It isn't just about the boardroom as diversity delivers better performance

Agenda

Finally the debate is moving on from getting more women into the boardroom. I should qualify that: it’s not so much moving on as broadening out. Greater diversity is the order of the day, as a Vince Cable-backed initiative to be launched next month will explain.

The success of Lord Davies’s report four years ago in highlighting the shortage of women has meant that all efforts since have been directed to making boardrooms less male, but not less pale. Now Mr Cable is plotting a new target – that by 2020, one in five directors should come from ethnic minorities.

An ethnicity summit held the other night by the Institute of Directors prepared the ground. The McKinsey consultancy unveiled some research guaranteed to catch the eye of any sceptical shareholders. Not only is diversity the right thing to do, but McKinsey found that companies in the top quartile of gender diversity were 15 per cent more likely to have above-average financial returns relative to domestic peers. Those in the top quartile of racial and ethnic diversity were 30 per cent more likely to perform better.

Why so? These companies benefit in areas such as talent recruitment, customer and employee satisfaction and better decision making. Interestingly, if FTSE 100 companies hit this new target – and they are close to achieving the one set for 25 per cent female representation – boards will start to look more diverse than Britain itself.

That shouldn’t matter. Blue-chip companies have been singing the praises of globalisation for several decades. If most of their business lies outside Britain, why shouldn’t their boardroom expertise?

As with the drive for more women, though, the real story is what happens under the surface. It is easy to count the non-white faces that stare out from a company’s annual report – or lack of them. But ensuring diversity – of gender and ethnicity – among the top 200 managers is how real change happens on a day-to-day basis.

Only family strife could rattle the Murdoch empire

The sadness of Rupert Murdoch stepping down as chairman of the BSkyB board in 2007 was that London was deprived of an annual performance by the media mogul.

His gruff retorts to shareholder questions were usually a variation on: “If you don’t like it, you know what you can do.” One year, Mr Murdoch faced down a troublesome corporate governance expert by suggesting he looked far too pleased with himself. The price of entry to a shareholder meeting – a single Sky share, unless you were a hack – was well worth it for the dry wit alone. When one investor confessed he watched Sky through a Telewest (now Virgin Media) cable package, all Mr Murdoch could say was: “Dear oh dear”.

Nick Ferguson, the private equity veteran who took the chair when James Murdoch, Rupert’s son and successor, stepped down, couldn’t be expected to be anything like as entertaining yesterday. But even though the floor show is very different, the Murdoch grip on events at Sky is just as tight. This year’s spat, over whether James remains a non-executive or not, is irrelevant. The board of Sky – now enlarged after combining with its Italian and German cousins to create a European pay-TV giant – still contains a cadre of loyalists even if they don’t share the surname.

It is important to remember that what external investors have had to cede in influence to a single 39 per cent shareholder, Mr Murdoch’s 21st Century Fox, they have made up for in returns over the last five years. There is evidence that shares in other family-controlled, FTSE-listed groups – the asset manager Schroders, media group DMGT and Primark owner Associated British Foods – have outperformed too – something to do with investing for the long term.

What is striking, though, as Andy Coulson walks free from prison after serving five months for conspiring to intercept voicemails at the News of the World, is how little the Murdoch empire has been knocked out of its stride by the phone-hacking scandal.

Sure, Mr Murdoch caved into Wall Street by carving News Corp into two, with 21st Century Fox housing the group’s satellite, cable and movie-making arm, and “new” News Corp including the newspapers and other publishing interests.

But the crisis did not spark a bigger corporate shake-up, which means that Mr Murdoch’s family trusts still own almost 40 per cent of the voting shares in each company but far less of the equity. For all the outward noise that flares up from time to time, only family strife is likely to spark that revolution.

It might be underground but mining is stuck in the mud

The most striking thing about sitting down with Mark Cutifani, the straight-talking boss of Anglo American, was how far behind the curve he believes the mining industry is compared with other engineering sectors.

The Australian, who has dug most things out of the ground in a career that has taken him to South Africa, Canada and beyond, puts the gap at about 20 years. So it’s no wonder he is trying to pick up tips on efficiency from Laing O’Rourke, the engineer that worked on London’s Olympic Park, and the design software firm Dassault, instead of fellow miners.

Anglo, like its peers, is slimming down after the commodities boom and bust. But rather than just trading assets, Mr Cutifani knows he must polish what remains – and not just the gems his De Beers division keeps unearthing.