Women made up more than half of the new directors on the FTSE 350 board last year, as companies came under pressure to improve the gender balance in their management.
But around two-thirds of the seats were held by retired executives as well as people who had previously worked on the board – among the highest proportions in Europe – which raises doubts about the commitment of the the corporate world towards the diversity of boards of directors.
More than four-fifths of the roles have been played by whites, the majority of the rest being of Asian descent. Only 3% of new directors were black.
Heidrick & Struggles, the executive headhunters, said UK boards are making significant progress on gender diversity but need to go much further on racial and ethnic inclusion.
He added that the high percentage of retired executives suggested that there was still a reliance on traditional sources of board directors, rather than building larger and more diverse networks.
Heidrick & Struggles found that out of 362 board seats filled in 2020, almost half of the directors were, or had been, a CEO or CFO of a company. The firm found that many more boards in other European countries were increasingly looking for active rather than retired executives, given their operational knowledge.
This is the second year in a row that the UK has had more women than men appointed to the board, with a proportion of women 51% above the EU average of 48%.
The government-backed Hampton Alexander review that ended in February had prompted boards to appoint more female directors. He has achieved his goal of more than a third of the board positions of the FTSE 100 and FTSE 250 companies by December 2020.
But Heidrick & Struggles pointed out that many of the new appointments were for non-executive positions, with far fewer female senior executives.
Kit Bingham, Partner and UK Board Practice Leader at Heidrick & Struggles, said: “The place to do more is in the Executive Suite. “
He said research has shown boards often face conflicting pressures to recruit seasoned and experienced directors while ensuring greater diversity with candidates from outside the listed industry.
The increase in virtual board meetings could allow more people from outside the UK with different skills to take up board positions, Bingham added. Heidrick & Struggles said boards are likely to appoint many more directors outside of Europe in the coming years.
In a separate study released Thursday, PwC said the UK’s gender pay gap continued to narrow for companies that reported their 2020/21 data, from an average of 14, 3% in 2017-18 to 12.5% in 2020-2021. .
More than three-quarters of companies have delayed reporting, however, in line with the extension granted by the government due to the impact of the pandemic.