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FTSE 350 ethnic diversity needs action not words following Parker Review

?Seemingly ‘unambitious’ goals to boost ethnic diversity set by the Parker Review Committee in 2017 are still proving challenging as they near their end target

Thirty-seven per cent of FTSE 100 companies and 69% of FTSE 250 companies still do not have a single person of colour on their board, according to an update of The Parker Review.

Three years ago, the Parker Review of ethnic diversity in UK boardrooms recommended each FTSE 100 board to have at least one director of colour by 2021. FTSE 250 boards were challenged to meet the same target by 2024.

In the review’s foreword, Andrea Leadsom, secretary of state for business, energy and industrial strategy, said that despite some growth in D&I, “not enough is being done” by the FTSE 100 as a whole to deliver.

The cornerstone recommendation from the new review was that boards should focus on "actioning rather than positioning."

Positioning is when companies describe their policy and approach to ethnic diversity, whereas actioning involves companies reporting their activities in order to learn from the results.

The review said: “[If] boards endorse the business case for diversity (i.e. that diversity is linked to improved performance), then a logical way of measuring the effectiveness of the board would be to assess its diversity.

“We found that this was often not the case. The business case for diversity was endorsed in positioning diversity, but it was much less likely to be evidenced in their actioning.”

Sixty-nine per cent of FTSE 100 companies which provided data for the review said they have a Board Diversity Policy which specifies ethnicity, this was an increase of 36 percentage points on 2018 in which 33% said their policies specify ethnic diversity.

Only 48% of FTSE 250 companies, by comparison, have policy specifying ethnicity – an increase of 18 percentage points on the prior year.

Despite the increased integration of such policies, none of the companies said that they report any progress against measurable objectives for board ethnic diversity.

Sandra Kerr, race equality director at Business in the Community (BITC) which set out its Race at Work Charter in 2018, stressed the importance of reporting data in order to effect change.

She said: “The most disappointing news from this review is that only 256 out of the FTSE 350 were able to sufficiently capture ethnicity data within their organisations.

“Without this there can be no action taken or real commitment to addressing the lack of representation of BAME workers at the most senior levels or monitoring ethnicity pay gaps.”

To combat this, Kerr recommended senior management fast track programmes, after BITC research found that 43% of ethnic minority employees would love to access senior management fast tracks, yet only 10% are receiving it.

She added: “There is a lot of talk about widening access to opportunity, but taking real action to increase access to key roles and manage the diversity of the talent pipeline within the organisation is vital if employers really want diversity in their senior and executive positions.”

The Parker Review Committee has reinstated its goals for 2021 and 2024, yet the target-setting approach has been met with some criticism.

Binna Kandola, senior partner at workplace psychology consultancy Pearn Kandola, said: “Establishing targets has for a while now been the most visible way in which organisations seek to demonstrate a commitment to diversity. They continue to use a commonly recommended solution, despite the fact that they never work.”

“For instance, targeting a single group – such as women or black people – means that other forms of discrimination are ignored.

“People who are selected using positive or affirmative action policies are seen as being less competent than others. They are regarded as having required extra assistance to join the organisation, without which, they would have been rejected.”

Kandola instead recommended businesses should create a climate that “fosters justice and equality for all.”

He added: “Data should be used of course to highlight where specific problem points exist, but in a much more thoughtful and problem solving way than we do now.

“HR managers need to examine their own motivation on this issue. And how much of an example does the CIPD provide on this?”

Ninety-six per cent of FTSE 100 and 81% of FTSE 250 companies responded to the 2020 Parker Review. The report was sponsored by EY and the National Equality Standard, with the Financial Reporting Council (FRC), Cranfield University and Linklaters acting as key advisors and contributors.