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2 December 2012

We can move further and faster to bring diversity to the board room

Conservative Party Vice Chairman calls for government action to expose disadvantage and discrimination in the hiring of non-white candidates.

By Alok Sharma

In a move designed to put the focus on gender diversity in the workforce, the government recently published regulations which include the requirement for listed companies to disclose the number of women and men within their organisation as a whole and at senior and board levels. The government has now also called on all executive headhunting firms to publish the numbers of men versus women they place in senior positions.

But the government should look into going further. Whilst gender balance is one measure of workforce diversity, ethnicity is another. Championing workforce diversity should be about improving both.
 
The regulations should be extended so listed companies also have to set out the number of employees from both white and black and ethnic minority (BME) backgrounds within their workforce as a whole, as well as at senior and board level.

Just as there is under-representation of women at senior levels there is also under-representation of those from non-European ethnic backgrounds. The latest figures from the Office for National Statistics estimate that around 12 per cent of the population in England and Wales has a non-white ethnic minority background.

By contrast, the overall proportion of ethnic minority male and female directors on the board of FTSE 100 companies is only 4.4 per cent and 1.3 per cent respectively, according to analysis published this year by Cranfield University. And only seven of the 48 male directors from minority backgrounds, are known to be British.
 
It is a real concern that there may not always be a level playing field when it comes to applying for a job. The All Party Parliamentary Group on Race and Community has just published a report on ethnic minority female unemployment which concludes that discrimination can be found at every stage of the recruitment process – when assessing applications, during interviews, at recruitment agencies and also in the work place itself. Just having a non-European name may stop a candidate from getting an interview.
 
To throw light on this the government could consider introducing a further disclosure regulation with listed companies required to breakdown, by gender and ethnicity, the total number of job applicants, interviewees and new employees over the past year. This would certainly help to highlight companies and sectors where either, ethnic minority candidates and women are just not applying in any number, or where they are not getting interviews.

Some may explain a low level of interviews to minority background applicants by the fact that not enough qualified candidates are applying.
If this really is the stumbling block, it should reinforce the need for companies to undertake more outreach work and mentoring to achieve, over time, a workforce representative of today’s society.

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THANK YOU

Appointing people to jobs on merit and experience is absolutely right. But the proposed new regulations are about taking companies one step further towards focusing on what they need to do to increase diversity in the workforce.

Companies with diverse boards are more effective and outperform their rivals. If a company’s workforce and senior management are representative of its customers, it is more likely to make decisions which respond to their needs and hence ultimately benefit the business. And that virtuous circle is one which every company should be looking to square.

Alok Sharma is MP for Reading West and Conservative Vice Chair with special responsibility for BME communities

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