Earlier this year (2017) creative business services agency Jacob Bailey Group came up with a creative solution to the call for more diversity in UK boardrooms. It launched a Brilliant Experiences Board – a junior board sitting under the main board – comprising seven employees from a range of ethnic and social backgrounds, gender, age and talent. It discusses board-level business topics focused on people, processes and growth.
In tune with customers
“I believe a more diverse group of idea generators leads to richer solutions for our customers and our own business,” explains founder and chief executive Shaun Bailey. “People from diverse backgrounds see things differently. You can’t replicate their knowledge and understanding in a society which is both more individualistic and more global.
They are more in tune with our customers and contrast with the typical echo chamber board where people from the same ages and same backgrounds come up with similar ideas.” Bailey says it wasn’t possible to change the main board given shareholding complexities but stresses that ideas and strategies generated from the Brilliant Experiences Board are transferred across.
“Our management team have grown this business together and we are a settled team so making it more diverse would change the entire business structure. However, we want more diversity and so we look at all the Brilliant Experiences ideas and either debate them to ensure they align with business strategy or we just say, ‘Go ahead’,” he says. “This model can work with all growing businesses.”
Government targets
Board diversity is a hot topic in UK business. Pressure from the Government to improve gender diversity in senior leadership teams includes a target for FTSE 350 boards to have 33% female representation by 2020.
The recent Government backed Parker Review to “improve the ethnic and cultural diversity of UK boards to better reflect their employees and the communities they serve” proposed that each FTSE 100 board should have at least one director from an ethnic minority background by 2021.
Raj Tulsiani, chief executive of executive search group Green Park, says much work is needed. Its recent Leadership 10,000 survey found that the number of ethnic minority representatives at senior level in FTSE 100 firms had fallen from 62 to 58 with female representation also declining.
“There has been a lack of thoughtful application through strategies such as reverse mentoring and employee referral schemes,” he says. “You need to widen the gate without lowering the bar. Diversity can add value and allow your business to listen to the voice of the changing customer and society. But you need to devise more thoughtful strategies to take advantage.”
He says this is particularly pertinent to growing businesses not just FTSE giants. “It is infinitely more important for them. They are agile and innovative and want to delight customers to grow their brand and product,” he says.
“You can build market share and grow internationally by understanding your customers more and gaining their trust by being more diverse. You can reach out wider than your competitors.” It also benefits the bottom line.
According to a survey from consultants McKinsey in 2015 companies in the top quartile for gender diversity were 15% more likely to post financial returns above average with a 35% boost for those with high racial/ethnic diversity.
Attracting investment
Tulsiani says being a diverse business also makes you more attractive to investors. In a recent Green Park poll of 63 institutional investors (November 2017), 56% believed the ethnic diversity of company boards would become more important in the next five years. “They are increasingly recognising that companies with homogenous all white boards aren’t best placed to deliver future success,” he says.
“They understand that millennial customers especially view diverse brands more positively.” Bailey wishes he had started his diversity drive earlier. “I didn’t think about it when I was starting out but if I was doing it again now I would give great importance to diversity,” he says. “My message to start-ups or growing businesses is to look at your organisational structure and ask if you can do more.”