Think tank calls for end to lack of diversity in top management by increasing ethnic minority representation at senior levels.

Britain’s biggest listed companies should be encouraged to include at least one non-white person on their boards within five years, according to a think tank.

Policy Exchange’s Bittersweet Success? report urged the government to set a target for all FTSE 100 boards to include one individual from an ethnic minority by 2021. It also urged the 100 firms listed on the London Stock Exchange to include a non-white individual in final interview processes for board-level roles.

The study noted that this year’s Parker Review quoted statistics from Cranfield University’s Doyin Atewologun that only 90 of 1,087 FTSE 100 directors were non-white – and just 17 were British-born non-whites. Policy Exchange added that executive recruitment agency Green Park found in 2014 that just 11 of 300 people filling the three most senior positions within FTSE 100 companies – chairman, chief executive and chief financial officer – were non-white.

13 Out of 1000

The think tank noted that just 13 of 1,000 positions on the 2016 Sunday Times Rich List were held by non-white, British-born, British citizens.

“We recommend that a simple target is adopted by the government for FTSE 100 boards: that all boards should have non-white minority representation by 2021, unless companies can provide good reasons why this should not apply to them,” said the study.

“All FTSE 100 companies should adopt the Rooney Rule – requiring all final interviews for top jobs to have at least one minority candidate on the list – for executive and non-executive board vacancies.”

A Policy Exchange spokesman said it did not want to see legislation on these measures, but “simply a signal from government that they would like to see this happen”.

“All FTSE 100 companies should adopt the Rooney Rule – requiring all final interviews for top jobs to have at least one minority candidate on the list – for executive and non-executive board vacancies.”

Frank Douglas, CEO at Caerus Executive and a former non-executive director of the CIPD, said HR needed to take the lead on black, Asian and minority ethnic (BAME) diversity. “For the HR profession to have licence to talk about this, it has to focus on the ethnic minority representation at the senior levels of HR,” he said.

“In 2007, I was probably the last black group HR director in the FTSE 100. Unilever has [recently] made an appointment, but other than that I don’t think there is an ethnic minority group HR director in the FTSE 100.”

Douglas said organisations need to try new tactics to increase representation of ethnic minorities: “Many companies are trying to address ethnic minorities in the same way that they addressed the gender diversity issue, by looking at structural solutions such as flexible working and talent programmes. [But] there’s no one lever that you can pull for ethnic minorities to make it happen; it’s very contextual to the organisation’s culture.

“In most companies the conversation stops at gender. In others it expands to LGBT and even to disabled employees. There are few companies where you could find on their website a conversation about ethnic minorities as part of their diversity strategy.”

Leading by Example

The CBI has come under fire for encouraging employers to increase BAME representation even though its seven-strong board does not include any individuals from ethnic minorities. The CBI said, in 2015, it had two non-white chairs of its standing committees, and one non-white chair of its regional and national councils.

“While quotas are not the way forward, it is incumbent on organisations that represent British business such as the CBI to lead by example,” said David Goodhart, head of the Policy Exchange’s integration and immigration unit.

A CBI spokesperson said: “Increasing ethnic representation is not only the right thing to do, we believe there is a strong business case for placing diversity and inclusion at the heart of business, helping employees to perform at their best.

“More than a quarter of all new CBI appointments in the last six months had a BAME background, half were female and more than a third of our leadership team is comprised of women, demonstrating that our wider focus to attract talent from all backgrounds is working.”