25 August 2023 Kloe Halls The Diversity Faculty Blog

CIPD research finds lack of awareness and discomfort around DEI among boards

The High Pay Centre, an independent non-party think tank, has published a report by the Chartered Institute of Personnel and Development (“CIPD”) looking at the value of people expertise on the boards of the UK’s largest publicly listed companies. 

Key findings from the report include:
 
  • only 25% of FTSE 350 firms have a board member (both executive and non-executive) with a HR background, but all boards have financial expertise
  • 65% of boards have a director with a background in banking
  • 49% of boards include a director with a background in marketing/sales/advertising
  • 41% of companies now have an ESG or impact committee
The CIPD report suggests that this lack of HR representation results in a significant mismatch between the skills and knowledge of boards, and those needed to understand the main people-related issues facing organisations – a ‘people insight deficit’. 
 
Common ‘people mistakes’ made by boards
Chief People Officers, HR leaders and NEDs with HR backgrounds identified a number of common errors made by board members around people, including:
 
  • an 'overenthusiasm' around employee engagement, leading to interference with management
  • a lack of emotional intelligence
  • a lack of in-depth understanding of people issues to help navigate challenges such as closing skills gaps, talent attraction and retention, diversity, equity and inclusion (“DEI”) and mental health
  • a lack of awareness around DEI issues. Examples included board members inadvertently using language that might be offensive or the feeling of discomfort towards hybrid or flexible working. They identified a need for board members to receive additional training on how employee expectations have shifted, including around DEI. 
The report concludes with the all-too-familiar reminder that failing to take DEI matters seriously can hold companies back in the war for talent. 
 
Refinements to the UK Corporate Governance Code 
To match the balance of skills and experience on the board to the challenges faced by the organisation, the CIPD calls for the Financial Reporting
 
Council to refine the UK Corporate Governance Code and Board Effectiveness Guidance, so that boards are made up of professionals with a variety of experience. 
 
For more on the power of language in DEI, see our blog here.