Headhunter reveals UK boards’ emphasis on experience trumping diversity in the past year

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The proportion of first-time, female, and minority ethnic candidates appointed as non-executive directors by the UK’s largest listed companies decreased significantly in the previous year, according to new research. Boards prioritized candidates with experience running publicly listed companies as they faced destabilizing events such as the Russia-Ukraine war and high inflation, as per headhunter Spencer Stuart, which conducted the research on the UK’s 150 biggest listed companies.

In the 12 months until April 30, only 31% of newly appointed non-executives were first-time directors, a decrease from 44% the previous year. Additionally, ethnic minority candidates represented 15% of non-executive board appointments, the lowest proportion since 2020. Last year, the figure had risen to 27% as companies rushed to meet the official target of having at least one ethnic minority board member.

Spencer Stuart’s head of board practice, Chris Gaunt, mentioned that there was a significant effort made by companies to achieve the government-commissioned Parker review’s target of appointing at least one minority ethnic director by the end of 2021 for the FTSE 100 and the end of 2024 for the FTSE 250. However, Gaunt noted that after achieving the target, companies might have taken their foot off the gas.

By the end of 2022, the Parker review target had been met by 96% of the FTSE 100 and 67% of the FTSE 250. The percentage of non-executive vacancies filled by women fell from 60% to 51% compared to the previous year, according to Spencer Stuart’s UK board index.

Currently, women hold 40% of all board roles at the 150 largest listed companies, a slight increase from the previous year. In contrast, minority ethnic directors occupy 13% of positions, up from 12% last year. As per the 2021 census, 81.7% of the population of England and Wales was recorded as white.

Gaunt said that targets to increase female and ethnic minority representation on boards have prompted the PLC community to take them seriously. However, he questioned whether some companies were going beyond viewing board diversity merely as a “compliance exercise.” In the 12 months until April, out of 20 chief executive appointments, only three were women, along with four out of 22 chair roles. However, there has been an increase in women becoming senior independent directors.

The research also highlighted the decreasing tenures of chief executives in the UK. Chief executives in the country’s largest listed companies now stay in their positions for an average of 5.1 years, a 12% decline over the past two years. According to Gaunt, the demanding nature of chief executive roles and competition from private companies in recruiting directors contribute to shorter tenures.

Gaunt added that the shortened tenures could indicate a broader societal challenge of not providing leaders enough time to assess the impact of their decisions. The research found that chief executives were less likely to take on non-executive roles at other companies, which Gaunt attributed to unexpected crises such as Covid, Ukraine, extreme inflation, and now Israel, which require CEOs’ significant attention and energy.