New research into the top 10,000 executives in Britain’s most important firms reveals a widening “diversity deficit” which risks putting UK companies at a serious disadvantage in domestic and global markets.
The Green Park Leadership 10,000, Spring 2015 shows that the position of ethnic minorities in leadership roles within the FTSE 100 has declined over the past year. Despite an increased corporate focus on diversity, just under two thirds of FTSE Companies (62) now have an all-white Main Board (Executive and Non-Executive Directors), up from last year (61).
Excluding Non-Executive Directors, the research shows that the number of companies with an all-white leadership board (executives and operating board directors), has jumped from 63 to 70. Additionally, Black leaders tend to be present predominantly in those companies whose operations are based in Africa.
The research shows that there are still no senior East Asian or Chinese heritage Executive Directors on any Main Board in the FTSE 100, and in fact fewer than 60 people of East Asian or Chinese Heritage in the entire 10,000 in the study.
The decline in ethnic minority presence is more marked at the ‘pipeline’ Top 100 leadership level. This year’s study shows that the FTSE 100 has lost the equivalent of nearly 40 of its 480 non-white leaders at this level in the past twelve months, suggesting that the prospects for minority leadership at board level are decreasing rather than increasing.
The study is the second report on the top leadership levels within the FTSE 100, commissioned by the executive recruitment consultancy Green Park and designed to give a comprehensive illustration of how well British-based businesses are performing on diversity. It uses specially developed software to analyse the gender and ethno-cultural composition of Britain’s business leaders across different business sectors. Uniquely, the research reaches below the Main Board level to assess the state of the “talent pipeline”.
The research does show that following the government-backed initiative led by Lord Davies, there has been a small increase in the number of women occupying Top 20 Leadership roles. However at the Top 100 Leadership ‘pipeline’ level the numbers show little prospect for increased female participation at Board level over the long-term.
Raj Tulsiani, CEO of Green Park Group said:
“Britain’s top 100 companies operate in a global market and need to continue to target growth in developing economies worldwide. Despite all the focus on increasing diversity within the FTSE100 to help business operate more competitively around the world, our research shows that UK companies are getting less ethnically diverse rather than more over the past year. It’s particularly concerning to see that at pipeline level, we’ve lost such a large number of potential ethnic minority leaders, suggesting that the situation is likely to continue to worsen rather than improve in the future.
“China, Korea, Indonesia and Japan are some of the biggest and fastest growing markets so it’s astonishing to see from or research that there is not a single Chinese or East Asian heritage executive director within the FTSE100. And even more startling that there are fewer than 60 Chinese or East Asian Heritage people in the entire 10,000 top leaders in the whole of our study.
“We know that this group forms the single most successful educational demographic in the UK, and has done for quite some while, so big companies need to ask themselves, why are they not drawing on this group’s talent and insights to help provide a competitive edge in targeting important markets for growth?”
The 2015 study reveals that:
- The number of ethnic minority CEOs has dropped from six to four, meaning that the FTSE has lost two thirds of its ethnic minority CEOs.
- Women and minority leaders continue to feature disproportionately as Non-Executive Board Directors; as a consequence, their true level of influence is far smaller than their numbers suggest.
- At Top 20 levels, though the numbers remain tiny, there has been a small rise in minority participation overall, but a decline in the number of executive directors from minority backgrounds.
- There has been a small increase in the number of women holding Chair, CEO and CFO positions. There has also been slow but steady rise in the numbers of women at Top 20 and Top 100 positions, however, not enough to suggest that there will be a significant increase in future appointments to Executive Director roles.
- The Top 100 levels show a disturbing decline in the numbers of minority executives, suggesting that the prospects for minority leadership at board level are decreasing rather than increasing.
- Ethnic minority leaders occupying Top 20 roles are more likely to be female than male. This runs in stark contrast to the study’s overall findings.
- Analysis by industrial sector shows slow improvement in most sectors at the top 100 level ‘pipeline’ level which indicates where the next Executive Directors may come from. The most significant rise in the number of women in these roles occurred in the Telecoms and Construction and Property sectors. The biggest faller was the technology sector which lost almost 10 per cent of its female leaders at this level.
Trevor Phillips, Chair of Green Park Diversity Analytics adds:
“Diversity is only of value to business if it genuinely brings people of different outlook, experience and culture to the table - there are few benefits to cosmetic change. This research reveals that the drive for diversity in Britain’s top companies is in danger of becoming a euphemism for more seats for professional white women at board tables. While it looks like we will meet the targets set by the Davies Committee for gender diversity, it’s clear that we are going nowhere when it comes to improving social mobility and actually going backwards on ethnic diversity. The analysis in this report of the Top 100 pipeline, which illustrates a real lack of progress in developing a broader range of future board leaders shows companies need to take quick action to refocus and recalibrate efforts to increase diversity.”