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The profound lack of ethnic diversity across boardrooms in the UK led to the setting up of the Parker Review. Its recommendations could spur a long-awaited evolution in corporate Britain

As at the end of July 2017, only 85 of the 1,050 director positions in the FTSE 100 were held by people from ethnic minorities, and only 2% of director positions held by UK citizens from ethnic minorities, despite this group making up 14% of the total UK population (up from 2% in 1971). 51 companies of the FTSE 100 did not have any ethnic minorities on their Boards.

About the Parker Review

The lack of diversity in the UK Boardroom led to a call for UK businesses to build on its successful drive to increase gender diversity in Board leadership by drawing attention to the absence of minority ethnic leaders in its largest companies. The Chair of Anglo American plc, Sir John Parker, who had been a member of the Davies Review, agreed to bring business leaders together to respond to the challenge of ethno-cultural diversity. In late 2015, the then-Secretary of State for Business in the new Conservative administration, Rt. Hon. Sajid Javid, affirmed the government’s official support for the initiative and invited Sir John Parker to conduct an official Review. This work would also complement the investigation, to be led by Baroness Ruby McGregor-Smith, into the progression of minority ethnic groups in the labour market generally.

The composition of the Review Steering Committee assembled by Sir John Parker was supported organisationally by EY, and by Linklaters in the drafting of the Report. Research was commissioned from the Cranfield School of Management, which had undertaken analogous work for the Davies Review.

‘Beyond One by ‘21’ - A Report into the Ethnic Diversity of UK Boards

The Parker Review Committee, led by Sir John Parker published its final report in which it urged business leaders to improve the ethnic and cultural diversity of UK Boards to better reflect their employee base and the communities they serve. The report, in association with EY and Linklaters, sets out achievable objectives and timescales to encourage greater diversity, and provides practical tools to support Board members of UK companies to address the issue. The Review’s recommendations fall under the following three areas:

  • Increase the ethnic diversity of UK Boards by proposing each FTSE 100 Board to have at least one director from an ethnic minority background by 2021 and for each FTSE 250 Board to do the same by 2024
  • Develop a pipeline of candidates and plan for succession through mentoring and sponsoring
  • Enhance transparency and disclosure to record and track progress against the objectives

Upon its publication, Sir John Parker, Chairman of the Parker Review Committee, commented: “Today’s FTSE 100 and 250 Boards do not reflect the society we live in, nor do they reflect the international markets in which they operate. Whilst we are making good progress on gender diversity in the Boardroom, we still have much to do when it comes to ethnic and cultural diversity.

“Our report has identified clear commercial benefits in addressing this issue, and it is crucial to make progress in this area if we want Britain to continue to be at the forefront of global business. We also outline some business-friendly recommendations, which aim to not only increase the ethnic diversity of Boards in the near term but also develop a strong pipeline of candidates for the future. These recommendations received overwhelmingly positive feedback and we have now provided some practical tools to help Boards implement them.

“I look forward to seeing a change in the Boardroom as we continue to track progress in the coming years.”

“Each one of us in the BME group now has increased responsibility; firstly, to maintain our status as role models and continue to invest in our own development, and secondly, but most importantly, we have an obligation to spread the word about the Parker Review.”

Key recommendations:

The Report makes recommendations in three key areas to help to evolve the face of corporate Britain and better prepare UK companies to continue to be global leaders in business:

1. Increasing the ethnic diversity of UK Boards

  • Members of the FTSE 100 and FTSE 250 should develop mechanisms to identify, develop and promote diversity within their organisations in order to ensure over time that there is a pipeline of Board capable candidates and their managerial and executive ranks appropriately reflect the importance of diversity to their organisation.
  • Nomination committees of all FTSE 100 and FTSE 250 companies should require their human resources teams or search firms to identify and present qualified ethnic diversity to be considered for Board appointment when vacancies occur.

2. Developing candidates for the pipeline and plan for succession

  • Members of the FTSE 100 and FTSE 250 should develop mechanisms to identify, develop and promote ethnic diversity within their organisations in order to ensure over time that there is a pipeline of Board capable candidates.
  • Led by Board Chairs, existing Board directors of the FTSE 100 and FTSE 250 should mentor and/or sponsor people of colour within their own companies to ensure their readiness to assume senior managerial or executive positions internally, or non-executive Board positions externally.
  • Companies should encourage and support candidates drawn from diverse backgrounds, including people of colour, to take on Board roles internally (e.g., subsidiaries) where appropriate, as well as Board and trustee roles with external organisations (e.g., educational trusts, charities and other not-for-profit roles). These opportunities will give experience and develop oversight, leadership and stewardship skills.

3. Enhancing transparency and disclosure

  • A description of the Board’s policy on diversity be set out in a company’s annual report, and this should include a description of the company’s efforts to increase, amongst other things, ethnic diversity within its organisation, including at Board level.
  • Companies that do not meet Board composition recommendations by the relevant date should disclose in their annual report why they have not been able to achieve compliance.

Long Overdue Intervention

There has been widespread support for the findings of the Parker Review, and Karina Ampomah, co-founder and Director of HUEWN, an executive search and diversity consultancy, is optimistic that Parker will provide impetus for BME inclusion on corporate boards.

“There are some who feel that the Parker Review should have mandated its recommendations and by failing to do so has not gone far enough. It is worth noting, however, that the Davies Review, published in 2011, which dealt with the issue of Boardroom Diversity as it relates to gender, was also not mandated and yet over the last seven years we have seen a significant increase in the number of women on Boards, industry-wide.”

For Ampomah, these findings reflect their key goal of encouraging companies to recognise and advance qualified ethnic minorities into pipeline positions. “At HUEWN, we are delighted by the arrival of this long overdue intervention into the participation of Black and Asian Minority Ethnics (BAME) in Boardrooms and Senior Positions in the UK. We see this as finally giving the BAME population: (1) genuine inclusion in British industry and its social structures; (2) realistic expectations of career progression beyond the age of 35; (3) an opportunity to set up or strengthen networks for the sole purpose of advancing the careers of their members; and (4) an incentive to develop their own talent and that of others through mentoring, training and stretch assignments with the support of Business Leaders willing to respond to the challenge set by the Parker Review.”

The Review also creates obligations for black and minority professionals, says Ampomah. “The ‘Gender Agenda’ has kept the momentum created by the Davies report strong and progressive. The BAME population is much smaller and few of us are in a position to influence our white colleagues outside of work. We therefore need to work much harder to garner support for our activities. Each one of us in the BME group now has increased responsibility; firstly, to maintain our status as role models and continue to invest in our own development, and secondly, but most importantly, we have an obligation to spread the word about the Parker Review and yes, dare I say it, we now have “permission” as well as an obligation to recommend BME colleagues and friends for roles in the organisations we work for.”

For further details: Download the full report

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