COMMENT: The ethnic composition of the boardroom

Recruitment consultancy Green Park has surveyed 63 institutional investors to sound out the major recruitment issues for companies they believe will be faced in the next five years.

The results reveal that over half (56 per cent) of institutional investment managers believe the diversity of company boards will be a key factor in determining an investment case.

However, there is a divergence of opinion amongst investment managers as to the value of ethnic diversity at board level, with approximately half (52 per cent) believing an ethnically diverse board helps people understand the changing requirements of a diverse customer base, and the other half believing that factors other than pure ethnicity are important.

Only six per cent of investment professionals believe ethnic diversity is a major consideration today, which could imply a major shift in attitudes, or conversely that the shift has already happened and that ethnic background is now considered of little importance compared to other forms of diversity.

Some institutional investors did feel that the business case for ethnic diversity was underestimated, with 37 per cent feeling that boards don’t understand the financial value of diversity, and a similar number would advocate proactive lobbying for placement (36 per cent) and creating a pipeline of talent (33 per cent).

As a global (2015) Diversity Matters report from McKinsey clearly states “correlation does not equal causation” and the more diverse (in all forms) of boards might be more successful for a host of other reasons, but there is at least a verifiable pattern of overall diversity being associated with success. (See Diversity Matters )

The concept of diversity, and intersectionality, in board recruitment being taken on board is reinforced by the survey, with the main reason that institutional investors believe so many companies still have all white (mono-cultural) board was for the undisputable logic that ‘boards want to appoint the right candidates for the job rather than positively discriminating in favour of black or Asian candidates.’

There is, of course, the potential to dispute exactly what is meant by the ‘right candidates’ and that could pander to ‘group think’ and ‘in my image’ themes, but conversely, perhaps the Green Park survey does hint at a need for companies to be ‘perceived’ at overt level as diverse in order to conduct business, especially in a globalised world where, in some cases, the debate is more basic.

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