August 21, 2015 Promoting Diversity
Within our news pieces we generally try and cover a range of topics but there are some areas which have a stronger impact on corporate governance than others and which therefore tend to appear more frequently. One such is the topic of diversity.
Since our last article, ‘Boardroom Diversity,’ we have come across further instances of positive action being taken to promote diversity, thereby strengthening corporate governance. The first example comes from the Financial Reporting Council (FRC). Tasked with promoting high quality corporate governance, the FRC regularly issues bulletins which are aimed at promoting diversity within UK companies. In the spirit of practising what it preaches, the FRC’s annual report 2014/15 highlights the steps which it has taken to promote diversity within its own organisation, including signing up for the government’s ‘Think, Act, Report’ initiative. This initiative aims to provide greater transparency on gender employment issues and in signing up to the initiative the FRC has committed to review its equality, diversity and inclusion practices.
The second example comes from the legal profession. Law Society statistics reveal that those entering the legal profession are drawn from a diverse range of backgrounds; but that diversity is not reflected in the higher echelons of legal practice. Accordingly, the Law Society has set up a mentoring scheme which is designed to help and encourage people from ethnic minorities, the disabled and women to take a more visible role at partnership and senior leadership levels. Commenting on the scheme Law Society president Jonathan Smithers said “We need a profession that rewards excellence equally; a profession that embodies the values we uphold in the law, and one that reflects and represents the diverse population we serve.”
Our final example comes from Apple. In publishing its latest diversity figures, Apple CEO Tim Cook said “Diversity is critical to innovation and it is essential to Apple’s future” adding that the company must “create a future generation of employees as diverse as the world around us.” This idea that those working within an organisation should reflect the customer base and the wider world is key to promoting strong corporate governance through diversity. When business is increasingly being seen as a partnership between corporate, their clients, their investors and other key stakeholders, then the better a board is able to represent its constituency, the stronger the partnership will be.