Diversity, Democracy and the Boardroom

by Martin Butler

Diversity is all the rage. It has even reached the boardrooms of the UK’s top companies and indeed those that are not so top. Targets are set for the percentage of women and ethnic minorities who should populate these boardrooms. A group known as the 30% Club aims for “30% representation of women on all FTSE 350 boards” and “to include one person of colour”.[1]  We are told that although we have some way to go, things are moving in the right direction. This all seems very progressive and few voices, even from the more conservative corners of the business world, object. But there’s something odd about this. Why has an idea about boardroom composition that would further the interests of a diverse population to a far greater extent (and which has been around in the UK since the 1970s) been implacably opposed by the business world? What is even more puzzling is that, far from finding the wholesale acceptance achieved by the aims of the 30% Club, this idea has been rejected out of hand without shame or negative publicity. The idea is that boardrooms ought to incorporate an element of democracy, that employees in a company ought to have at least one elected representative on the board of directors who can advocate for their interests. There is no club to promote a modicum of democracy in UK boardrooms, and there is no pressure for one either.[2]

In the UK, the Bullock Report of 1977 recommended a system of worker directors on the boards of large companies, an idea to those of my generation which seemed as compelling as the idea that boardrooms should be ‘diverse’ is to today’s generation.[3]  Of course this report was never implemented, and the coming Thatcher years saw the rise of the neoliberal ideal that the prime purpose of any public company was the ‘maximization of shareholder value’ (known as the Friedman doctrine after the economist Milton Friedman[4]). This excludes any room for boardroom democracy.  Over the last two decades there has been talk of a company’s ‘stakeholders’ – in other words, all those with an interest in the success of a company (not just shareholders) – but no mechanism has been introduced that might actually rebalance the scales in favour of the ordinary employee. Short term profits and shareholder value reign supreme. Teresa May timidly suggested introducing some kind of worker representation on the steps of Downing Street after the 2017 election, but again this idea was quickly buried by the powerful business lobby.  The experience of the last 50 years seems to be that if companies can get away with low pay and degraded working conditions, by and large they will, which is why the Labour government needed to imposed a minimum wage in 1998.

Since the 1970s, work in the private sector has become less secure, pay has stagnated, pensions have eroded, and the pay gap between the average wage earner and chief executives has skyrocketed.[5] Companies do of course feel a pressure to look after their employees with regards to public image and, what has become more pressing recently, the retention and recruitment of skilled staff. But all of this is merely a means to the end of maximising shareholder value. The welfare of employees is never an end in itself. It seems plausible to argue then that in terms of public image, diversity in the boardroom can be an easy win. It makes a company look progressive without changing anything significant, and a diverse board of directors can ruthlessly pursue the Friedman doctrine just as much as a non-diverse board. All the negative trends in terms of pay and working conditions noted above have been accompanied by increased diversity at the top.

It’s interesting to note that the language used by the 30% Club echoes the language of democracy. “30% representation of women” makes it sound as if women in the boardroom somehow represent the interests of women, as if including a person of colour means that that particular ‘group interest’ is represented. This is of course nonsense, like arguing that Margaret Thatcher represented the interests of women, or that multi-millionaire Rishi Sunak (the present UK Chancellor of the Exchequer) represents the interest of ethnic minorities. If we do take the representation model of identity seriously, we end up with identity factionalism, each identity group vying with the others to push its own perceived interests – a kind of identity war of all against all. Also worth noting is the justification for diversity in the boardroom, not an ethical one, but simply the pragmatic argument that diverse boards are more effective as they bring a wider range of experiences and perspectives. But we have to ask the question: more effective at what? If it simply means being more effective at pursing shareholder value to the exclusion of all else, perhaps this is not so progressive after all.

There is something slightly metaphysical about the turn to identity, which contrasts sharply with the democratic process.  The democrat does not assume any essential link between those who share a similar identity. An explicit judgment is made by the voter that a particular individual (or party) is someone they wish to identify with, someone who they believe can further their interests. This individual might well be chosen because they share the voter’s identity but this judgment has to be made – it cannot be assumed.

It is worth examining here the logic of diversity. There are two identifiable types, contrived diversity and a deeper diversity which is an intrinsic feature of the society itself. Contrived diversity is a top-down process. Any organisation can decide to appoint individuals to positions of power so that the ‘full-range’ of identities are included (although this idea is deeply problematic as we shall see.) But does this tell us anything about the society in which this organisation exists? Does it tell us that this society has equal opportunities? Does it even tell us that the organisation itself is an equal opportunities employer? No. Contrived diversity can be a smoke screen in that it makes it look as if anyone from any background can make it. It’s a bit like believing that a highly regimented garden with a perfect balance of flowers and shrubs just grew there naturally.

Contrived diversity has to be measured, so that the organisation in question can claim that the requisite level of diversity has been met. This then presents the problem of identifying the range of identities which count towards diversity. Fortunately the BAME acronym seems to be going out of fashion, but ‘person of colour’ has its own vagueness. Then there’s the issue of social class, sexual orientation, regional accents, religious belief, disability, level of attractiveness and so on. Why, we might ask, does the 30% Club not also include some of these other categories in their aims, in order to achieve truly diverse boardrooms? Again, there is something anti-democratic about this. Who gets to decide which range of identities qualifies as sufficiently diverse? Who gets to decide the proportions?  Groups not included inevitably feel resentful, and the whole thing collapses into absurdity. Diversity cannot be measured by the pound.

Deep diversity, on the other hand, is a bottom-up process and not something that any particular organisation can institute. It is a characteristic of a whole society and must start at the level of education and social support. It’s more than just providing equal opportunities, since, at the level of employment practices at least, equal opportunities is only concerned with ensuring that unjust discrimination does not occur with regard to certain characteristics such as race and gender. It’s possible however to have perfect equal opportunities and still lack diversity. What matters is equality in being able to gain the skills and qualifications required for powerful roles, not merely a lack of unjust discrimination in allotting them. Contrived diversity can even cover over a lack of any real progress in this area.

A society which promotes deep diversity is a society that enables the diversity within the population to gain the skills and capacities to take opportunities when offered. Obviously this can never be perfect since upbringing is key here and families will vary as to how well they raise their children. But there are a number of policies that the UK (at least) could implement which would considerably improve this deeper diversity.

Here are just a few. First and foremost is dissolving the distinction between state and private education. The numbers of those with a private school education in top corporate positions is out of all proportion, and they tend to have a quite narrow range of identities. A society with one unified education system would ensure that that system was of the highest standard, with no short cut to the elite. Those who believe in contrived diversity might argue that the way to solve this problem is to set a minimum quota for state educated pupils. Those who believe in pursuing a deeper kind of diversity would argue that this does not solve the problem. If we are serious about diversity then we have to ask the question whether there is any real justification for this private/state divide. Study after study has confirmed that the system of private (including ‘public’ schools) schools entrenches inequality, and is one of the main drivers for lack of diversity at the top.[6] Why doesn’t the 30% Club campaign about this?

Secondly, when considering women in positions of power, the campaign for women to comprise 30% of boardroom positions seems absurdly arbitrary.  Why not 35%? 51%?  Why a general rule?   Can’t we allow for the possibility that men and women might gravitate to different industries to some degree? Far more coherent would be to ditch arbitrary percentages and remove the barriers that allow women to gain the experience and qualifications for boardroom positions.  An obvious policy here would be to improve the level and quality of childcare, since whether we like it or not women tend to shoulder childcare responsibilities.  Maternity and paternity leave could be further improved.

Thirdly, given the importance of early years in a child’s social and cognitive development, schemes to really bolster early years care in areas of high deprivation are crucial. (Unfortunately, the Sure Start programme instituted by the last Labour government was cut by the coalition government after 2010). All those support facilities most likely to be used by those on the bottom rungs of society need to be improved. In the UK, youth services and Further Education colleges have been run down over many years by the Conservative government, yet these are crucial in bolstering the chances of those of all identities who struggle to develop their potential. Again, no mention of any of this from the 30% Club. Are they really interested in genuinely extending opportunities right across society, or merely adjusting the elite to include other privileged individuals who happen to have a slightly different profile?

The boardroom democracy I outlined earlier would be far more radical than the contrived diversity of the 30% Club and would actually provide a means of unifying different identities.


[1] https://30percentclub.org/about/chapters/united-kingdom

[2] The focus of my discussion is the UK, I am conscious that the situation in many European countries is somewhat different. The US is perhaps a more extreme version of the UK.

[3] Report of the committee of inquiry on industrial democracy – Wikipedia

[4] “There is one and only one social purpose of business… to increase its profits so long as it stays within the rules of the game”. Friedman Doctrine 50 Years on (eom.org)

[5] Chief executives earn almost 180 times the UK’s average salary – CityAM : CityAM

[6] Britain ‘increasingly divided’ with most influential people five times more likely to have gone to private school | The Independent | The Independent