How FTSE firms can make the most of a more diverse boardroom

Despite years of big talk about diversity by leading businesses, a gender-balanced board remains a rarity. Bernadine Rees, managing director in Protiviti’s UK financial services industry regulatory practice, explains the steps FTSE boards can take to improve diversity in their teams.

Compared to their peers in the FTSE All-Share Index, AIM companies lag badly when it comes to boardroom gender diversity. Forty percent of AIM-listed companies still do not have at least 33% female board members. In contrast, just 16% of all FTSE All-Share ex350 companies failed to achieve this target, according to the report by Women on Boards and Protiviti UK Hidden Talent: ‘The Expertise Listed Company Boards Are Lacking’.

Not only is improving gender diversity the right thing to do, but having a diverse board also enriches debate, decision-making and boardroom dynamics, all of which improve the company’s overall culture and financial performance. Indeed, research by the European Commission, as part of its proposal for a quota of women on boards, highlighted evidence to suggest that greater diversity has a positive effect on both corporate performance and governance.

In an unpredictable economic climate, gender diversity may become a lower priority issue for businesses, but it should remain high on the agenda for AIM companies looking to strengthen and grow their businesses. The FCA’s recently introduced diversity requirements are something that AIM companies should strive to achieve, so the question is how are AIM companies really making a difference and upping their game in terms of gender diversity?

Importance of role models and allies

Having female role models on boards and in senior positions is critical to increasing diversity in the boardroom and wider business as it will help inspire the next generation of women to believe they too can take a stand in the boardroom in the future. Without female leadership role models, it will be difficult for companies to make real or meaningful change when it comes to improving gender diversity.

It is also critical that men and other groups act as allies when it comes to advocating for women in the boardroom and across the organization, especially in male-dominated industries such as the financial sector. By providing women with visibility, encouragement, mentoring and sponsorship in promotion processes, allies can be critical in supporting women up the career ladder. They also have a key role in highlighting any areas for improvement in the firm’s diversity and inclusion policies and procedures to ensure the business attracts and retains the best talent.

Embedding diversity in recruitment

AIM companies must ensure that diversity is at the heart of all recruitment efforts, not just at senior and board level. By taking this approach, AIM companies can maintain the right gender balance across the company and create a good gender mix of future leaders who will eventually occupy senior and board level positions.

However, this cannot be achieved unless unconscious bias is completely removed from the recruitment process. To do this, it is critical that leaders instill a culture of diversity throughout the company; otherwise, biases will continue to go unnoticed and harm all efforts to increase gender diversity.

When it comes to applying for a new job, women are 31% more likely to prioritize roles that include clear details about career growth and trajectory. Therefore, if companies want to see an increase in female applicants, they need to ensure that job descriptions clearly outline how the company will help them achieve their career goals and aspirations.

That being said, there is no one-size-fits-all approach when it comes to increasing the number of female applicants. Companies will need to ensure that women have a positive recruitment experience, as evidence shows that women are more likely to tell friends about a positive recruitment experience than men.

Fostering a culture of diversity

When it comes to increasing diversity, many companies will often use financial incentives and key performance indicators to hold executives accountable. Such measures play a role, but what companies should really focus on is fostering a culture of diversity throughout the organization.

This can be done by ensuring that senior management is fully committed to DEI, so that a culture of improvement and embracing diversity comes from the top. Furthermore, a relentless commitment to improving gender equality regardless of economic circumstances is vital to ensure that AIM companies do not fall behind in their diversity efforts.

Increasing gender diversity in the boardroom may seem like a daunting challenge, but it is an important one. By taking the steps outlined above, AIM companies will be able to create greater diversity not just in the boardroom, but across the organization, thereby helping to inspire the next generation of female leaders and creating a more sustainable and dynamic organization.

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