Opinion: US retailers lead where FTSE 100 fails on leadership diversity

Across the whole FTSE 100, there are only 10 ethnic minority chairs, chief executives and chief financial officers, and 47 companies have no BAME leaders on their boards and executive committees at all.

At this rate of change, it will take until 2039 before all FTSE 100 boards and senior leadership teams have ethnic minority representation – a far cry from the government-backed target set by Sir John Parker in 2016 to have no all-white boards by 2021.

“Forward-thinking corporations are realising they need to do more than talk about change and are giving authority to a diversity and inclusion leader”

While far from meeting proportional representation of the UK population (13%), retailers are bucking the trend of the overall findings at board and executive level, rising marginally to 5% from 3.1% in 2018, while the overall FTSE 100 has declined. However, with the leadership pipeline stagnating at 10.7% BAME in 2019 (10.6% in 2018), retailers would be right to be concerned about the prospects for future continuous improvement.

The Green Park Leadership 10,000 report does show an overall improvement in gender balance throughout the FTSE 100 at board level, with a surge of female non-executive directors doubling the representation over six years. However, these increases are mainly in white rather than ethnic minority women, whose representation at this level has dropped over the past year.

The findings support those of the Hampton-Alexander review that suggested a reluctance to put women at the heart of company decision making, with FTSE 100 boards on track to meet the 33% female target by 2020, but executive committees a few years off.

Additionally, since 2018, female progress at the top 100 leadership pipeline level has stalled at under 30%. This calls into question the likelihood of one in every two FTSE 100 executive director appointments over the next year being female – the requirement necessary for the Hampton-Alexander gender equality targets to be met in the 2020 timeframe.

Business imperative

The retail sector is in a period of unprecedented transformation – where omnichannel growth opens the customer experience to anyone, anywhere, and migration to cities is likely to make retail one of the biggest provider of jobs. Without visible and tangible diversity at senior executive levels, we will see greater employee attrition, inability to attract and engage minority ethnic candidates, erosion of the customer base and difficulty succeeding in new markets.

Forward-thinking corporations are realising they need to do more than talk about change and are putting resources behind – and giving authority to – a diversity and inclusion leader, usually in the shape of a c-suite executive.

“If the FTSE 100 companies are to represent the true modern face of the UK, and their customers, there’s a need for drastic change”

In the USA, almost half (47%) of S&P Index companies have a chief diversity officer, with two-thirds of these roles filled within the last three years – for example at businesses such as General Motors, Walt Disney, Time Warner, Mastercard, Bank of America, Coca-Cola and Walmart. Aside from the obvious moral motivations, these companies recognise the genuine business imperative, which is now a c-suite-level issue.

The UK’s population is due to increase by 3 million in the next 10 years, with net international migration expected to account for 73% of that growth, according to the Office for National Statistics. The UK population is 51% female. As for the future leaders, today, the young are far more diverse than the population as a whole – the school population in the UK is close to 25% BAME.

If the FTSE 100 companies are to represent the true modern face of the UK, and their customers, there’s a need for drastic change.

The talent is there, but the way institutions are rushing to cut and paste attraction and retention solutions with no clear data or market insight is analogue thinking in a digital world.