65 / 72
The Female FTSE Board Report 2016
58
Inquiry into fairness, transparency
and diversity in FTSE 350 board
appointments
Increasing diversity at board level – and throughout
companies – is acknowledged as a priority by
business, government and regulators as well as many
shareholders and customers. Research has shown that
companies with more diverse boards can operate more
effectively, by understanding their customers, and more
innovatively, by being more open to change. This can in turn lead to increased profits and returns
to shareholders.
In March 2016, the Equality and Human Rights Commission has published an extensive inquiry
into fairness, transparency and diversity in FTSE 350 board appointments. The inquiry report
shows that while there has been progress in improving the number of women on boards, there
is more that can and should be done. Outdated attitudes and opaque selection processes make
improving diversity a challenge. Our inquiry found continuing reliance on ‘old boys’ networks’ to
source candidates, reluctance to cast the net more widely and selection based on vague notions of
‘chemistry and fit’, all of which lead to boards recruiting in their own image. Despite the evidence
that many firms are now conducting board evaluations which look at diversity, too few actually
translate these into setting proper targets and action plans. And a worryingly large proportion still
believe that positive action to encourage talented women to apply for roles, or provide them with
the skills to do so, has no place in their company.
Companies need to look at ways of improving their appointment process so that it is objective,
transparent and fair, and selects the best candidate on merit. They need to think about ways of
broadening the candidate pool so they consider a more diverse range of people with suitable
skills and experience. And, most challenging, if they are to create the female non-executive and
executive directors of the future, they need to consider how they can improve the diversity of their
talent pipelines – and this means thinking about how they recruit, retain, develop and promote
employees.
Laura Carstensen
Commissioner at the Equality and Human Rights Commission
Case Studies