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October 20, 2023

In Charts: Newly appointed UK company directors are less diverse

Boardroom meeting
The Spencer Stuart Board Index found that the most senior roles of CEO and chair have seen a dip in diversity over the past year (Photo: YuriArcursPeopleimages/Envato)

Over the past year, UK boards have prioritised appointing individuals with a proven track record instead of more diverse talent, according to a new study

Professionals with previous experience on listed company boards have filled the majority of non-executive director positions in the top 150 UK boards over the past 12 months.

New research by executive search firm Spencer Stuart revealed this dynamic has had a negative impact on board diversity, with the proportion of minority ethnic, female and first-time NEDs falling 44 per cent, 15 per cent and 30 per cent, respectively, year on year.

The report, which tracks governance changes across the 150 largest FTSE companies, suggests this is due to boardrooms prioritising established professionals over newcomers because of current geopolitical issues and economic challenges facing their business. Fifty-five per cent of newly appointed NEDs have either a chief executive or general management background, the reports adds.

“Aside from slowing efforts to improve diversity around the boardroom table and foster the next generation of leaders, this flight to experience may not always provide the answer, given the accelerating pace of change and complexity facing businesses,” says Chris Gaunt, head of Spencer Stuart’s UK board and CEO practice. 

Moreover, the most senior roles of CEO and chair have also suffered from a dip in diversity over the past year.

Of the 20 new CEO appointees, only three are women and none come from an ethnic minority background. Whereas only four women were appointed chair in 2023 compared with 18 men, this is a reversal from 2022, in which six female and five male chairs were recorded.

The four senior board positions of chair, CEO, chief financial officer and senior independent director are still filled by men only in 60 of the 150 largest FTSE companies, although this is seen as a decreasing trend. At present, no board has appointed only women to all four of these leadership roles.

Gaunt points out that CEOs will need to draw on the collective intelligence of their ecosystem — their teams, board members and expertise outside company walls — if they want to stay the course. “Boards will increasingly have to manage the trade-off between delivering short-term results and securing a sustainable business for the long term,” he says.

A service from the Financial Times