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Inclusivity in the Workplace Q3 2023

How an ethnically diverse board could help optimise your bottom line

business team having morning briefing in office
business team having morning briefing in office
iStock / Getty Images Plus / Prostock-Studio

Alex Hall-Chen

Principal Policy Advisor, Institute of Directors

Despite progress, more work is needed to realise the benefits of boardroom diversity in UK businesses.

Boards are increasingly under pressure to be more agile, flexible, and able to detect emerging risks and opportunities in a rapidly changing economy. Thus, diverse voices in the boardroom have never been more important. In a 2019 survey of our members, two-thirds agreed that a diverse board is a strong driver of business efficacy. 

Recent years have seen significant progress in improving ethnic diversity on boards. By the end of last year, 96 FTSE 100 companies had at least one ethnic minority director, compared with 47 in 20161.  

Use data to build on progress

As with most things in business, data is essential to good decision-making. As the adage goes: ‘what gets measured gets done.’

One-size-fits-all targets are rarely the answer to building a diverse board, but ambitious targets based on the specific circumstances of a business, accompanied by accountability structures for those targets to be met, are crucial to making progress.  

Building a pipeline of diverse talent will also
help board recruitment in the long term.

How to recruit a diverse board

An essential step is to make the application process open. Proactively engage with diverse networks, rather than relying on existing board members’ personal and professional networks.  

Where recruitment agencies are used, ensure they source candidates who reflect the diversity of the talent pool; this key deliverable is vital. Another impactful step is to broaden the range of professional backgrounds considered for board member positions. 

Scrutinise your executive board

Building a pipeline of diverse talent will also help board recruitment in the long term. The recruitment business, PageGroup, for instance, has created an executive shadow board to scrutinise the executive board’s agenda. This not only brings contributions that reflect the diversity of its employees and customers but also provides individuals from underrepresented backgrounds with valuable board experience.  

More widely, equity, diversity, and inclusion (ED&I) issues need to be driven from the top as a board-level topic and not one consigned to HR, to ensure it receives the focus and resources needed to achieve cross-organisational change.   Equally important is clarity around the internal case for change – seeing ED&I as a means to becoming an organisation better able to serve its employees, shareholders, and other stakeholders, rather than as a tick-box mechanism, is the foundation for realising the gains that come from building a diverse and inclusive business.

[1] Improving the Ethnic Diversity of UK Business An update report from the Parker Review David Tyler The Parker Review Committee March 2023

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