Here we have distilled down a (non-exhaustive) list of key arguments for diverse boards, just in case you – or your board’s Chair or Nominations committee – need convincing.

 

1. Highly successful companies in the FTSE Index are diversifying their boards

• Board diversity and effectiveness in the FTSE350 companies – a joint report from the FRS, SQW and LBS tracking the actual impact of increasing board diversity in the FTSE 350 (July 2021)
• The Cranfield Management School’s Female FTSE Index charts the number of females on the boards of the UK’s top listed companies. As of 2022, 40% of NEDs in FTSE100 firms are female.
• The Parker Review examines the ethnic diversity on FTSE-listed companies’ boards. 52 of the FTSE100 firms have at least one director of colour…. there is still clearly progress to be made to meet the target of all FTSE boards having at least one director of colour.

2. Companies with diverse boards are more profitable

• Diversity matters even more: The case for holistic impact, McKinsey’s fourth report (2023) on the business case for diversity, shows even stronger links between diversity and performance on their largest data set so far.
• When and why diversity improves your board’s performance, looks at research into how to harness diversity of thought to deliver benefits to your business (Harvard Business Review 2019)
• Gender 3000: The Reward for Change, Credit Suisse Research Institute build on their previous research linking gender diversity at senior level with increased profitability. (2021)

3. Gender diverse boards correlate with less excessive risk-taking and business failure

• “When women are on the board, male CEOs are less overconfident” (Harvard Business Review 2019) summarises research exploring why having women on the board results in better acquisition and investment decisions and in less aggressive risk-taking, yielding benefits for shareholders.
• Adding women to the C-Suite changes how companies think – research shows gender-balanced ‘top management teams’ are more open to change but less open to risk, and focus more on R&D (2021)

4. Financial services regulators are encouraging diversity on boards

• FCA to look at diversity when assessing firms reports the FTAdviser (2020)
• Our article “How to use the revised FRC guidance to push for open recruitment on *your* board” looked at key 2018 revisions to Financial Reporting Council guidance.

5. Shareholders and institutional investors are increasingly positive about diversity or even demanding it

• Board Agenda reports on the RBC Global Asset Management Responsible Investment Survey which found for the second year that institutional investors believe gender diversity on boards is important. (2020)
• Institutional Investors lead the push for more gender-diverse boards, 2017 advice to clients from Russell Reynolds including how to take a wider perspective on NED recruitment.

6. There’s an increasing reputational risk in a lack of diversity, with customers and staff

• The Black Lives Matter movement’s growing prominence in 2020 has brought more attention to diversity within companies, as exemplified by this Marketing Week article: ‘If Black Lives Matter to brands, where are your black board members?’
• Magnet for Talent: Managing diversity as a reputational risk and a business opportunity, PwC research report (2017)

7. Any additional care taken over selection of NEDs should generate a strong return on investment

• When and Why Diversity Improves Your Board’s Performance summarises research on the impact of diversity in the boardroom in Harvard Business Review (2019)

8. What is there to lose?

• Recruitment, promotion and the myths of merit – A brief examination of the concept of merit and its place in recruiting for diversity.
• Why diversity and performance are not competing priorities – Read a brief overview of why recruiting for diversity does mean comprising on performance.

How to recruit for diversity

• Turn off the spotlight, and turn on the floodlights

Women on Boards UK’s practical suggestions on how to change your recruitment process to ‘turn on the floodlights’ to the broadest pool of top talent

• What works: Gender Equality by design

Book by academic researcher Iris Bohnet, published by Harvard Univerity Press 2016

• Achieving gender balance on British boards with the soft-law approach: a directors’ perspective (Goyal, Kakabadse & Kakabadse, 2018, Journal of Business Diversity)

Further reading …

• How to improve gender equality in the workplace (tool-kit and Evidence-based actions for employers by Iris Bohnet (Co-Director of the Women and Public Policy Program, Harvard Kennedy School)