Diversity – Executive recruiters to be more proactive

The Parker 2020 Review on ethnic diversity urges Executive Recruiters to be more proactive.

On 5th February 2020 an updated report by Sir John Parker and the Parker Review Steering Committee was published. The report provides an update on progress made since the initial recommendations that FTSE 100 Boards should have at least one director of colour by 2021, extended to 2024 for FTSE 250 Boards. Whilst it noted that some commendable company initiatives improving ethnic minority representation, quality of board diversity policy reporting and supporting a diverse talent pipeline have been initiated, not enough progress has been made and, for most corporates, it appears that meeting the targets set will be a challenge.

On gender, great strides have been made bringing female leaders into the Board Room, partly attributable to the Hampton-Alexander initiative. The majority of Boards of our FTSE 350 companies however remain all white domains. In his forward, Sir John Parker makes it clear that the responsibility lies with Board Chairs to drive the change. He also calls on head-hunters to ensure they introduce to their clients, qualified and competent people from minority backgrounds in the UK and internationally:

“We, as company Chairmen and Chairs of Nominations Committees need to be more assertive – not least by refusing to accept the head-hunter’s excuse that “the candidates just aren’t there”. For my part, when I hear this message from my consultants, my next step is to find better consultants who can find the talent either at home or in our world of 7.7 billion people.”

For the first time, the 2020 Parker Review analysed the FTSE 250 boards and these were found to be even less diverse than the FTSE 100. Nearly three quarters (69%) of the FTSE 250 companies analysed (119 out of 173 companies) have no ethnic diversity on their boards. Across the FTSE 350, 59% have no ethnic representation on their boards (150 out of 256 companies analysed). And, when board leadership roles were examined, it was found that just 6 ethnic minority directors hold the position of Chair or CEO in the FTSE 100 and 9 in the FTSE 250.

“We recognise that meaningful change takes times, but the data tells us that the current pace of change is not quick enough to meet the targets set by the Review,” highlights Arun Batra, EY Partner and both CEO of the National Equality Standard and adviser to the Parker Review.

“Businesses need to continue to challenge traditional ways of working and legacy issues, and really investigate the talent that they have available in their business. While there isn’t a one size fits all approach, there are certainly a number of initiatives we’ve seen that make a difference in some companies.”

In addition to the recommendations set out in the original Parker Review, the 2020 Parker Review makes the following further recommendations which focus on measuring board-level diversity and helping to build a pipeline of board-ready candidates:

  1. Engage – FTSE 350 companies must engage constructively on this issue and report on the ethnic diversity of their boards. The Review found that a small number of companies did not respond to their request for data.
  2. Report – The Review urges companies to report fully on their ethnic diversity policies and activities as part of their reporting requirements and in compliance with the Corporate Governance Code. Ideally this should also be with the aim of delivering the recommendations in the Parker Review and should cover board appointment processes and the work of the nomination committee.
  3. Recruit – Executive recruiters should be much more proactive in ‘marketing’ highly talented ethnic minority candidates and in applying their voluntary code of conduct. Recruiters have already supported the Hampton-Alexander Review’s aim to increase female board representation. The Parker Review recommends an extension to this initiative to cover ethnic diversity.
  4. Develop – A pool of high potential, ethnic minority leaders and senior managers should be developed as part of a cross-sector sponsorship/mentoring programme. These individuals should be sponsored by CEOs across the FTSE 350 through a well-structured and facilitated scheme.

The Review also contains a helpful toolkit for companies and those responsible for recruitment to help with implementing many of the recommendations, including selecting recruitment partners
with diverse talent sourcing in mind.

Two years remain for FTSE companies to respond to the Parker recommendations. The message is simple – although progress has been made over the last 3 years, it’s been too slow and change must come from the top. Sir John Parker says that to remain competitive in the global market, UK businesses must focus on the recommendations. As recruiters, we should also reflect on the Parker recommendations and support our clients by always providing outstanding customer service and delivery. We must always challenge bias and adopt the Parker Review recommendations in identifying and supporting the most appropriate individuals for each role we work on.

Krista Murray
Executive Researcher, Oakleaf Executive
10 February 2020