Word on the web: Diversity in the boardroom

Vince Cable's plan to increase diversity in boardrooms has received a mixed response from the media. Will the new targets help generate better businesses or will they undermine the principle of appointment based on ability?

Next month, Business Secretary Vince Cable will launch an ambitious plan to drastically improve minority representation across Britain's most powerful boardrooms. His aim is that one in five directors of FTSE 100 companies will come from an ethnic minority within five years.

The move comes after a significant push for more female directors in large corporations earlier this year. But while many feel the plan comes not a minute too soon, some commentators fear Cable's target poses awkward questions for business leaders.

About timeThe Guardian's Shane Hickey refers to a study of the top 10,000 executives published this year, which shows that less than half of FTSE 100 firms represent ethnic minorities at board level, while two-thirds have no full-time minority executive directors.
The proportion of FTSE 100 company directors that will come from an ethnic minority within five years if Cable's target is met

According to Hickey, the Institute of Directors (IoD) believes Cable's plans will help businesses tap into a wider range of skills and expertise. "We have long advocated boardroom diversity, including a broad range of expertise, backgrounds, age, gender and skill sets," said IoD Director General Simon Walker. "Forward-looking businesses recognise the benefits of pursuing this."

The Guardian story

Setting a precedentKPMG has already taken steps to increase diversity within its workforce. In an industry first, the professional services company recently published a detailed diversity profile of its 11,500 employees, and announced targets for greater diversity across its business over the next three years. The firm aims to ensure fairer representation in the areas of gender, ethnicity, disability and sexual orientation, and now has a set of diversity targets that are the most detailed in its sector.

Speaking to think tank Diversity UK, KPMG's UK Chairman Simon Collins revealed: "The diversity profile of the workforce across the professional services industry does not reflect society or our client base." Collins called for change, expressing a need for greater transparency and scrutiny to ensure the company meets its new targets.

Diversity UK post

Over-ambitious? On the other side of the fence, The Telegraph's Roland Gribben describes the limitations of setting targets. He claims that the campaign "poses awkward questions for business leaders", with Cable potentially "going too far too fast and ignoring the principle of directors being appointed on ability".

Gribben also highlights another perspective put forward by the IoD's Walker, who warns that Cable's campaign could be counterproductive. "Businesses seek to appoint board members on the basis of competence," said Walker. "They may not always make good decisions but there is little sign of systematic racial prejudice at the top of British business."

Meanwhile Katja Hall, CBI Deputy Director General, said that although "it was right to look at increasing the number of black and ethnic people in senior roles", a target of 20% would be very ambitious.

Hall said: "We believe the best way of improving boardroom diversity is to build on the success of the voluntary approach ... in encouraging businesses to boost female representation."

The Telegraph article

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Published: 07 Nov 2014
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