Non-executive directors: All change on the top table

Businesses are learning to diversify at the highest levels by recruiting more female and ethnic minority non-executive directors

In the past two years, the ranks of the non-executive director team at Reuters have opened to include two women and one black man. Prior to their appointment, the well-known media organisation had precisely no non-white or non-male directors.

That's the sort of fact that makes Dr Val Singh, senior research fellow at Cranfield School of Management and, since 1999, co-author of the annual Female FTSE Index and its biennial cousin the Ethnicity Index - breathe a deep sigh of satisfaction.

Yet while she believes that UK firms are finally waking up to the fact that boards dominated by white middle-aged men with identical social and educational backgrounds are missing out on a rich vein of talent, she is by no means content at the slow rate of progress since the Higgs report of 2003, which made a series of recommendations on boardroom diversity.

Cranfield's last report, published at the end of 2005, revealed that 22 of the top FTSE 100 firms still had no women on the board, despite the widespread trumpeting of diversity policies by leading business figures.

The study identified around 110 female directors in these blue-chip firms, up from 84 in 2002, and found that the proportion of ethic minority directors was just 2.4 per cent. Cranfield notes though that with the globalisation of many top firms, determining the ethnic background of directors on UK boards can be far more complicated than establishing their gender.

While the numbers of women in executive positions is, says Singh, "still pretty dire" at around four per cent of FTSE 100 posts, their presence in non-executive positions - at 14.5 per cent - is close to the 15 per cent in the US.

Intriguingly, many of the women and ethnic minority directors now being invited to take up non-executive positions in the UK are from abroad - particularly the US - where, says Singh, "women are brought up to believe that anything and everything is possible". British women non-execs on the other hand - the majority of whom are in their forties and fifties - were "brought up to believe that a woman's place was in the home," she adds.

Aside from the good PR that is attached to firms such as Centrica, which is a fierce champion of diversity and which topped the 2004 Female FTSE Index with a 33 per cent female board, why does bringing in more female and non-white faces matter?

To Niall FitzGerald, chairman of Reuters, diversity is a business imperative: "How can any business expect to flourish, especially in today's increasingly competitive market, if it is only drawing talent from part of the population? Or if it obliges its employees to check aspects of their identities at the door every morning?"

"Diversity is not just about being able to more closely identify with the needs and aspirations of an international company's wide-range of consumers, customers and business partners, it is also about bringing in a diversity of leadership styles," he says. "An approach to leadership that is inclusive has a crucial role to play in today's multinational, multicultural world."

Claire Vyvyan, director and general manager of Dell UK's corporate business group, has 20 years' experience in the male-dominated world of IT. Today, she says she is happy to be a role model for young women looking to fill a wide variety of technical and non-technical roles at the firm, and believes that the organisation has a good mix of male/female and white/non-white talent: "In the early days, I was usually the only women in meetings, but over time, I have been delighted to see more women move into senior positions and bring with them new experience, talents and attitudes."

She adds: "Here at Dell, we feel very strongly that there is an important business case to be made for greater diversity at all levels of the organisation."

While there is an argument to say that women can be a civilising influence on male-dominated boardrooms and can help create a more open management style, Dr Singh believes that boards simply need the additional skills that women can offer.

"In my view, boards take on women as non-executive or executive directors because of their experience - which often spans both public and private sector - their often very impressive educational record, and their top level contacts," she says. "Many of these women have more experience than their male colleagues and invariably bring something new and important to the board, be it experience in customer relations or maybe international experience at a time when the company is looking to expand overseas."

"Many senior men enjoy working with women, and in terms of return on investment, they are certainly seen as being great value for money," she adds.

While gender or ethnic diversity in boardrooms is an emotive issue that raises passionate controversy - particularly when it is bound up with accusations of "political correctness" or "tokenism" - Cranfield's regular snapshot of diversity in FTSE 100 firms is, she says, intended to help build the business case for diversity, rather than to hector directors about their apparent conservatism.

"We are often seen as the 'diversity police', but that isn't our role at all," says Singh. "Diversity is a bottom-line issue first and foremost and that's why many clever companies are nowadays so keen to embrace it."

Although there may be an underlying belief in many large firms that it is no longer appropriate to operate under a board where everyone looks the same and has the same cultural background, there are six clear prompts, says Cranfield, that lead a firm to seek an ethnic minority or female director.

First are the companies that need to be connected to changing public attitudes to diversity - media firms such as Reuters for example - and second are those experiencing rapid globalisation. Third are post-colonial firms - mining or tobacco firms in South Africa for example - where the new seat of power needs to be represented, while the fourth prompt may be deepening links with universities and management schools, where diversity is a hot topic.

The fifth reason for ushering in a more diverse board may be that Government regulation is shining a spotlight on the entire workings of the firm - power companies for example - while sixth is the need to earn good publicity for diversity or Corporate Social Responsibility policies overall. "There may also be a seventh," says Singh, "and that is the sheer need to draw in new talent at a time when particular skills can be thin on the ground."

While many UK firms have been slow to recognise the strengths of women and candidates from ethic minorities - preferring instead to choose white male faces - skills shortages are such that many organisations can simply no longer afford to ignore the talent available to them. "With one-third of the population of London coming from ethnic minorities, for example, who in their right mind can afford to ignore anyone who doesn't fit the traditional white stereotype?" asks Singh.

'I will never become a token. I feel strongly about this'

Ken Olisa, chairman of the homelessness charity Thames Reach Bondway, is a non executive director of Reuters, one of four non-executive posts he holds. With over 30 years of business experience, specialising mostly in the technology field, Nottingham-born Olisa is one of a tiny minority of non-white UK directors.

In the commercial world, I admit I'm a bit of a show-stopper. People who've spoken to me on the phone expect me to be white, because that's how I sound to them, and when they come face to face with me in a meeting, they're often very surprised.

I'm fairly AC/DC about the significance of my skin colour. In terms of my personal life, it hasn't been a major problem for me, but I realise that for society, the lack of diversity is an important matter.

On the one hand, I know that I've only made it in business because of my talents, and in that respect, my ethnic origin is irrelevant to my career.

On the other hand though, I reluctantly concede that I'm a role model for young blacks and it's important that there are plenty of us around to give young, talented people hope. What I will never become, and I feel very strongly about this, is a token.

In Silicon Valley, I have met countless British Indians who are running very successful companies, yet very few of them appear to be in evidence back home.

The notion that UK firms can somehow re-colonise India, or make inroads into the massive Chinese market, while simultaneously refusing board positions to anyone who doesn't fit the 50-something, white male stereotype, is a nonsense, and this will soon become apparent.

UK firms in general are not digging deep enough into the well of talent that exists in this country and for me and many others, that is very frustrating."

'It's all a matter of fishing in a wider pool'

Appointed to the board of Alliance & Leicester in 2004, Margaret Salmon is chairman of the Sector Skills Development Agency and a non-executive director of Kingfisher PLC. Her former posts include stints as chief executive of BBC Resources and group personnel director at the Burton Group.

Through my work, I meet a lot of boards, and I am glad to say that more and more of them appear to have senior women.

Although there aren't as many top women as we'd like in the UK, women are being hired for senior posts and they are already making a difference.

Finding people from ethnic minorities with the rights skills and expertise can be a different challenge, but we know that they are out there - it's just that many of them are busy running their own businesses.

I was appointed to Alliance & Leicester because they needed someone with retail and customer service experience, but the fact that I was a woman had nothing to do with it. It's all a matter of fishing in a wider pool.

I know female and non-white execs and non-execs can be marginalised in business, but I've been lucky with the organisations I've worked with so far.

None of them have resembled gentlemen's clubs - although I know that these do exist - and all of them have been far more concerned with what I can offer than the fact I'm a woman.