October 12, 2022 Navigating barriers to leadership
Companies in the top quartile of gender diversity within their executive teams are 25% more likely to deliver above-average profitability than those in the fourth quartile. And when it comes to ethnic and cultural diversity, the figure is even higher at 36%.
Those figures from a McKinsey study released in 2020 graphically illustrate the positive outcome for organisations which look towards boosting executive diversity. And that’s before you consider the additional benefits which individuals, their families, and the wider society can gain from being associated with diverse organisations.
However, despite seeing some improvement in representation in recent years, there are still a number of barriers to overcome in order to deliver equality of opportunity for all. Some of those barriers have been explored in a new Financial Reporting Council (FRC) report: “Navigating barriers to senior leadership for people from minority ethnic groups in FTSE 100 and FTSE 250 companies.”
Despite the report acknowledging that the tide has shifted towards diverse representation, the barriers seen by some of the report’s respondents still make for uncomfortable reading. Overt and covert racism still seems to be present, whilst some reported that they have had to demonstrate higher standards of performance when compared with colleagues from majority backgrounds in order to have the same development opportunities.
The report’s authors not only spoke to a number of individuals across FTSE 100 and FTSE 250 companies, they also reviewed the way in which approaches to diversity were covered in the annual reports. One interesting aspect of this review was the fact that whilst companies readily reported on areas such as pay gaps, performance metrics, or targets, they were less forthcoming on the actual initiatives which were being undertaken in order to improve diversity. The report acknowledges the importance of metrics as a first step but suggests that companies should go further in linking specific initiatives to those metrics and reporting on actions taken. One example given was that reporting on training could be enhanced by including information on the design, content or impact of the training in helping to diversify senior leadership.
Commenting on the report The FRC’s CEO, Sir Jon Thompson, said: “With the power of these personal insights and experiences that go beyond the data, I hope this report can help advance the conversation about how to successfully increase diversity in senior positions on boards and create sustainable pipelines of diverse talent to fill both executive and non-executive roles.”