Racism alone doesn't explain boards' diversity deficit

Ethnic minorities are woefully under-represented on FTSE 100 boards. Is UK plc to blame and will quotas solve the problem?

by Adam Gale
Last Updated: 02 Nov 2016

When British business looks at itself in the mirror, it does not see a racist or a sexist for that matter. Yes, the reflection may reveal a white (straight, Oxbridge-educated) man in his fifties, but that’s not because of racism. Is it?

There will be those who beg to differ, and they could easily arm themselves with a set of numbing statistics revealing deep inequalities in the UK labour market.

According to Sir John Parker's diversity report, only 8% of FTSE 100 directors are from black, Asian and minority ethnic (BAME) backgrounds, compared to 14% of the general population, while 53 of the top 100 firms have no BAME directors at all. 

It's not just a top table problem either. Data from the Equality and Human Rights Commission (EHRC) reveal that:

- 12.9% BAME people are unemployed, compared to 6.3% for white people.

- The long term unemployment rate for BAME 16-24 year olds has risen 49% since 2010, compared to a fall of 2% for whites of the same age.

- black graduates are paid 23.1%  less per hour than whites, while only 6% of black school leavers attend a Russell Group university, compared to 11% of white school leavers (and 12% of Asians).

- only 8.8% of BAME people work as managers, senior officials or directors, compared to 10.7% for white people.

It's all pretty grim. As British employers are the ones hiring, promoting and paying white and BAME people alike, it’s hard to avoid the conclusion that they are part of a deeply unfair, indeed racist system. 

Beware statistics

Well, yes and no. Words matter here. Obviously, British employers are indeed a big part of a system that produces unequal results, but that does not mean they are racists.

Most people in business would be mortified at the accusation, and many businesses try very hard to attract BAME applicants and ensure fairness in their recruitment and promotion processes. 

What they – and indeed all of us - are much more likely to suffer from is unconscious bias, which can significantly affect outcomes in recruitment and promotion. But unconscious bias alone will not explain the above statistics.

The missing ingredients are class and to a lesser extent age.

We are not as socially mobile in the UK as we like to think we are. If you’re born in the bottom quintile for household income, you’ve got a decent chance of staying there – and ethnic minorities are heavily over-represented in the bottom quintile.

It may well be that racism – conscious or unconscious – means BAME people from low-income backgrounds still have worse job and pay outcomes than white people from the same background, and/or are less socially mobile, but that doesn’t mean the significant role of class in race inequality can just be ignored.

Age, meanwhile, explains some of the under-representation on boards because directors tend to be older while the BAME population is younger (roughly 9% of over 55-65 year olds compared to over 25% of under 10s).

Indeed, analysis from Spencer Stuart's 2015 UK Board Index reveals that BAME people made up 13.3% of directors under the age of 50 in the biggest 150 companies, compared to 5% when looking across all ages. Hardly perfect, but better than it initially looks.

What all this means is that the statistics paint a distorted picture (how distorted is debatable) of the undoubted problem of race inequality in the UK, that clears up somewhat upon closer examination.

The question is what to do with the information. It is absolutely not an excuse for UK plc to say ‘it’s not too bad really’, blame our class-ridden society and wash its hands of the inequality issue.

Instead, it’s an opportunity to think through why its diversity and inclusion programmes haven’t achieved what it wanted them to achieve. 

In any case, understanding a problem better can never hurt. Simply dismissing business as bigoted without trying to get to grips with the underlying causes of inequality, however, can.

Are quotas the answer?

At board level, Parker's solution to set a target for BAME directors - that no FTSE 100 firm would have an all-white board by 2021. This, one would hope, would then filter down through the corporate machinery.

As ever, quotas will divide opinion. Parker's target could introduce an element of tokenism. Indeed it's hard to imagine there wouldn't be a hiring spree of BAME non-executive directors, while executive positions remain largely the same - much as happened following the Davies report into women on boards.

It could also place the emphasis too heavily on ticking boxes. At this summer's MT Live Future of Work conference, former BP boss Lord Browne argued that the real goal was not diversity per se, but inclusion: build an inclusive system, and diversity will follow. 

The problem is that diversity hasn't followed. Quotas may not be a perfect solution, but they're undoubtedly a better solution than doing nothing.

A version of this article was originally published on August 18.

Image credit: Image credit: Pui Shan Chan/Wikipedia

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