Diversity in the boardroom

Diversity in the boardroom

“Having a diversity of perspectives leads to better decision-making, more relevant products, and makes work a whole lot more interesting”

Google diversity report 2014

We’ve previously reported on the ongoing challenge of increasing female representation in the boardroom and now a report compiled by Blue Sheep has revealed some interesting patterns of representation across the UK.  The last FTSE 100 company without female representation may have announced that it is to rectify the situation by the end of 2014 but, according to the report, in the London EC postcode women still only occupy just 21% of boardroom positions.

Whilst the battle is ongoing at the top of the FTSE index, it seems that further down the company chain women have quietly been taking their place at the top.  Admittedly the report analysed all companies and this will have included those smaller entities which may have a sole director but in Dorchester 37% of directorships are held by women and in Kirkwall in Scotland this figure increases to 39%.

Overall, according to the Guardian, the report reveals that smaller cities fare better, with larger cities such as Manchester and Birmingham falling below the national average of 30%.  In fact this average seems almost to be a magic number where female representation is concerned.  A report earlier this year revealed the same percentage of female representation in Irish companies with Google and LinkedIn revealing similar numbers in respect of their global presences in 2014.

Diversity is not just about female representation however.  At the end of 2013 the FT-ICSA Boardroom Bellwether report revealed that 89% of boards had a diverse business experience mix whilst 45% were geographically diverse.  According to the ICAEW “research suggests that companies with more diverse boards perform better and take fewer risks.”  Diverse boards can also be more able to represent the customer base and to respond to changing customer needs.

One way or another, by regulation or through recognising the benefits which diversity can bring to an organisation, the pattern is changing.  The EU capital requirements directive, which is binding on banks and investment firms, may include a diversity requirement but elsewhere businesses are quietly adjusting the boardroom mix to embrace diversity.  Non-executive directorships may well be the first to reflect the trend as boards seek to bring in those who can bring relevant experience to the business but sooner or later executive positions will also show a greater degree of diversity.  After all, when asked about the business case for diversity Alan Mulally, the CEO of Ford said “It’s the only business case we need—the only way to satisfy diverse customers is to include their perspectives inside the company.”

Alison Griffiths
alison@gerranium.co.uk
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