UK boards’ push to increase diversity has slowed, says headhunter

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The push by UK companies to diversify their boardrooms is stalling, with fewer ethnic minority directors appointed in 2024 and women still struggling to occupy the most senior roles such as chair and chief executive, new data shows. 

Headhunter Spencer Stuart, which carried out the research, said there was a risk that some companies were now “resting on their laurels” after meeting targets for minimum levels of representation for minorities.

“Part of the reason we are seeing diversity appointments decrease or stall is that so many companies have surpassed or met the targets they have set,” said Chris Gaunt, head of Spencer Stuart’s board practice.

The Parker Review set a target for all FTSE 100 boards to have at least one director from an ethnic minority background by December 2021, resulting in 96 FTSE 100 companies meeting that target.

Boards in the mid-cap FTSE 250 index have been set a deadline to meet a similar target by the end of this month.

Only three of the 50 FTSE 250 companies in the sample studied by Spencer Stuart have yet to meet the requirement. Yet only 12.5 per cent of all directors are from an ethnic minority background, the study found. 

“We don’t want to rest on our laurels and have a ‘one and done’ mentality,” said Gaunt.

The annual review took into account the biggest 150 FTSE companies by market value on April 30 2024.

Of the 196 directors appointed in the 12 months to the end of April, just 4 per cent identified as being from an ethnic minority background, compared with 15 per cent last year. This is the first drop since Spencer Stuart started tracking this data in 2019.  

Headhunters and boardroom consultants have said that despite a concerted diversity push in recent years, there was a risk of boardrooms slowing these efforts as they seek experienced hands to guide them through economic and political turbulence. 

Gaunt said the “flight to experience” and the fall in diverse boardroom appointments were connected. “If the requirement or specification for new appointments is a certain type of experience, this will be a self-limiting pool by definition,” he said. 

The proportion of boardroom roles held by women rose from 40 per cent to 43 per cent with two-thirds of boards having at least one woman in the four senior roles of chair, senior independent director, chief executive, and chief financial officer.

But 67 per cent of new female senior leadership appointments were for senior independent director roles. Headhunters hope that the appointments will be a stepping stone for these women to reach chair roles in the future. Of the 150 companies covered by the study, 113 had men in both the CEO and chair roles.

Spencer Stuart also noted the rise in the proportion of appointees over the age of 50 on UK boards. It warned that this could affect companies’ ability to anticipate new consumer trends and to manage generational divides in the workplace and technological advances such as AI.

The proportion of new non-executive director appointments under 50 has fallen over the past three years to 6 per cent in 2024 with 94 per cent of board members aged above 50.