City needs ethnic diversity

By Zaki Cooper, April 2, 2009

The recent appointment of Tidjane Thiam as the new chief executive of the insurance giant Prudential was a significant landmark in the history of the City. Mr Thiam, who comes from the Ivory Coast and once served as a government minister there, is the first black head of a FTSE 100 company. His appointment was welcomed not only by the business community but by long-time champions of equality. Brendan Barber, the head of the Trade Unions Congress, said Mr Thiam’s elevation was very encouraging, adding that we need more than one black CEO at the top of a FTSE 100 company.

This issue of diversity in business is of interest to the Jewish community, and not just because the current CEO of the Pru, Mark Tucker, is Jewish. The Jewish community is one minority group which has succeeded in the City and in business more generally. A number of City institutions were built up by European Jewish immigrants, including Warburgs and Rothschilds in the banking sector. Beyond the square mile, the founders of some of the most successful high-street stores, such as Tesco, Sainsbury’s and Dixons, were Jewish and there remains a number of leading Jewish business figures.

Yet while there is good Jewish representation in the City, diversity in other areas has been lagging. A report carried out by Derek Higgs on corporate governance in 2003 found that boardrooms are still overwhelmingly white and male. Today it is estimated that only 6.8 per cent of management positions are held by people from the black or ethnic minority communities, who comprise 10 per cent of the population. To borrow Greg Dyke’s phrase when speaking about the BBC, the City is still “hideously white”.

In addition, there are very few women in senior positions. Until recently, Dame Marjorie Scardino, the CEO of media group Pearson, stood out as the only female chief of a FTSE 100 company. Further down the hierarchy, there are a low proportion of women; one study from 2006 showed that almost 90 per cent of FTSE 100 company directors were men.

The desire to see more women and ethnic minority figures in the upper echelons of the City is not political correctness gone mad. Part of the reason for low representation is discrimination and prejudice. Where this is the case, firm action must be taken, supported by the Employment Equality legislation of 2003. There are strong business arguments, too, for greater diversity. In his book, The Difference, Scott Page has argued that the benefits are less about “identity diversity” but about “cognitive diversity”. People with different identities produce different forms of thinking, which add to the decision-making strength of a company.

Mr Thiam’s arrival at the Pru is a breakthrough for ethnic minorities, who have struggled to make inroads into City boardrooms. Just as President Obama’s victory was a watershed for race relations globally, so — on a more modest scale — could Mr Thiam’s appointment for diversity in the City.

Zaki Cooper is Director of Business for New Europe and a Trustee of the Council of Christians and Jews

Last updated: 12:16pm, April 2 2009