Diversity – what’s happening outside the spotlight of the FTSE 100?

February 28, 2020

There is a seemingly strong belief, particularly from Government, that the best way to make change is to do so through the use of “nudge” – influencing the behaviours of those organisations at “the top” to impact upon a wider group.

A recent survey by the organisation Company Matters prompted us to consider the interesting question as to whether those organisations that were less in the limelight had started to be affected by the changes in diversity – and particular gender diversity – that were occurring at the Board Room Level in the FTSE 100.

Having met in 2015 the target set by Lord Davies for gender diversity of 25% of Board Roles being filled by women, the next expected target for the FTSE 100 is that this should increase to 33% within 2020.

Interestingly, the survey shows that the largest 100 companies in the FTSE Small Cap Index have made progress in this direction with 28% of roles undertaken by women – which would seem to indicate that there is a real influence at play.

However, when the survey at the position of the companies in the AIM UK 50, it found that the number of women on Boards has dropped to 15%.

Given the disparity between the FTSE Small Cap Index, which is governed by the same principles as the FTSE 100, and the AIM market, it is an interesting question to ponder whether the less strict governance regime for AIM companies might be a factor.

Given that the value of the AIM UK 50 keeps increasing, it may well be that guidelines and recommendations are pushed wider in the future – which his unlikely to be popular with those on the AIM market. (Although, it will also be interesting to see whether the more recent requirement for AIM companies formally to adopt a recognised governance code will start to have an effect on Board diversity).

Whatever happens, it is worth noting that diversity, which is not just a Board issue but applies, too, across the business, is increasingly being seen as a contributing factor to those businesses who outperform the market. We would suggest that all businesses consider what they have in place in respect of Board diversity and succession planning, as well as across the wider workforce, to make sure that they are getting the most out of all of their people.

For further information about the issues raised in this article or to discuss any questions you may have, please contact Stuart James.

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