How FTSE firms can get most from a more diverse boardroom

09 November 2023 4 min. read
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Despite years of big talk around diversity by leading businesses, a gender-balanced board remains a rarity. Bernadine Reese, a managing director within Protiviti’s financial services industry regulatory practice in the UK, explains the steps FTSE boards can take to improve diversity within their teams.

Compared to their FTSE All-Share Index peers, AIM companies are seriously behind when it comes to boardroom gender diversity. Forty percent of AIM-listed companies still do not have at least 33% female board members. In contrast, just 16% of all FTSE All-Share ex350 companies haven’t hit this target, according to the Women on Boards and Protiviti UK report Hidden Talent: ‘The Expertise Listed Company Boards Are Lacking’.

Not only is improving gender diversity the right thing to do but having a diverse board also enriches debate, decision-making and boardroom dynamics, all of which improves the overall culture and financial performance of a company. Indeed, research from the European Commission, as part of its proposal for a quota of women on boards, highlighted evidence to suggest that greater diversity has positive effects on both corporate performance and governance.

How FTSE firms can get most from a more diverse boardroom

In an unpredictable economic climate, gender diversity can become a lower-priority issue for businesses, but it should remain high on the agenda for AIM companies looking to strengthen and grow their businesses. The FCA’s recently introduced diversity requirements are something that AIM companies should be striving to achieve, so the question is, how do AIM companies really make a difference and up their game on gender diversity?

Importance of role models and allies

Having female role models on boards and in senior positions is critical to increasing diversity within the boardroom and the wider business, as it will help inspire the next generation of women to believe that they too can hold a boardroom position in the future. Without female leadership role models, it will be difficult for companies to make any real or meaningful change when it comes to improving gender diversity.

It is also critically important that men, and other groups, act as allies when it comes to championing women within the boardroom and throughout the organisation, especially in male-dominated industries such as the finance sector. By providing women with visibility, encouragement, mentorship and sponsorship in promotion processes, allies can be crucial in supporting women up the career ladder. They also have a key role to play in highlighting any areas for improvement in a firm’s diversity and inclusion policies and procedures to make sure the business attracts and retains the best talent.

Embedding diversity in recruitment

AIM companies should ensure that diversity is at the heart of all recruitment efforts, not just at the senior and board level. By taking this approach, AIM companies can maintain the right gender balance throughout the company and create a good gender mix of future leaders who will eventually fill the more senior and board-level positions.

However, this cannot be achieved unless unconscious biases are completely removed from the recruitment process. To do this, it’s critical that leaders instill a culture of diversity throughout the company; otherwise, biases will continue to go undetected and damage any efforts to increase gender diversity.

When it comes to applying for a new job, women are 31% more likely to prioritise roles that include clear details about career growth and trajectory. Thus, if companies want to see an increase in female applications, they need to ensure that job descriptions clearly outline how the company will help them achieve their career goals and aspirations.

That being said, there is not a one-size-fits-all approach when it comes to increasing the number of female applicants. Companies will need to ensure that women have a positive recruitment experience, as evidence shows that women are more likely to tell friends about a positive hiring experience compared to men.

Fostering a culture of diversity

When it comes to increasing diversity, many companies will often use financial incentives and key performance indicators to hold executives accountable. Such measures play a role, but what companies should really focus on is fostering a culture of diversity throughout the organisation.

This can be done by ensuring that senior management are fully engaged with DEI so that the culture of improving and embracing diversity comes from the top. Furthermore, a relentless commitment to improving gender equality, regardless of economic circumstances, is vital in making sure AIM companies don’t fall behind in their diversity efforts.

Increasing boardroom gender diversity might seem like a daunting challenge, but it’s an important one. By taking the steps outlined above, AIM companies will be able to create greater diversity not just in the boardroom but also throughout the entire organisation, thereby helping inspire the next generation of female leaders and create a more resilient and dynamic organisation.