Skip to main content

The case for diversity on AIM-listed boards: The recruitment gap – Part 1

Lily Searle


United Kingdom

There may be instances, in the early growth-stage of a company, when an all-white, all-male board may be unavoidable for that particular company and serve its purposes for the time being, but those circumstances are limited and specific.

It will not surprise you to learn that when I asked multiple directors of listed companies whether diverse boards made for better boards and better companies, all replied in the affirmative.

I sat down with a number of female directors of AIM-listed companies to discuss their experience as board members – all were quick to stress that diversity in all aspects was just as important as gender diversity.

As a result, I realised that it was perhaps short-sighted to focus on gender diversity alone – a theme I will return to later.

In almost all cases, the directors I spoke to were the sole female director at their company. Having attended many 30% Club workshops, I wanted to know whether there was indeed a critical mass to facilitate having diverse voices heard in a boardroom.

Many directors said that, at times, they found it difficult to be heard, with male colleagues frequently talking over them. Others recalled that when they first joined the board as the only female member, the other members did not quite know how to hold a conversation, feeling as if they needed to temper their tone and language in the presence of a woman.

The directors to whom I spoke took different approaches to this. With experience comes confidence and the longer they sat on the board, the more they realised their opinions were valid and they had been brought onto the board for a reason.

One took an acting course to help with assertive body language and dealing with constant interruptions from colleagues. Others felt as though they had grown up in a male-dominated sphere and as a result, did not need to change their behaviour, feeling they were probably thought of as 'one of the lads' anyway.

Perhaps the biggest argument in favour of diverse boards is the breadth of experience and opinion different board members bring to the table.

If a board has a good blend of socio-economic backgrounds, ethnicities, genders and ages, it will be well-placed to anticipate a greater range of problems and come up with solutions.

It will also naturally invite more varied and open discourse, meaning the board will be less likely to fall foul of herd mentality. This is particularly important, given the diversity of the world around us, as all types of stakeholders will expect to be considered in key decisions.

The recruitment gap

Despite the virtues of a diverse board, vanishingly few (particularly, executive) director positions are occupied by women.

Why? A theme that quickly emerged in my discussions was recruitment – which I considered to be a threefold problem:

(1) Unconscious bias in recruitment;
(2) Availability of diverse candidates at board level; and
(3) Perceived risk.

When a board position becomes available, the directors I interviewed said that in their experience, the first port of call is for the existing board members to recommend a suitable candidate.

This is not an unwise course of action and many of the directors I interviewed spoke of being recruited thanks to a recommendation by a contact on a different board.

The result, however, will largely depend on how diverse the existing board is. Each board member is likely to recommend someone whom they think will be a good 'fit' with the existing board. This will, more likely than not, be someone who is similar to them.

Therefore, on an existing board made up largely of men, the recommendations will also be formed largely of men; in particular, men who are from a similar socio-economic background and of a similar age.

Many of my interviewees admitted that they and their fellow board members might struggle to name multiple candidates from diverse backgrounds with the requisite board experience. Putting unconscious bias aside, the very fact that there are so few diverse board members in the first place is a barrier to diversity in recruitment.

So, where do we turn? A theory suggested by one interviewee is that boards on AIM are traditionally smaller than the boards of their Main Market counterparts, and each board member plays a more integral role in running the business.

As such, there is a much greater level of perceived risk and responsibility in filling an available board spot on an AIM-listed company.

This throws up another barrier. To counter the lack of diverse candidates with existing board experience, boards might be tempted to turn to candidates who do not yet have board experience but show promise either at senior management level or other high level positions in complementary industries such as finance, accounting and law.

However, with no board experience, directors of AIM-listed companies may be reluctant to fill such an integral role with an untested candidate, while the candidates themselves might lack the confidence to accept the position.

This article was authored by Lily Searle, corporate associate at Fieldfisher, a European law firm and is the first of a three-part series on diversity on AIM-listed company boards. Read Part 2 here.

Sign up to our email digest

Click to subscribe or manage your email preferences.