FTSE 100: Looking To Emerging Markets After Brexit ? 43% Of Directors Are White, British, And Male
Some of us have been talking about the need for better representation of Britain’s multi-cultural society in its big business boardrooms for many years. After it was first launched in 2011, Board Talk was privileged to attend meetings by invitation from what was then the UK Government’s Department of Business, Innovation and Skills (BIS) to listen, learn and report on the perceived barriers to progression.
Now, with Brexit looming, having non-white faces at the top in British industries looking to compete outside the EU umbrella is suddenly becoming a business imperative. Meanwhile, a report just out paints a stark picture of the reality on international diversity in FTSE 100 boardrooms.
Some 43% of directors in the FTSE 100 are white, British and male and 49 companies in the FTSE 100 still have ‘all white’ boards, says a report just out from the think tank Global Future, as it launches its Global Future Diversity Index.
Trade with emerging markets amounts to a quarter of British exports, but directors from these markets currently account for just 7% of positions on UK boards, and just 16% of all non-UK held positions. Almost 70% of Britain’s biggest firms have no directors from emerging markets, it says.
Flagging its report as “the first measure of international and cultural diversity in British boardrooms”, Global Future points out that 163 positions on FTSE 100 boards are taken by North Americans. I certainly remember headhunters (among whose ranks I have dwelt in a past and mercifully almost forgotten life) almost a decade ago highlighting ‘international diversity’ by citing these directors as evidence of “diversity.” At the time they often included the rare North American woman and therefore handily ticked two boxes, instead of just one.
Only five of those director positions on FTSE 100 boards are from China, and there are eight from India, according to this report. Among the swathes of Brexit speculation in the media at large, it has been suggested that the UK post-Brexit would be seeking closer economic ties with both India and Australia, playing the ‘Commonwealth’ card.
“Diversity is strength. In recent years British business has moved to address gender and ethnic representation on their boards but as post-Brexit Britain seeks greater trade and penetration in wider markets overseas, British business must also think about international diversity“ said the report’s author and Global Future’s CEO Gurnek Bains. He is founder and former Chairman and CEO of the global leadership consultancy YSC which lays claim to a client base comprising over half of the FTSE 100.
“With so many of the FTSE 100 companies operating across a wide range ofcountries and regions, and managing global supply chains, a single-nationality board is almost certainly a disadvantage” said Mr Bains.
“Board members who understand the different regions in which their company works, and who have experience of doing business there, will be better equipped to help their company negotiate the ever-greater challenges of operating in a global marketplace. There is no one size fits all. A company’s need for international diversity on a board should be determined by its geographic footprint and the international nature of its customer base and workforce, as well as by its strategic ambitions” he added.
The report also finds (as has been suggested before) that a mere 2% of FTSE 100 directors are BME British - compared to 14% BME in the wider population. I have also heard that figure put at 15% but that’s all about collecting data and understanding your business and its digital quotient - see last post on Board Talk and the one before.
Making a series of recommendations for changing the status quo, the report makes the usual diplomatic noises about utilising Britain’s “wealth of BME talent.” But it has a good idea, too - it suggests that every 2-3 years, boards should conduct a review of the personal qualities, experiences and what it calls “spike” strengths or distinctive areas of strength the individuals possess, that it requires for the future. This, it suggests, should be “based on the strategic aspirations of the business, its geographic footprint, and its employee base.”
A novel idea? Not really, but it might well be to FTSE 100 boardrooms. Because they seem determined to be stuck in the past on recruitment, and on the conversations in and around boardrooms even as the world crashes into change on multiple levels.
On the plus side, it’s very good news that reports like this are at last daring to push at the barriers to change. Because this snapshot of the boardrooms of the UK’s biggest businesses feels a little bit uncomfortable. But it is likely to feel even more so for any business looking to be competitive if the country crashes out of the European Union after two years of Brexit uncertainty with a dogged belief that the rest of the world will welcome post-Brexit Britain with open arms.