In the UK, we share a vision for board appointments to be made with due regard for the benefits of diversity and inclusion. Boards and stakeholders know that board diversity matters. In the current climate, when seeking a new non-executive director (NED), any process that results in a shortlist without any women or candidates from BAME (black, Asian, minority, ethnic) backgrounds is likely to be questioned.
Whilst there is currently a strong push for gender (more female representation) and race diversity on boards. However, I have yet to speak with anyone who wants to be appointed based on their gender or race alone, and if you were, you should probably question whether you wish to be appointed to that board.
We know that diversity is more than gender and race and that organisations recognise the benefits of diversity within the workforce and leadership teams. What many applying for a NED role don’t realise is that they may be more diverse than they thought. The key is to know why diversity is valuable at the board level and which organisations will value it enough to appoint you.
Diversity should matter to boards
A BCG study suggests that “increasing the diversity of leadership teams leads to more and better innovation and improved financial performance. In developing and developed economies, companies with above-average diversity on their leadership teams report a greater payoff from innovation and higher EBIT margins. Even more persuasive, companies can start generating gains with relatively small changes in the makeup of their senior teams.”
Through their different backgrounds and experiences, diverse employees, managers, and leaders often view problems from different perspectives, coming up with alternative solutions. Overcoming diversity usually requires decisive problem-solving skills and builds resilience. In ever-changing and competitive business environments, such skills leave organisations and management teams better positioned to adapt and prosper. A worldwide study found that companies with more diverse leadership teams found that more than 50% of their revenue came from new products and services.
Boards must also act on shareholders’ and stakeholders’ evolving expectations of diversity, equity, inclusion, and social responsibility. These expectations include at the top corporate level. The 2023 UK Spencer Stuart Board Index confirms that board diversity matters to organisations. UK Boards continue appointing candidates who can offer one or more strands of diversity.
The six strands of diversity to consider when applying for a NED role
Six strands encompass the diversity spectrum:
- Gender
- Ethnicity
- Religion
- Age
- Sexuality/Transgender
- Disability
Gender
There has been a long-time push to get more women on company boards, resulting in significant improvements in gender diversity. Most newly appointed NEDs in the UK are women and now account for ~46% of non-executives. The FTSE Women Leaders Review set a target of 40% representation of women on FTSE 350 Boards and in Executive Committees to be achieved by the end of 2025.
If you are a woman, these figures sound encouraging, but you must consider that you will likely compete against other women for the same NED appointment. When this is the case, gender is no longer a differentiator or advantage for you. Therefore, you need to place less emphasis on gender and more on your points of difference. These competing females may have similar or better skills and experience. You need to focus on the compelling reasons why you should be appointed.
If you are a male of a certain age, in the eyes of the board, you are seen as very appointable and statistically more likely to be appointed. However, gaining a board appointment today is arguably far more competitive for males than a decade ago. This is partly due to the push for female representation but mainly because of the number of people pursuing NED careers. Due diligence also prevails, so males can not, and should not, rely on the “old boys club” to get a NED appointment. They must be ready to compete by articulating what value they can add to a board.
Age
In 2023, the average age of non-executive directors across the FTSE1 50 was 61. Over the past ten years, there has been little change at this top level of commercial companies. However, as boards look for more diversity, inclusion and technical skill sets when replacing non-executive directors, the statistics should start to show a drop. It will also take time for younger potential NEDS to achieve a certain level in their executive careers. If you are an aspiring NED, you must focus on your unique offerings, not your age and possibly lack of board experience. If your age contributes to your unique offering, you must show how this will add value to the board.
Ethnicity, Religion, Sexuality & Disability
- 11% of board directors in the UK identify as minority ethnic.
- The Parker Review’s 2024 Report showed that 96 FTSE 100 companies had at least one director from an ethnic minority group.
- Those with disabilities are underrepresented on boards.
- It is estimated that the percentage of LGBTQ+ NEDs in the UK is as low as 0.4%.
Know the value of your diversity
To be successful, organisations addressing diversity must focus on five key areas: recruitment, culture, leadership (including governance), retention, and advancement. This requires direction and guidance from the board. For senior executives and directors, their pivotal question about diversity is not whether but how. Can your diversity help them with the HOW?
In a sense, we are all diverse, not always in traditional or physical ways. We all bring diverse opinions and approaches based on your history or experience with any of the six strands. You need to consider if or how your diversity will help the board deliver better outcomes for organisations. You can frame any diversity you bring as something of value to a board.
Diversity, for its own sake, is not valuable. You must articulate the value of your diversity – not just that you are diverse. Take time to think about this and do some research. The issues the organisations face and how you can help may vary. You must articulate how your “diversity” can bring value to that board and organisation. More importantly, why is it more valuable than the other NED candidates.
Remember also that organisations, society, and shareholders see the need for diversity and inclusion at the board level. Resilience, problem-solving, and diverse contributions to strategic conversations are all valuable to a board.
Be smart
Board diversity matters, but not every organisation or board will value every element of diversity. So, target organisations that will value your diversity or experience in one or more of the six strands.
You must have a NED CV that articulates everything you offer a board, including any strands of or contributions to diversity. You must also create a compelling NED Cover Letter for every board position you apply for. When doing so, consider your competition and highlight all your unique points of differentiation and diversity. The content of both will transpose to any formal or informal conversations you have regarding the appointment.
But don’t stop there. When preparing for your NED interview, know what your points of difference are and, just as importantly, why they are valuable; just because you are a female or male is not enough to convince the board. If the question about diversity does not come up during an interview, be proactive and highlight your diversity value when the opportunity arises for you to address the panel.
In Closing
Regardless of your background or level of experience, you must make your case about what attributes you bring to the table and how they will enhance the board. Board diversity matters in its various strands and can set you apart from the competition. It is worth researching the current board members to determine what areas of diversity you can address. Do they lack the diversity or diverse insights that you can offer?
Gaining a NED appointment has always been competitive, even more so today. Accepting this truth is the first step to better articulating your value to a board. This will separate you from your competitors and dare them not to appoint you. That is what our Board Appointment Training Series helps you do.
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About the Author
David Schwarz is CEO & Founder of Board Appointments – The UK’s leading board advertising and non-executive career support firm. He has over a decade of experience in putting people on boards as an international headhunter and a non-executive recruiter and has interviewed over one thousand non-executives and placed hundreds into some of the most significant public, private and NFP roles in the world.