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CityAM blog: We need to 'Change the Race Ratio'

The history books will likely remember 2020 as a year of great change and loss, but amid the human tragedy and economic fallout of the global pandemic, there were also signs of hope – especially for the D&I agenda. 

The killing of an unarmed black man by a police officer in the US sparked a global movement of protest and resistance. In cities all around the world, tens – in some cases hundreds – of thousands of people protested not only against the killing of George Floyd, but how similar events have become an everyday part of the systematic racism in the world’s biggest superpower, and beyond.

The protests spread rapidly online, causing global corporations to take serious note. Many household names rushed to show their support, issuing statements and straplines calling for a fairer, more equal society. 

Despite this global public and corporate reaction, however, the pace of change on the ground remains glacial. Inequality is still rife from the streets we walk, to the boardrooms of most major companies.

In the UK, the 2016/17 Parker Review looked into representation of ethnic minorities on FTSE100 and 250 boards. It showed a disappointing picture but set a target that by 2021 there should be at least one person of ethnic minority on the board of every FTSE100 company. The same target was to be achieved by those in the FTSE250 by 2024. 

Not only is it the “right thing to do” for society, but there is growing evidence it makes sense from a business perspective. Don’t just take my word for it. Leading business journals are packed with statistics showing how a diverse workforce and leadership teams create better and more sustainable performance.

In my latest DiverCity Podcast with Lord Bilimoria of Chelsea, President of the Confederation of British Industry (CBI), and Dr Kamal Munir of Cambridge Judge Business School, we assessed the progress that had been made – and discuss what more can be done. 

Frustratingly, the current picture is not much better than at the time of the initial Parker Review. Its targets are nowhere close to being reached. More than a third of the UK’s top 100 companies did not have a single board member representing an ethnic minority at the end of 2020.

I talked with my guests about the “Change the Race Ratio” campaign, which Lord Bilimoria is spearheading in his role at the CBI. The campaign aims to accelerate greater racial and ethnic representation and participation on executive boards and within leadership teams. It also aims to replace the ethnicity pay gap and get companies to set out action plans for inclusion at all levels. 

Published as four commitments – to increase racial and ethnic diversity among board members; increase diversity in senior leadership; for companies to be transparent on their actions by publishing a clear action plan and clear ethnicity pay gap reporting; and to create an inclusive culture in which talent from all diversities can thrive – this may at first seem prescriptive, but it is clear that simply relying on a “nudge” culture is not working for most. 

Yet some companies have made significant progress – so what can we learn from them?

Dr Munir – who advises organisations around the world – suggested companies must appoint a diversity task force, responsible for hitting inequality targets, including those set by the ‘Change the Race Ratio’ campaign.

With our data-driven culture, we have the ability to measure and manage everything – what is missing seems to be the enthusiasm to focus. 

Once companies see the picture in their own organisation, they can focus on how to change and improve. Dr Munir advises collaboration on best practice and establishing internal and even cross-sector mentoring programmes to push forward on progress.

As the founder of a successful global giant, Lord Bilimoria knows that to be truly effective, changes must start at the very top. Therefore, the search community must also step up to the mark, to ensure an ethnically diverse pipeline of applicants is encouraged at all hiring levels. The excuse that there are too few suitable candidates from different ethnic backgrounds and communities can no longer ring true – if indeed it ever did. The search community must look beyond the usual lists. 

Not only is it absolutely the right thing to do for a fairer and more equal society – it is proven that greater ethnic representation can improve your commercial performance and might help futureproof your business too. McKinsey data shows companies in the top quartile for racial and ethnic diversity are 35% more likely to have above average financial returns.

The ‘Change the Race Ratio’ campaign is timely and rightly bold. Enlighted organisations have been jolted awake by the Black Lives Matter movement and we cannot let the opportunity to make real and lasting change pass us by. Business needs to take proper, strategic action and Change the Race Ratio gives them a clear framework, commitment and a plan to take that action and to say so publicly.