Blogs 10th December 2019 6 minutes read

Britain’s top retailers must take definitive action to increase ethnic diversity leadership

Green Park’s latest research has highlighted the ongoing failure of the UK’s biggest businesses to recognise the need for diverse talent at the top levels. While there has been progress in gender diversity and BAME representation at Board level, we cannot ignore the fact that many Executive teams do not reflect the ethnocultural and gender make up of this country.  

We are living in an age of accelerated change in a modern, wealthy country with a population more diverse and multicultural than it’s ever been. However, the research leaves us with clear, disturbing evidence – if you are a woman or a person of colour, you are still far less likely than your white male counterpart to rise through the ranks to the top level of the top companies in the UK.

Green Park’s recently released annual research report, thLeadership 10,000, is a review of the gender and ethnocultural diversity of FTSE100 leadership. The findings from 2019 have been compared against Green Park’s first report in 2014 and reveal some disappointing realities.

It is true that we see an improvement in gender balance at Board level, with a surge of female Non -Executive Directors doubling the representation over five years.  However, while women have also doubled their share of top 3 roles (CEO, CFO, Chair), that number still sits at less than 10%.

An even more disappointing picture appears for BAME leaders, where representation has remained stagnant at around 3% since 2014. 47 companies still have no ethnic minority representation at Board and Executive Director level – just 14 less than in 2014. At this rate of change it will take until 2039 before all FTSE 100 Boards and Executive Committees have ethnic minority representation; a far cry from the Government target set out by Sir John Parker to have no all-white boards by 2021.

This month also saw the release of the Government backed Hampton Alexander review, a deep dive into gender diversity in the UK’s FTSE350. In 2014, the review set two targets for the FTSE 100 - one to reach 33% female representation on Boards; the other a goal of 33% on Executive Committees by 2020. In 2019, women now make up 32.4% of FTSE 100 boards and 29.6% on FTSE 250 Boards.

The review’s Chairman, Sir Philip Hampton is confident the Board level target will be reached, but lamented that the UK is “still a long way from reaching the target for women in senior leadership roles at Executive Committee level. Unless half of all appointments made this year go to women – our target for 2020 is not going to be met.”

The report finds that 96% of Chief Executives, 85% of CFOs and 83% of CIOs are men.

Looking specifically to Retail, we see a sector in a period of unprecedented transformation – where omnichannel growth opens the customer experience to anyone, anywhere, and migration into cities is likely to make Retail one of the biggest provider of jobs. This year, Green Park’s research report The Leadership 700 delved into the leadership of the Top 30 publicly listed Retailers of the UK, Europe and the US and reinforced that the diversity gap emerging between Executive Committees and the Main Boards is an area of paramount concern.

In the UK, white males represent 72% of total leadership at Board and Executive Committee level, with BAME males at just 1%. While white females make up 25%, BAME females are at just 2%.

The report found things to be slightly more positive in the US, where main Retail Boards and Executive Committees are further ahead in terms of diversity than those in the UK and Europe. Of the 10 US retailers examined, all have appointed at least one women to their Executive Committee.

Steve Baggi, Co-Founder and Head of Retail at Green Park,  noted that “without visible and tangible diversity at senior Executive levels within retailers, we will see greater employee attrition, an inability to attract and engage minority ethnic candidates, erosion of the customer base and difficulty succeeding in new markets.”

Aside from the obvious moral motivations, these companies need to recognise the genuine business imperative, which is now a C-suite issue.

The UK’s population is due to increase by three million in the next 10 years, with net international migration expected to account for 73% of that growth, according to the ONS. The UK population is 51% female. As for the future leaders, today, the young are far more diverse than the population as a whole – the school population in the UK is close to 25% BAME.

If the FTSE companies are to represent the true modern face of the UK, both now and in the future, there is a need for drastic change.

Jo Heath, Partner in Green Park’s Diversity, Inclusion, Culture & Ethics Consultancy Practice says this isn’t just a case of ensuring talented individuals excel, “it’s about changing the face of leadership to inspire others, having visible role models, having diverse opinions and decision makers which will ultimately make organisations more successful.

These diverse leaders widen a Board’s perspective, making it more relevant and insightful. And when Boards understand their teams and customers, there’s more chance that they’ll create the products and services that people really need and want.”

It has become more important than ever to focus on areas where change is slow moving. Melanie Richards CBE, Deputy Chair of KPMG states in the Hampton Alexander that “this will require systematic focus on all aspects of recruitment, retention and promotion.

To truly address a lack of diversity at the top we must look at every stage of the talent pipeline. Sustainability and longevity of these changes are essential, and to that end the progression of women remains key.”

In order to support women in the Retail sector, Green Park sponsors the Retail Week Be Inspired Senior Leadership Academy , a programme designed to give top female talent the exposure to a range of learning and insights across the year. In September, Nicola Paul, Senior Consultant at Green Park’s Diversity, Inclusion, Culture & Ethics Consultancy spoke to Academy members about the need for a cultural shift within businesses to encourage diversity.

In light of the latest research insights, the call for an increased awareness of cultural intelligence is an important stepping stone to understanding the continued lack of diversity at the top tables.

“Too often people wait to be told what they need to do to help their business to be more diverse. Yes, there is an ecosystem of initiatives that will make a difference to D&I. However, it’s quite evident that people overlook their personal responsibility to be more inclusive and take the opportunity to explore different perspectives and different cultures as part of making an impact.

It means people can end up developing their knowledge of D&I through their own view of the world; leaning towards the more comfortable topics and sometimes shying away from those they may find more challenging.

A higher level of cultural intelligence means people will be more effective when relating to people with different backgrounds to their own, which will aid inclusion. With a high level of curiosity and positive intent, over time, you can become a more culturally intelligent person.”

It’s undeniable that there is a business and ethical case for increased diversity in the workplace and by examining the FTSE companies, we see businesses that should be leading the way are falling short of genuinely diverse leadership.

Further and deeper research is needed to truly understand why BAME diversity on Boards is stalling and why female representation is increasing on Boards, but not at Executive level. In the Retail sector, one only needs to walk a shop floor to see a breath of diversity that reflects UK society. So, where does the drop off occur, and why? Continued ethnic pay gap investigation may provide some answers, but the real accountability lies within the businesses themselves.

We can see clearly through the research that there is a disconnect between the shop floor and the most senior leadership. Many retailers have D&I policies, even dedicated D&I officers, yet the issue remains.

Through our consultancy with the Retail sector, we have seen this occur at middle to senior management levels, but the emphasis and balance differs – all businesses are different, as are diversity strands. The talent exists but cut and paste solutions without data or market insights will not work.

Therefore, in order to truly understand this issue, and to get to the heart of solving it, businesses need to make a proactive, genuine commitment to investing time and money into self-reflection, brand reputation and market analysis. To understand where the diversity drop off occurs is key to understanding why it happens, and what can be done, taking a deep dive into hiring processes as well as internal culture and behaviours.

Without this commitment to internal reflection and market research, businesses risk blinkered perspectives, missed opportunities and a drift into irrelevancy.

 

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Green Park’s Retail & Consumer team operates at the forefront of the consumer revolution. Through our global research, we continue to identify and define the requirements for future consumer leadership, organisational design and effectiveness.

Green Park’s Diversity, Inclusion, Culture & Ethics Consultancy helps organisations to build knowledge, strengthen internal capabilities and lend support to develop a diverse and inclusive workplace culture.

 

To find out more about Green Park's Retail & Consumer Practice, click here

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