The Parker Review
In March 2024, the latest Parker Review update report (the Review) was released assessing ethnic diversity among the leadership of the UK’s largest companies. Initiated by the UK government in 2015 and first reporting in 2016, the scope of the current Review has been expanded beyond publicly listed companies to include the UK’s largest 50 private companies. It also examines ethnic diversity within senior executive positions, not just boards.
This broader perspective encompasses executive committee roles and their senior executive direct reports. This offers a fuller view of the UK’s advancement in ethnic minority representation and seeks also to provide a stimulus to change. The Review’s purpose is to improve the performance and competitiveness of UK businesses by encouraging them to take full advantage of the talents of people from minority ethnic backgrounds. It also aims to help ensure that those from ethnic minority backgrounds have equal opportunities to have a successful and fulfilling career in business. In this blog, we explore the Review’s key findings and guidance for business leaders.
The Review’s findings
The core target set by the Review is for each FTSE 250 company to have at least one minority ethnic director on its board by December 2024, and for the UK’s 50 largest private companies to meet the same target by the end of 2027.
Key findings from this year’s report, based on data as at December 2023, include:
- At least one ethnic minority director: 96% of FTSE 100 companies now have at least one ethnic minority director (the target set for 2021). As at the end of 2023, with a year left, 70% of FTSE 250 companies have reached the 2024 goal, up from 60% in 2022. Among the 50 private companies invited to participate in this Review, 44% have already achieved this target with four years remaining.
- Ethnic minority representation on boards: Ethnic minority board representation stands at 19% for FTSE 100 companies, 13.5% for FTSE 250 companies and 11% for the 50 private companies invited to participate in this Review.
- Ethnic minority representation in senior management: In senior management, ethnic minorities on average make up 13% within FTSE 100 companies and 12% in FTSE 250 companies.
Becoming “race fluent” – guidance for business leaders
The Review suggests that a primary obstacle to leaders advancing racial equity is a concern about making inappropriate statements or being labelled as racist. As a result, language is often seen as an impediment to taking action.
The Review contains useful guidance for business leaders on how to build their confidence and fluency in talking about ethnicity and “race”:
- Guidance on terminology
- The Review does not set out a list of what to say and what not to say, but it does contain some interesting and thought-provoking guidance on common terms related to ethnic heritage, including looking at certain terms which need not be avoided, and at others which may be wholly inadequate or there is a better choice.
- Breaking down “BAME”: In the UK, there is a general move away from using this acronym/grouping as it can hide significant differences in the experiences of people with diverse backgrounds due to its homogenising assumptions. Caution in its usage is advised. Leaders are recommended to be as specific as possible when referencing diverse ethnic groups. If it is necessary to use “BAME” in written or spoken communications, the acronym should initially be expanded to “Black, Asian and Minority Ethnic” to ensure a clear understanding. Avoiding the use of “BAME” as an adjective, such as in the phrase “BAME people”, is also recommended.
- Being aware of personal identification preferences: It is important for leaders to respect and adapt to how individuals wish to be identified, recognising that language and cultural identifiers are constantly evolving.
- Context matters: The Review emphasises the importance of context in communicating with “race fluency”, and of embracing a growth mindset. It emphasises the need for business leaders to stay updated about evolving language and cultural sensitivities. It suggests the involvement of HR or the D&I team and other expert guidance, such as executive coaches who specialise in equity and inclusion. Reciprocal/reverse mentorship relationships are also recommended.
Change the Race Ratio
Change the Race Ratio is a UK campaign supported by the Review, designed to help companies achieve the Review targets and calling for businesses to take action to increase ethnic inclusion more generally in the corporate sector. The Review sets out Change the Race Ratio’s five ESG recommendations to align culture and inclusive objectives with business strategy:
- inclusive leadership;
- accountability measures;
- transparency and data;
- harnessing the power of people managers; and
- AI governance.
Final thoughts
Since the 2016 Parker Review Report, notable strides have been made in ethnic diversity in leadership. However, it is clear that more vigorous efforts remain necessary to increase ethnic minority representation and create more diverse teams. The Review provides meaningful insights and is a useful stimulus for change and improvement, but only as part of a multi-faceted approach to diversity and inclusion in the management pipeline.
