Diverse boards lead to better corporate culture and performance, according to new research from the Financial Reporting Council.
The accountancy watchdog said there has been a step change over the past decade with UK Listed company boards becoming more diverse than ever before, primarily as a result of the Hampton Alexander review and more recently the Parker review.
The main findings of the research concluded that:
- It is the responsibility of the chair of a board to drive inclusion.
- Regulators and companies must focus on collecting more data on the types of diversity, board dynamics and social inclusion.
- The Nomination Committee itself should be diverse and have a clear mandate to work with search firms that access talent from wide and diverse pools.
- The greater representation of women in the boardroom is reshaping culture and dynamics and benefiting businesses from a social justice as well as a performance perspective
Sir Jon Thompson, CEO, FRC, said: “The FRC wants to see companies which thrive in the long term and both benefit the economy, society and reflect its make-up. I want to see boards invest time and energy in making diverse appointments not to achieve a target but because it will have a positive impact on their business. The UK Corporate Governance Code makes it clear that boards appointment should promote diversity and we want to see nominations committees reporting on progress.”
The research, Board Diversity and Effectiveness in FTSE350 Companies, was published by the FRC in conjunction with London Business School, Leadership Institute and SQW.