“We have a problem: the young, the socioeconomically disadvantaged, and women are not all represented in the boardroom,” said Marisa Hall, director of the Thinking Ahead Institute. “If we look at FTSE 100 boards, only 8% of board members are ethnic minorities. Breaking this down further, looking at minorities who are UK citizens, this number drops to 2%, despite them making up 14% of the population.”
Just 5% of FTSE 100 board chairs are women, said Hall. While there has been progress on the number of non-executive women in the boardroom, there has been little change in the progress of executives. Only 10% of executives are women.
In the words of Green Park’s latest leadership report, which reviews the gender and ethnocultural diversity of FTSE 100 leadership, Hall summarised: “The future leadership of Britain’s top companies may be marginally less male, but it is also looking whiter”.
Pension trustee boards are also problematic. An overwhelming 83% of UK pension fund trustees are men. Meanwhile, a third of trustees are over the age of 60.
“We know that millennials make up about 40% of the target group for auto-enrolment. Yet young people are largely absent from trustee boards,” said Hall. She asked the audience for their views on the pace of action on inclusion and diversity. An overwhelming 75% felt it was too slow.
Why does this matter?
“There is a big gap in cognitive and representational diversity in the pensions industry,” said Hall. It matters because trustee boards aren’t accurately reflecting the make-up of their scheme memberships. This results in less well-rounded decision-making.
“The historical approach of dealing with gender first, ethnicity second, disability third or whichever order suits the corporate agenda has lent itself to box-ticking and compartmentalisation of diversity factors,” said Hall. “I don’t think of myself as a black woman to be added to statistics, I think of myself as an individual with my own journey, which we all have”.
“The historical approach of dealing with gender first, ethnicity second, disability third or whichever order suits the corporate agenda has lent itself to box-ticking and compartmentalisation of diversity factors.”
Marisa Hall
She argued: “Our current approach is flawed, when we pick this one aspect of humanity – gender, for example – because it doesn’t reflect the entirety of who we are.” Instead, trustee boards should try to map identity more broadly, not just considering gender, ethnicity and age but factors like education, religion, nationality, politics, family and lived experience.
“We tried out this identity map in Willis Towers Watson teams in Sydney, Melbourne, New York, and Reigate – we are doing it in London too – in the form of a game,” said Hall. “We looked at the teams that we had. Some interesting things came out: we have a lot of actuaries, and a lot of people who have economics degrees. We need to think more broadly about where we bring in our talent from.
“Historically, companies have asked people to trim away their identities. We are calling for an alternative philosophy – to take people for who they are and ask trustee boards to do the hard work of fitting everyone together. Perhaps more importantly, we need to build a strong culture that views diversity as critical,” said Hall.
Practical actions trustees can take:
Carry out a governance and diversity assessment. Identify under-represented parts of the scheme membership.
Even if we all look different, does it matter if we all think and behave in the same way? Worse still would be if we all acted the same way to avoid embarrassment, because we don’t believe our voices will be heard. Trustee boards should challenge their advisers and encourage active discussion.
Think about a maximum term of appointment. Also consider targeted recruitment: where do you currently look for new people and could you expand your recruitment avenues?
Develop a robust and inclusive recruitment process. Ensure your succession planning process is well considered.
Next Chapter: Five reasons why sustainability matters to your pension scheme…
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| Title | File Type | File Size |
|---|---|---|
| Pensions and Savings Conference 2019 Overview | 1.5 MB |
