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The drive by UK companies to diversify their boardrooms is stalling: fewer ethnic minority directors will be appointed in 2024 and women will continue to fight for top roles such as chair and chief executive, new data shows.
Headhunter Spencer Stuart, who carried out the research, said there was a risk some companies were “resting on their laurels” after meeting targets for minimum levels of minority representation.
“Part of the reason we are seeing diversity appointments decline or stagnate is that many companies have exceeded or met the goals 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 a minority ethnic background by December 2021, which would result in 96 FTSE 100 companies meeting that target.
Boards of the FTSE 250 mid-cap index have been given a deadline to meet a similar target at the end of this month.
Only three of the 50 FTSE 250 companies in the sample studied by Spencer Stuart still do not meet the requirement. However, according to the study, only 12.5 percent of all directors come from ethnic minorities.
“We don’t want to rest on our laurels and have a ‘one and done’ mentality,” Gaunt said.
The annual review took into account the 150 largest FTSE companies by market value as at 30 April 2024.
Of the 196 directors appointed in the 12 months to the end of April, only 4 per cent identified as being from an ethnic minority, compared to 15 percent last year. This is the first drop since Spencer Stuart began tracking this data in 2019.
Headhunters and boardroom consultants have said that despite a concerted push for diversity in recent years, there was a risk that boardrooms would slow down these efforts as they looked for experienced hands to guide them through the economic and political turbulence.
Gaunt said the “flight to experience” and the decline in various board appointments were linked. “If the requirement or specification for new appointments is a certain type of experience, this will be a self-limiting group by definition,” he said.
The proportion of directorships held by women increased from 40 per cent to 43 per cent, and two-thirds of boards had at least one woman in the top four positions of chair, senior independent director, chief executive and chief financial officer.
But 67 per cent of new appointments of women to senior management positions were to senior independent director positions. Headhunters hope the appointments will be a springboard for these women to reach presidential positions in the future. Of the 150 companies covered by the study, 113 had men in both the CEO and president positions.
Spencer Stuart also highlighted the increase in the proportion of appointees aged over 50 on UK boards. He warned that this could impact companies’ ability to anticipate new consumer trends and manage generational divides in the workplace and technological advances such as AI.
The proportion of new appointments of non-executive directors under the age of 50 has fallen over the past three years to 6 per cent in 2024, with 94 per cent of board members aged over 50.