Vince Cable plans to reduce white dominance of boardrooms

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Business secretary Vince Cable is to launch an ambitious plan next month to bring more ethnic minorities into Britain’s most powerful boardrooms, with the aim of eventually having one in every five directors from a non-white background.

The move to advance more black, Asian and other minority representation into senior management roles comes after a successful push to get more women into director positions in large corporations.

Under the plans from Cable, one in five directors of FTSE 100 companies will come from an ethnic minority within five years. It is expected that he will announce the target next month.

The business secretary has consulted with Trevor Phillips , the former chair of the equality and human rights commission and the actor Lenny Henry, to formulate a plan to increase ethnic diversity at board level.

A study of the top 10,000 executives published this year – written by Phillips and Professor Richard Webber, of Kings College London – found that more than half of FTSE 100 firms had no non-whites at board level, and two-thirds had no full-time minority executive directors.

On Wednesday, the government will publish a six-month progress report on the number of women in Britain’s boardrooms. This follows a review by Lord Davies into women in senior positions which began in 2011 and was required by the government to improve female numbers in senior business roles.

Davies set a target of increasing board membership of women to 25% in FTSE 100 companies by 2015. Having started at 12.5%, it stood at 22% in September. The commodity trader Glencore became the final FTSE 100 to appoint at least one woman to its board when Patrice Merrin became a non-executive director in June.

A source close to the business secretary said yesterday: “Vince Cable wanted to encourage a more diverse workforce and the obvious place to start was with women. He thinks businesses make better judgments when they have a diversity of opinions at the top. We feel like we have achieved a huge amount in terms of women and boards, but if you look at diversity in terms of ethnic minorities there is a huge amount of work to do.

“If we thought the problem in terms of female representation was bad, the problem with visible ethnic minorities is potentially even worse because you can count on one hand the number of visible ethnic minority heads of business or people on boards of FTSE companies.”

However, as with the drive for greater female representation on boards, the one-in-five benchmark will represent a target and not a legally binding quota. One of the initiatives that will be promoted in the plan by Cable will be to have a mentoring programme within the corporate structure to enable employees from ethnic minorities to rise through the ranks, according to the Sunday Times. The initiative may later be rolled out to include FTSE 250 businesses.

The move was welcomed by the Institute of Directors. “We have long advocated boardroom diversity, including a broad range of expertise, backgrounds, age, gender and skill sets. Forward-looking businesses recognise the benefits of pursuing this. Where, as with mining companies, an entire sector has historically appointed directors from too narrow a social pool, shareholders are forcing change in the interests of better business. Voluntary efforts to improve gender diversity are proving effective, and this is the model to follow in other areas,” said Simon Walker, IoD director general.

“Skills, business expertise and the climate for progress all need to be doggedly improved across the whole community. This work may be frustratingly slow at times, but ultimately a well-developed pipeline of diverse talent, in all its forms, is the only lasting solution.”

If the moves prove successful, it will result in a proportionately larger number of non-white people on boards compared with the current profile of the population. The 2011 census showed 86% of the population of England and Wales was white while the largest ethnic grouping was Asian or British Asian at 7.5%. The source close to Cable said the rapid growth in ethnic minorities meant those proportions were expected to change significantly within five years.

The report by Phillips and Webber was followed by further research from the charity Business in the Community which found 6% of senior managment positions were held by people from ethnic minorities. The charity’s report found 7.9% of management positions were held by black, Asian and minority ethnic people in 2012, compared with 10% in total employment in the UK. The management figures have edged up from 5.5% and 6.8% respectively since 2007. The BITC report called for ethnicity to be added to the UK corporate governance code, which sets out standards of good practice and states: “The search for board candidates should be conducted, and appointments made, on merit, against objective criteria and with due regard for the benefits of diversity on the board, including gender.”

In terms of public profile, Tidjane Thiam of Prudential is one of the most high recognised senior executives from an ethnic minority. He was the first black chief executive of a FTSE 100 company and has served as a government minister in the Ivory Coast, where he was born.

Powered by Guardian.co.ukThis article was written by Shane Hickey, for The Guardian on Sunday 2nd November 2014 19.58 Europe/London

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