Foreword

Increasing focus has been paid to diversity across all stakeholders in the corporate ecosystem.
As society has warmed to the idea that companies should reflect the communities they serve
at all levels of organisations, greater scrutiny has turned to the picture of leadership at firms.
Technology is uniquely positioned at the forefront of the innovation economy and has
justifiably so come under criticism for the lack of representation from members of all
communities at senior leadership and board levels.


In many walks of life, the majority of us would assert that environments that embrace all
elements of diversity benefit from more insightful discussions, greater variety of skill sets,
and ultimately come to better decisions. There has come a recognition that this should also
happen in the boards of our companies. UK companies have made significant progress on
gender diversity but we still have much to do when it comes to the experiences of ethnic
minorities in the workplace. For many firms greater diversity, inclusion and belonging has
been a nice to have but not a concrete business objective. As more research has emerged
regarding the business case for diversity, there needs to be more progress made for ethnic
minorities in leadership.


As the technology industry becomes an increasingly influential actor in our society, new
innovations from artificial intelligence to virtual reality increasingly challenge our
conceptions of representation. When ethnic minorities are actively excluded from the
decisions that shape these views, we push divisiveness to the forefront of our lives. Exclusion
becomes mainstream and we foster an environment where xenophobia, racism and
discrimination are acceptable outcomes from our designs, products and workplaces. It is clear
that the boardrooms of Britain’s leading companies do not currently reflect the ethnic
diversity of either the UK or their key stakeholders, including customers, suppliers and
employees, that are critical to success of their businesses. Leadership has a role in changing
this.


In this review, we set out a series of data points which serve to challenge the conception of
the state of play today. We aim to highlight the lack of ethnic minorities at the forefront of
our technology ecosystem, provoke consideration and drive discussion. We want to spark a
fruitful debate about some of the challenges and substantive action points to address such
inequality. We believe technology has and will continue to provide solution to some of
societies greatest challenges, and the British technology landscape can provide some of the
answers for the lack of diversity at the top of British industry. We hope that our
recommendations will be considered alongside the review of ethnic diversity and the labour
market that was led by Baroness McGregor-Smith published in in February and Sir John
Parker in October 2017.


Given the challenges and innovation occurring in the UK, and within wider global civic
society, it has become increasingly more important companies understand the changes within
new new social, political and economic conversations. Leadership stems from all levels
within an organisation, but leadership in the Boardroom must better reflect society. It is
imperative our companies become equitable places. We look forward to seeing changes in
board environments and believe it will enable the technology ecosystem of Britain to drive
equality at the forefront of innovation.

 

UK Landscape

The under-representation of ethnic minorities and women in the FTSE100 and UK management pipeline
is a well-known and documented fact 1 . The dial on race has not moved despite sporadic government
initiatives and some well-meaning programmes set up by conscious and progressive employers. The
reality is that change will not occur until an organisation understands their business case for race and
gender diversity and those that don’t are likely to suffer both commercially and in terms of brand
reputation as recently seen by companies across the industry.
The fact that we are rapidly engrossed in a digital transformation should be a wake-up call to who and
how we run our business. Technology is high on the agenda. Unfortunately, just a peek at the boards of
the UK’s top technology companies unveils a clone of individuals who are white and male and over 50 in
contrast to Britain’s entrepreneurs who are on average ten years younger in their forties.
The objective of this review was to quite simply establish how diverse the UK technology sector is and
compare it to other FTSE100 and Fortune 500 companies and sectors.

 

Key Findings 

KEY FiNDINGS.png
  • Racial diversity in the boardrooms of the UK’s top tech companies is lagging seriously behind the U.S. where 17% 2 of high tech leadership positions are held by ethnic minorities in dismal comparison to the 2.6% on UK tech boards.

  • Ethnic minorities are far more likely to be appointed to the boards of businesses in the banking and financial services sector.

This is bad for business, bad for innovation and bad for the UK economy. On a positive note, the review
found that:

  • Women in leadership positions fare better in the UK where they occupy 26% of board positions in tech companies compared to just 20% in the United States, and

  • Women on the boards of UK tech companies are younger on average (54.6 years), than their male counterparts where the average age is 57.4 years.

Business Imperative for A Diverse and skilled Tech Workforce
 

6 REASONS:

  1. The UK ethnic minority resident population has been steadily increasing. In 2011 the ethnic minority resident population of England and Wales was 14.1% and it is projected to increase to more than double that size (29.7%), by 2051. See Figure 1.

  Figure 1:  Growth and Projection of Britain’s BAME Population

Figure 1: Growth and Projection of Britain’s BAME Population

 

2. The technology sector is seen as a major contributor to the UK economy. The third annual Tech
Nation report revealed the UK leads in Europe, attracting £28bn in technology investment since
2011, compared with £11bn in France and £9.3bn in Germany. In the United States, almost half
of the top 20 most profitable companies are technology companies.

3. Research from McKinsey&Company confirms that ethnically diverse boards are better at
delivering financial out-performance and stock market growth.

4. 50% of the UK’s top ten 3 fastest growing tech companies named in the Deloitte 20 th annual Fast
50 List 2017 had at least one ethnic minority person on their board/leadership team.

5. Businesses need to understand consumers in a global marketplace as well as have the ability to
identify new markets and break into new markets.

6. The UK talent pool is ethnically diverse and highly qualified. Employers wishing to attract this
top talent need to be aware that ethnic minority graduates are keen to work for employers
where there are visible signs of career progression for people like themselves.

 

What does Diversity Look Like In The Tech Sector?

Similar to the United States, the boardrooms of the UK technology sector are predominantly male and
white. In our sample of the UK’s top 16 technology companies - of the 152 board positions, only four
were held by a ethnic minority person (see Figure 2) and of the 39 positions held by a woman only one
woman was from a ethnic minority background. See Figure 3.

  Figure 2:  Ethnicity in the Technology Sector

Figure 2: Ethnicity in the Technology Sector

McKinsey’s research in both 2014 and 2017 found that companies with the most ethnically diverse
executive teams in respect to absolute representation and also of a variety of mix of ethnicities were
35% and 33% respectively, more likely to outperform their peers on profitability. Clear evidence that
boardroom ethnic and cultural diversity is correlated with profitability.
Only one ethnic minority woman on the board of the top 16 tech companies is a shocking state of
affairs, particularly when compared to other UK sectors such as banking and financial services where at
least seven members of the board were ethnic minority women. However, on the subject of gender in
general, the percentage of women on the boards of the UK’s top 16 tech companies is encouraging as
they exceed the 25% minimum representation mandated in the Lord Davies Review, published in 2011.
At that time, women accounted for just 12.5% of FTSE 100 directors and 18 FTSE 100 companies had no
female directors at all. The Review called for FTSE100 companies to set targets to ensure more women
get the top jobs and openly acknowledged that radical change of mindset was required in the business
community to implement the scale of change required. It would appear the formula has worked and
there should be no reason why it could not equally be applied to increasing ethnic diversity in UK
boardrooms.

  Figure 3:  Gender in the Technology Sector

Figure 3: Gender in the Technology Sector

Although not reflective of the UK’s 50:50 resident gender population, this gender split is comparable to
women on the boards of the other FTSE100 sectors featured.

The average tenure on boards was 5.1 years overall, but there was a slight difference in tenures
between men and women where men had an average of 5.3 years board experience compared to 4.4
years’ experience for women. See Figure 4.


Although only four board members of the UK’s top 16 technology firms were identified as ethnic
minorities there was a significant difference in their board experiences. Whilst the average board
experience for white members is 4.9 years it is just 2.7 years for ethnic minority members.

  Figure 4:  Experience of Boards in the Technology Sector

Figure 4: Experience of Boards in the Technology Sector

The average age of board members in the tech sector is 56.7 years. However, there is a significant
difference in the age by gender. The average age of male board members is 57.4 years compared to women where the average age was 54.6 years revealing that women on average were almost four years younger than their male counterparts. See Figure 5. The average age of board members should be a cause for concern given that the average age of a UK entrepreneur is 40 and white, while other self-
employed individuals have a younger age profile and more likely to be in their 30s.

  Figure 5:  Average Age on Boards in the Technology Sector

Figure 5: Average Age on Boards in the Technology Sector

What Does Diversity at the Top Look Like in the Technology Sector Compared to Other FTSE100 Sectors

An interesting picture emerged when comparing the FTSE100 by sector where it clear that
Britain’s banks and financial services have understood and acted on the value that an ethnically
diverse mix of people at the top can bring to an organisation. 11% of board members in this
sector are ethnic minorities - more than three times that of the Travel and leisure sector and
technology sector, and almost three times that of the Media sector. See Figure 6.

  Figure 6:  Ethnicity in the Boardroom by Sector

Figure 6: Ethnicity in the Boardroom by Sector

Once again, the likely impact of the Lord Davis Review is evident across the three sectors featured with all achieving 25% or more female representation in the boardroom and an impressive 31% in the media sector.

  Figure 7:  Gender in the Boardroom by Sector

Figure 7: Gender in the Boardroom by Sector

The oldest men and women were found unsurprisingly 4 in the banking sector, where the
average age on theses boards is 58 years and the men somewhat older than women at 60
years old compared to 56 years old. As with the tech sector, boardrooms that do not reflect a
diversity of age risk not tapping into new ways of doing things or having their status-quo
challenged.

  Table 1:  Age and Tenure in the Boardroom by Sector

Table 1: Age and Tenure in the Boardroom by Sector

The Talent Is Out There

In the UK, British people from an ethnic minority background are over represented in the education
system. Whilst they make up 13% of the UK resident population they are over 20% of the UK-domiciled
university population. These British ethnic minority people have also understood that future careers
and growth lie in the tech sector and are trying hard to gain the skills required.

We know that the number of UK-domiciled ethnic minority students studying tech related courses has
remained consistent over the years, even when there was a drop of approximately 10,000 ethnic
minorities opting for university when tuition fees rose considerable in 2012/13. See Table 2. The number
of ethnic minority students studying Business and administrative studies has also been recorded as this
qualification serves as a foundation for those wanting to set up and start their own business.

  Table 2:  UK-Domiciled Ethnic Minority Students by Subject Area (2010/11 – 2013/14)

Table 2: UK-Domiciled Ethnic Minority Students by Subject Area (2010/11 – 2013/14)

A deeper dive into the ECU latest publicly available data - the academic year 2013/14, and overall a
higher proportion of ethnic minority (BAME) students studied SET subjects (48.6%) than white students
(44.7%). In particular, there was a higher percentage of BAME students compared to white students
studying Computer science, Mathematical sciences and Engineering and technology- see Table 3. At the
same time, 15.9% of Non-SET BAME students studied Business, admin studies compared to 9.9% of
white students.

  Table 3:  All UK domiciled students by SET subject area and ethnic group (2013/14)

Table 3: All UK domiciled students by SET subject area and ethnic group (2013/14)

Data from the Higher Educational Statistical Agency (HESA) for the academic year 2016/17 shows that 7.6% of all students in the SET cohort were studying computer science, 10.5% Engineering and technology and 3.2% Mathematical sciences. At the same time, 16.8% of students in Non-SET subjects were studying Business and administrative studies 5 . In fact, there has been a 5% increase in computer science enrolments between 2015/16 and 2016/17. For Mathematical sciences as well as Business and administrative studies there was a 2% increase over the same period and Engineering and technology 1%.

This should be good news for both the graduates and the UK economy as there is a huge demand for
skills and expertise in these subjects with an estimated 13.1 million new employees needed by 2024,
simply to replace existing staff. 6 Despite this outlook, the trend has been that ethnic minority graduates
are still three times less likely to be in full-time work 6 – 12 months after leaving higher education. 7 On
top of this, employment rates for ethnic minorities has consistently remained disproportionately lower
than employment rates for white people, with the exception of people from the Indian ethnic minority
group who experience relatively the same employment rates as white people. For the first quarter of
2018, there was a dismal 11.8 percentage point difference between the employment rates of white
people and ethnic minority people. See Figure 8. The statistics show that the barriers to employment
are still in place if you are from an ethnic minority background. This is a real shame given that the fast
moving pace of technology has opened up a plethora of new jobs with 40% of the top ten most popular
careers for 2018 in the UK being tech related. British ethnic minorities are finding it a challenge to get
into the UK workplace let alone the upper echelons of the tech sector.

  Figure 8:  UK Labour Market Status by Ethnicity (Jan – Mar 2018)

Figure 8: UK Labour Market Status by Ethnicity (Jan – Mar 2018)

The critical reality for the UK tech sector is that technology will not stand still and given its rapid pace of
development, the sector must establish its business case for race and act on it. While other sectors
might set aspirational targets for ethnic minority representation in say 2020, 2021 or beyond, today’s
tech companies cannot afford to be as laidback as the UK’s top 16 tech companies – they will be left
behind if they fail to grasp that diverse boards and leadership teams create a highly productive,
profitable and successful business where they can reap rewards in terms of revenue growth and
profitability. An obvious quick win would be to diversify boards - source and appoint ethnic minority
talent as Non-Executive Directors (NEDS). These entrepreneurs, small business owners or self-employed
who are connected in a different way to consumers, anticipating their needs, as seen by some 1000%
revenue growth in the UK’s top tech start-ups, will give new insight. Ethnic minority talent already exists
within the tech business – identify this talent and grow it. In the UK, we have established that the future
workforce is increasing in race diversity; ethnic minorities are highly qualified and have career
aspirations. There is no reason why this combination cannot be utilised to build a diversity of leadership
within the tech sector.

 

Recommendations

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Methodology, Limitations and Definitions

The FTSE100 constituents were taken as of 1 January 2018 and the Board of Directors data reflects all
positions as of 31 March 2018. The data was collected from multiple sources, predominantly the
company’s corporate website, as well as annual reports, Companies House, Reuters, Bloomberg and
other public websites. The information on selected ‘tech one’ companies was collected in the same
way.


All data on board composition was entered into an Excel spreadsheet so that the information could be
manipulated and analysed through the use of pivot tables. Data collection focused on ethnicity, gender,
age and length of tenure on boards - not time in current position as the research sought to understand
length of board experience. Wherever possible, the nationality of the incumbent was also captured.
This research has sought to identify all visibly ethnic minority Board members who have then been
classified using the broader UK Census 2011 ethnic categories of Black, Asian or Other Ethnic in the
database Given that an individual’s appearance is generally acknowledged as the first layer for
stereotyping and discrimination, followed by gender and age, and that many of the FTSE 100 companies
are multi-national, some Board members who might consider themselves ethnic minority (e.g.
Latino’s/southern Europeans) will not have been classified as such. Age is as 31 March 2018 where
actual date known or end 2018. The actual date of appointment was not always readily available
therefore where the month and year was known the first day of that month was assumed.

References and Footnotes

Deloitte, The 20 th annual Fast 50 2017


Equality Challenge Unit (ECU) Equality in higher education: statistical report 2015 Part 2: students


Kapor Center for Social Impact The leaky tech pipeline: A comprehensive framework for understanding
and addressing the lack of diversity across the tech ecosystem.


Lord Davies Review, Women on Boards, February 2011


McKinsey & Company, Delivering through Diversity, January 2018; Why Diversity Matters, January 2015



1 John Parker Review – a report into the Ethnic Diversity of UK Boards
2 Kapor Center for Social Impact, The Leaky Tech Pipeline, February 2018
3 Startups.co.uk/fastest-growing-tech-companies-uk-2017/
4 Banking industry established and older than travel and media
5 Higher Education Statistical Agency (HESA) HE student enrolments by subject of study and domicile
2016/17.
6 HECSU, What do graduates do? 2017/18
7 Business in the Community, Race into Work Revisited Part 1: The Status of BAME Leavers from Higher
Education (2011/12)