Last year, UK boards placed a higher emphasis on candidates' experience over diversity, as revealed by a headhunter's study. The research indicates a significant decrease in the appointment of first-time, female, and minority ethnic non-executive directors in the largest listed companies in the UK.
Amidst challenges such as the Russia-Ukraine conflict and rising inflation, boards gave preference to candidates with prior experience in leading publicly listed companies. Spencer Stuart, the headhunter firm behind the research involving the top 150 listed companies in the UK, reported these trends.
In the 12 months leading up to April 30, only 31 percent of newly appointed non-executives were first-time directors, a drop from 44 percent in the previous year. The representation of ethnic minority candidates in non-executive board appointments hit a low of 15 percent, down from 27 percent in the previous year when companies rushed to meet the official target of having at least one ethnic minority board member.
Chris Gaunt, head of Spencer Stuart's board practice, acknowledged the concerted effort by companies to meet the government-commissioned Parker review's diversity targets, which was largely achieved by the end of 2022. Gaunt suggested that with most companies reaching these targets, there might have been a decreased focus on diversity efforts.
The proportion of non-executive vacancies filled by women also declined, falling from 60 percent to 51 percent within a year. Nevertheless, women now occupy 40 percent of all board roles at the top 150 listed companies, showing a slight increase from the previous year. Meanwhile, minority ethnic directors held 13 percent of positions, up from 12 percent in the prior year, although the 2021 census reported that 81.7 percent of England and Wales' population was white.
While Gaunt acknowledged that diversity targets had motivated companies to take diversity seriously, he raised questions about whether some companies were merely treating board diversity as a compliance requirement rather than a genuine commitment.
In the 12 months leading to April, only three out of 20 chief executive appointments went to women, along with four out of 22 chair roles. However, there was an increase in women taking on senior independent director roles, which are often seen as a stepping stone to becoming a chair.
The research also highlighted a trend of shorter tenures for chief executives in the UK's largest listed companies, with an average tenure of 5.1 years, a 12 percent decrease over the past two years. Gaunt attributed this to the intense nature of chief executive roles and increased competition from private companies in recruiting directors. Shorter tenures may also reflect broader societal challenges in giving leaders sufficient time to assess the impact of their decisions.
Additionally, the study found that chief executives were less inclined to take on non-executive roles at other companies, possibly due to the unpredictable crises that have emerged in recent years, such as Covid, Ukraine, extreme inflation, and geopolitical confli