant progress in some areas.”
Diversity is better than in 2021
While the research found FTSEex350 are performing far below where they should be on diversity, the figures do represent an improvement on 2021 figures, even if the progress is moving at a “glacially slow” pace.
For instance, in 2021, 54% of FTSEex350 executive teams were all male, and 52% were yet to reach the 33% target of women on boards. In 2022, 50% of FTSEex350 companies have no women in their C-Suite and 44% had not yet reached the target of 33% women on boards.
The slow improvement still means FTSEex350 are lagging behind the FTSE350. Just 4.6% of the FTSE350 has all male executive teams, and 21% haven’t yet reached the target of 33% women on boards.
Women on Boards UK is also concerned how much the FTSEex350 trails the FTSE350 on executive leadership diversity. It is the C-Suite, not the board, that oversees the day-to-day operations of companies, as well as ensures that cultures are inclusive.
There has only been a 2% increase in female executive leadership numbers since 2021; the figure has now reached 20%, which is much lower than 25% for the FTSE350.
Further, while 38% of FTSEex350 had all male boards (or just one female board member) in 2021, this has declined to 25% in 2022. It still falls very far behind the 1.7% for the FTSE350.
But Women on Boards UK was pleased with the improvement around female board directors, and that more and more FTSEex350 were meeting UK government targets. 31% of board members in the FTSEex350 were women in 2021 – this has increased to 34% in 2022, exceeding UK Government targets and almost reaching the FTSE350’s 38%.
Importantly, Women on Boards UK does more than look at gender diversity, the group is also starting to look at ethnic minority board and executive team representation.
Just 2% of ethnic minorities are chairs of the board – while this is up from 0% in 2021, the 2% represents just 5 individuals.
In addition, Women on Boards measured ethnic minority representation at executive level for the first time – just 8% of executive leaders came from ethnic minority groups in 202. There is no standardized data collection on this metric in the FTSE350.
Progress, albeit slow, came in ethnic minority board representation. In 2021, just 16% of the FTSEex350 had at least one director of color, this increased to 25% In 2022, but lagged behind 62% in FTSE350.
But ethnic minority board representative sits at 5% in 2022 (up from 2% in 2021). This compares to 12% in the FTSE350 and 16% in the FTSE100.
It’s time for more focus on diversity
Hathorn noted: “This year more clearly than ever we see that achieving fully diverse boards and executive leadership teams is possible.
“Many companies are meeting or even exceeding diversity targets, although still too few across the board.
“There remains a high number of firms yet to reach even the most minimal levels of diverse representation, at both executive and non-executive level. To these firms I say, catch up – and quickly.”
But what does Women on Boards UK recommend that companies do to catch up and drive diversity at their most senior levels?
The group calls on governments and regulators to act to encourage or even mandate more reporting of diversity metrics and success.
In addition, Women on Boards UK calls on a more “intersectional approach” to diversity. While a lot of data is collected on gender diversity, less is done for other diverse groups.
One of the report’s recommendations is that “further steps should be taken, when the time is right, to further join up focus on board diversity to look at both gender and ethnicity. Data should be gathered on broader diversity, including LGBTQ+ representation, disability and socio-economic background”.
But it is not just governments that need to act, so do individual firms, particularly if they want to win in the ‘Great Resignation’. With diversity so high up the agenda at the moment, let’s hope we see significant progress in the next year.