Corporate Europe Ignores Diversity at its Peril

If European businesses were truly performing to the very best of their potential, you might expect their boards to resemble premiership football teams. They would be picking the best talent from around Europe and the world. Like the managers of the top football clubs, the chief executives would be drawn not just from the home nation but from across the continent.

The reality, though, is startlingly parochial, judging by a survey of top European organisations carried out by the Aspen Institute Italia with the help of the Economist Intelligence Unit. For this study we selected 75 leading organisations in the big five European Union countries plus Scandinavia – 450 organisations in all, mostly the largest private companies but also in each country a few public sector outfits such as central banks and public broadcasters. We then looked at various aspects of diversity for their top executives, including nationality, gender and educational background. The results were depressing.

In Italy, only one of the top 75 organisations we selected is led by a foreigner (a Frenchman). There are just two foreign leaders among the top 75 organisations in France, three in Scandinavia and four in Spain – all four heading Spanish subsidiaries of foreign-owned companies. Germany and Britain are the only countries where foreigners have made real inroads. In Germany, foreigners head 12 out of the 75 organisations (although half of those are Austrians or German-Swiss). Of the British organisations, 26 are led by foreigners, with 17 of the 26 coming from other English-speaking countries.

What accounts for these differences between countries? Clearly, language is an important factor but it does not explain fully why top managers in Britain are a far more cosmopolitan bunch than most of their continental counterparts. British companies seem generally more open to foreign involvement and they are more likely to have shareholders who expect top appointments to be made on merit: for example, all but one of the British companies are publicly quoted, whereas many of the Italian ones are family-owned.

But in other important aspects of diversity at the top the British are little or no better than the rest. Take ethnicity. Among all the 450 organisations surveyed, just one – Britain’s Vodafone, whose chief executive is Arun Sarin, an Indian-born US citizen – is run by a member of an ethnic minority. Or take the lack of women in leadership positions: here the resemblance to premiership football is all too close, for top corporate life in Europe is still largely a man’s game.

Only two out of the 75 British organisations surveyed are headed by women. It is the same in Spain. Angela Merkel has taken over as German chancellor but only one woman has made it to the top of the German organisations we looked at, which equals France’s dismal record. Surprisingly, the situation is no more impressive in Scandinavia, despite the efforts there to dismantle barriers faced by women in the workplace. And in Italy, there is not one woman among our corporate leaders.

There are some small signs of encouragement for women in the growing numbers who now sit on company boards of British and Scandinavian companies, which suggests that before long more may take on the top executive roles. And in the public sector women have made some visible gains. But among the 360 leading private sector companies in our survey, only three are headed by women.

When it comes to educational background, French organisations stand out for drawing on a relatively narrow elite for top management. Well over 40 per cent of the leaders of the French organisations we surveyed studied at one of two grandes écoles: 23 are alumni of the Ecole Polytechnique and a further 10 graduated from the Ecole des Hautes Etudes Commerciales. In Britain, Oxbridge graduates no longer dominate, accounting for only 12 of the top 75 corporate leaders.

Add all this up and it is clear that decades of rapid social change and all the years of stepped-up European integration have yet to be reflected in the hiring of the most senior executives in Europe. Our research suggests that European organisations are singularly failing to make the most of the pool of top talent available to them. With a few exceptions, their leaders are overwhelmingly white, male and drawn from the home nation.

To win in the global marketplace, corporate Europe needs an infusion of new blood at the top.