EHRC Guidance: How to improve board diversity

EHRC Guidance: How to improve board diversity

On 23 March 2016, the Equality and Human Rights Commission (‘EHRC’) produced guidance, detailing six steps companies should take to improve the diversity of their boards, within the frameworks set out by the Equality Act 2010 and the UK Corporate Governance Code.

Outlined below are the six recommendations:

  Step Further Details
Making an Appointment
1 Define the selection criteria in terms of measurable skills, experience, knowledge and personal qualities This includes avoiding the use of potentially discriminatory requirements, such as preference for candidates of a particular age or sex, or previous FTSE experience where it is not justifiable.
2 Reach the widest possible candidate pool by using a range of recruitment methods and positive action Avoid only using personal networks and word-of-mouth recruitment as this restricts the pool of applicants and risks ruling out good candidates with diverse skills and experience. Instead, publicise a role widely, including using advertising and channels such as social media.

Companies should also consider using positive action, including proportionate steps to encourage candidates from groups under-represented on the board to apply, to maximise the opportunity to meet these targets.

3 Provide a clear brief, including diversity targets, to your executive search firm Companies should ask their executive search firm about their track record in delivering diverse candidates and how they use positive action to secure a diverse pool. The board can ask the firm to achieve a diversity target that supports the company’s diversity commitments, provided the targets are realistic and the board makes clear that the firm must not unlawfully discriminate against potential or actual candidates.
4 Assess candidates against the role specification in a consistent way throughout the process The appointment process must not treat one candidate less favourably than another, or unjustifiably put candidates who share a protected characteristic at a disadvantage.
Ongoing action to improve diversity
5 Establish clear board accountability for diversity The board should have strategic oversight of diversity across the company. Where it reasonably thinks that a protected group is under-represented or faces disadvantage it can set aspirational targets to improve diversity and inclusion in the company. It should monitor and report on progress in meeting diversity policy and targets.
6 Widen diversity in your senior leadership talent pool to ensure future diversity in succession planning Companies should regularly review diversity in the company’s recruitment, development and retention strategy. Monitoring can help identify barriers preventing employees from progressing to senior roles in the company and identify when and where employees in groups under-represented at senior levels in the company are being lost.

Companies should consider using positive action measures to encourage individuals from under-represented groups to apply for roles or to help them gain skills which will enable them to compete on merit on an equal footing with others.

 

Increasing diversity at board and senior management level should be a priority of companies, housing associations, and governments, as well as many shareholders and customers. Indeed, research suggests that more diverse boards are associated with improved financial performance, and facilitate better decision making by bringing differing perspectives together in dialogue. Although not compulsory, this guidance should act as a useful benchmark against which committees can assess their current practices in achieving diversity within a boardroom.

For further information or questions, please contact a member of Devonshires’ Employment Team.

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