What is the ethical issue?

Equality and non-discrimination in the workplace are important ethical issues for companies as well as being required by UK law. Companies that are committed to diversity are making an ethical undertaking to recruit and treat employees fairly and without discrimination.

In the boardroom, in particular, diversity sets a leadership example and sends a powerful signal to all employees about the company’s approach to equal opportunities. Boardroom diversity remains a sticking point in business, as the percentage of women in the boardroom is barely increasing, and similar trends exist for those from Black, Asian, and minority ethnic (BAME), and disabled backgrounds among others. Organisations are also struggling to understand the nuances of of intersectionality, as they grapple with how to establish mechanisms which provide opportunities for progression and success for those who do not typically populate the boardroom.

Recent figures published by Cranfield School of Management show that in the UK over half of FTSE 250 boards have no women board members at all. The lack of diversity on boards runs the risk of generating ‘groupthink’ and increases the likelihood of placing the organisation in a position where it has an inferior understanding of risks and opportunities. A lack of boardroom diversity perpetuates the perception of a traditional male cultural environment, an ‘old boys network’ and the lack of opportunities for employees of more diverse backgrounds.

More broadly, recruitment poses an issue, with positive discrimination gaining traction in both the workplace and the press. Although companies may oppose hiring an individual on the pure basis of their characteristics, it is important to recognise the value in the new perspectives and approaches to the business that an individual’s characteristics can bring, which may ultimately improve the organisation. Additionally, when judging the differing skills and levels of experience possessed by candidates, businesses may consider the contextual factors which have contributed to disparities in experience and skill.

IBE Guidance

A summary of good practice

• Organisations should recognise that having an inclusive and respectful environment that values and promotes diversity provides an opportunity for the organisation and each individual to achieve their full potential.
• By creating an open and respectful atmosphere where everyone can thrive, diversity at all levels of an organisation can contribute to a embedding a strong ethical culture. In addition to mentoring and talent management, diversity training can help to build an inclusive culture and promote opportunities for all employees to fulfil their leadership potential, regardless of background, gender, religion or race.
• Possible methods of improving corporate practice and diversity measures include visible monitoring by the CEO and executive team of progress of diversity programmes, skill-building programmes aimed at specific groups and encouragement or mandates for senior executives to mentor junior staff from diverse backgrounds.
• Additionally, organisations can adopt the Voluntary Code for Executive Search Firms, encouraging headhunters to widen their search criteria and produce a more diverse list of candidates. The new UK Corporate Governance Code also attempts to remedy the UK situation in boardrooms, stating that the ‘search for board candidates should be conducted, and appointments made, on merit, against objective criteria and with due regard for the benefits of diversity on the board, including gender.’

Essential resources

Report

The Ethics of Diversity

An important report on diversity, groupthink and the need for fresh thinking and wider life experience on boards. The 2020 report is now available in French and Spanish.

04 Sep 2023

Board briefing

The Ethics of Diversity board briefing

This board briefing presents a summary of the key conclusions and recommendations of the IBE’s recent report on ethics and the diversity of boards.

14 Apr 2021

Further resources