Diversity in boardrooms declines at top FTSE 150 companies

• Aparna Sreevalsan
• 19 October, 2023

A SIGNIFICANT decline occurred in the percentage of female, first-time, and minority-ethnic applicants appointed as non-executive directors of the UK’s top listed firms last year, according to a survey carried out by the recruitment firm Spencer Stuart.

In times of uncertainty, firms have chosen to recruit people with prior expertise, leading to a decline in diversity on the top 150 UK boards.

Main findings include:

• 44 per cent drop in minority ethnic non-executive directors (NEDs) among the latest cohort (15 per cent of new NEDs vs 27 per cent in 2022).
• 51 per cent of new NEDs are women vs 60 per cent in 2022.
• 36 per cent of new NEDs are foreign vs 52 per cent in 2022.
• 31 per cent of newly appointed NEDs are first-time directors, compared with 44 per cent in 2022.
• The proportion of women among all first-time directors has declined from 54 per cent in 2022 to 45 per cent.
• 55 per cent of new NEDs have a CEO, or general management background.
• Year over year, there was a 15 per cent decrease in the percentage of women and a 30 per cent decrease in first-time appointments.

Chris Gaunt, head of the UK board and chief executive practice at Spencer Stuart, said: “These drops suggest that diversity — in terms of gender, ethnicity and fresh perspectives — has taken a back seat as boards turn to experienced listed company directors to meet these unprecedented times head on.”

Of the 20 chief executive appointments made during that time, just three women were appointed to the position of chief executive or chair, and no member of an ethnic minority was employed.

Gaunt said: “More diverse boards clearly offer less risk of groupthink and more nuanced, true diversity of perspective and an ability to react in multi-layered way to complex events. This needs to be a collective societal push, with investors and executive committees expecting diversity from their boards.”

There were double the number of chair appointments in 2023 compared with the previous year but only four women were appointed, against 18 men.

By comparison, in 2022 there were six women and five men appointed.

It was evident from the data that more women were being hired to fill entry-level roles.

With the increasing prevalence of environmental, social, and corporate governance boards, the proportion of female ESG chairs reached a record high of 78 per cent.

In February 2022, the business-led FTSE Women Leaders Review set FTSE350 companies a 40 per cent target for women on boards and in leadership teams by 2025, up from a previous target of 33per cent.