Companies with diverse boards accelerate diversity and inclusion

Companies with diverse boards are accelerating their diversity and inclusion schemes via partnerships and recruitment metrics. Diverse companies are more than twice as likely as non-diverse ones to set diversity targets – suggesting that many firms may be left behind if they do not change course.

In previous economic downturns, diversity and inclusion efforts have stalled, and according to a release from the Confederation of British Industry (CBI) in late 2020, that has proven to be the case with the coronavirus too. Women and people from an ethnic minority background have been among the most affected by the pandemic and the economic fallout. For example, women – who represent three-quarters of the part-time labour force – disproportionately hit by part-time jobs falling 70% in the first eleven weeks of the pandemic, while mothers were found to be 47% more likely to lose their jobs than fathers, as reported by the Institute of Fiscal Studies.

Whatever progress has been made on diversity and inclusion (D&I) over the last decade, it seems it is currently under threat in this case. This trend does not seem like it will manifest itself the same across all companies however – according to a new report from Odgers Berndtson, the situation might instead see a widening gap between firms leading on D&I, and those who were already lagging behind.

The UK Leadership Diversity Report follows an in-depth survey of 623 non-executive directors and C-suite members from companies across the UK. The major finding of the report is a clear distinction between the actions taken by diverse companies and non-diverse companies when it comes to recruiting board and leadership team members.

When asked if they believed what impact Covid-19 would have on D&I initiatives, the majority of firms suggested that it would not have any at all. However, diverse firms were far more likely to see the current scenario as an opportunity to push for more change in their organisation: 37% of diverse firms said the crisis will lead to more diverse boards, compared to just 12% of non-diverse firms.

Leading on from this, Odgers Berndtson found that companies with higher levels of diversity were more comfortable deploying new measures to further boost inclusivity. The study revealed that this manifested itself on three fronts.

First, diverse companies were three times more likely than non-diverse companies to partner with D&I membership organisations. At diverse firms, 36% of business leaders and 34% of boards said they partnered with organisations aimed at boosting diversity, compared to just 10% of non-diverse firms.

Meanwhile, diverse firms were also twice as likely to set targets for diversity than non-diverse firms – as 35% of leadership teams at diverse firms said they would do so. In comparison, a mere 15% of non-diverse companies set Board or C-suite level D&I targets.

Finally, the vast majority of diverse firms were committed to reducing unconscious bias in the recruitment process. Another hallmark of diverse organisations – and a particularly hot button issue in light of recent comments by former KPMG Chair Bill Michael – around three-quarters of organisations with strong diversity on their firm worked for an organisation that has measures in place to reduce bias in the recruitment of leadership or board members. In comparison, just 31% of non-diverse organisations had these measures in place.

If this is the case, and firms leading on diversity are looking to use their previous experiences as well as the opportunities presented by the pandemic to drive further change, many firms risk falling drastically behind on their diversity efforts. As has been extensively documented, diversity and inclusion can be a powerful force for boosting a business’ growth, so as firms look to position themselves to take advantage of the post-pandemic recovery, failing to improve on diversity could stifle the creativity and agility as an organisation.

Chief Diversity Officer

One method of boosting D&I in a firm could be to create a Chief Diversity Officer. 76% of C-suite respondents told Odgers Berndtson that they had no such officer – as did 72% of non-executive directors – illustrating the size of the opportunity it presents. While around 20% of firms have a CDO, and a further 3% plan to get one, this could be a key differentiator for firms looking to catch up on the efforts of rivals regarding D&I.

Whether this is an opportunity firms seize on remains to be seen, though. Odgers Berndtson found that only 40% of C-suite respondents believed their firm needed a CDO, and only 31% of non-executive directors agreed. In contrast, between 60-70% of both groups said that their organisation did not need such a role – and would rather its responsibilities be distributed to another officer’s portfolio. Chief People Officer was the most popular option for this, with 41% of non-executive directors, and 47% of C-suite respondents saying that position should take on CDO responsibilities.

Commenting on the study, Kester Scrope, CEO of Odgers Berndtson, said, “The case for diversity is unequivocal. We believe that the inclusion & diversity narrative has firmly moved on from the ‘why should we do this’ to the ‘how can we do this’. This report provides clear insights into the measures that can be implemented and the actions that can be taken to make diversity at the top table a reality.”