It looks like the snowy peaks syndrome, which has engulfed the top jobs in FTSE 100 companies for years, bears no sign of rescinding – at least in 2017.
A survey by Green Park, the executive search and diversity solutions provider, has found that while pipeline diversity among the top 100 titles in the FTSE 100 – from department head to executive vice president and a data set of 8,334 individuals – has seen significant improvement with the number of ethnic minority leaders doubling since 2015, diversity at the very top remains stagnant.
This won’t come as a shock to the business community, or indeed the UK as a whole. In November last year, the Parker review examined diversity across UK boards, finding that only 1.5% of directors in FTSE 100 boardrooms were from a minority background, compared to 14% of the UK population. The review set out recommendations that included FTSE 100 boards having at least one non-white director by 2021 and at least one non-white director sitting on the boards of FTSE 250 companies by 2024.
Even where there has been progression with regard to pipeline diversity, the Green Park study highlighted that this couldn’t be attributed to a “strategic effort” of FTSE 100 companies to make their leadership more diverse, but rather that the developments were “incidental to changes in the composition of the index”.
CFOs haven’t escaped the diversity slump. In fact, there has been a decline in ethnic diversity among CFOs of FTSE 100 companies, dropping from 4% in 2015 to 2% in 2016. However, since the survey was conducted (with data accurate to Q1 2017), Hikma Pharmaceuticals, with CFO Khalid Nabilsi, has dropped out of the index, replaced by G4S. Former CFO of G4S Himanshu Raja left the company last year and was replaced by Tim Weller. With Tony Chanmugam having stepped down from his CFO position at BT, ethnic diversity in the FTSE 100 has now dropped even further, with Tushar Morzaria remaining as group finance director at Barclays.
Looking at FTSE 100 chairs and CEOs, Fred Phaswana, and Manjit Wolstenholme remain as non-white chairs of Standard Chartered Bank and Provident Financial respectively. Said Darwazah remains as chair of Hikma Pharmaceuticals, although the company is no longer FTSE 100 listed. There have been no new non-white chair appointments since 2015. Similarly, there has been no change in relation to the number of non-white CEOs since 2015, which stays at 4%.
The gender split
Gender diversity has also seen little improvement, if none at all. There are currently 12 women CFOs in the FTSE 100, the same number as in 2015, with gender diversity failing to capitalise on the gains made between 2014 and 2015 when the number jumped from eight to 12. The number of women CEOs has slowly increased by one each year to reach a total of six women at the helm of FTSE 100 companies, and the number of women chairs has risen by one since 2015, to a total of five.
However, across the top 20 positions in FTSE 100 companies, which are on the main board and operating board directors, the survey found that women minority executives were more likely to advance up the corporate ladder compared to male minority executives, at 9.4% compared to 6.4%. When looking at the top 100 level, women retain the advantage at 11.2%, but the gap decreases to 0.8%.
Diversity rankings across FTSE 100
Taking the diversity data from each FTSE 100, the survey’s rankings attributed an aggregated diversity percentage to each company. At the top of the pile, InterContinental Hotels Groups achieved a ranking score of 36.7%, followed by Standard Charter on 36% and Unilever on 29.2%. Rounding out the top 10 were Randgold Resources (27.5%), Diageo (26.7%), Old Mutual (26.1%), Vodafone (25.2%, Next (24.4%), Informa (24.4%) and Royal Bank of Scotland (24.2%). At the other end of the table were Rolls Royce (9.4%) and St James’s Place (8.9%) at positions 90 and 91 respectively, with Fresnillo (4.2%) at 99.
Although the diversity pipeline has improved at the top 100 level, the failure to capitalise on diversity progress in recent years is a real cause for concern, especially as companies often claim to have diversity issues at the forefront of their future strategic plans.
Unless we start to see real representation on the boards of the top companies, the UK will face challenges in its campaign to been seen as a country with a diverse business community, which could have wider implications. As the survey suggested, with the UK locked in Brexit negotiations with the EU, and the government insisting that it is ready and willing to strengthen trade relationships with countries outside of the EU, “the UK’s claims to be outward looking and open to business with the non-European world are hardly enhanced by the continued domination of its business leadership by white men”.
The question now is whether the FTSE 100 will meet the recommendations made by the Parker review and ensure that boards have diverse representation by 2021. At the moment, unfortunately, the signs seem to be suggest that they’re a long way off from achieving that goal.