Executive Recruiters Upping Their Efforts to Help Organizations Achieve Diversity Goals

November 15, 2022 – Anyone who works in executive search right now has seen, and will continue to see, a push for more lists of diverse candidates for open roles. “We are also seeing organizations start to mandate diversity numbers as a benchmark for DEI success, and seeing an influx of diverse candidates at the executive level as a result,” said Ryna Young, head of the diversity, equity, and inclusion practice at Odgers Berndtson.

It’s encouraging that companies are making an effort. “And yet, if you’ve been paying attention over the past couple of years, you know diverse candidates still have a lot stacked against them,” said Ms. Young. “Board representation is still very low when it comes to both gender and equity deserving groups. COVID added extra barriers and stress for women executives, exemplified by the numbers of women dropping out (and staying out) of the workforce. And companies are struggling to retain the diverse talent they are hiring.”

Since the summer of 2020 companies have increasingly recognized the importance of diversity and inclusion within the workforce, according to Letitia Hatton, consultant and head of diversity, equity and inclusion at Tempting Talent. “Due to the huge spike in recognition, some companies opted to lay out some ambitious targets for their diversity hiring needs,” she said. “While others focused on an influx of hiring diverse talent to improve their statistics. The problem we have seen with the companies that implemented overly ambitious promises is that they originally had no diversity and did not change their strategy, nor did they consider their level of inclusion. Even if they have ‘ lived up’ to their promises the challenge some companies are now facing in result of their hiring plans have resulted in difficulty to retain staff due to not defining their strategy for inclusivity in the workplace ahead of hiring. Improving DEI does not come overnight and their needs to be measurable actions in place to ensure their strategy is constantly evolving to cater to the challenges minorities face in their day-day work environment.”

Ms. Hatton notes that there have been improvements in firms that have decided to act on diversity and inclusion daily and have implemented a strategy to stay inclusive as a fundamental foundation of their company. “Recruitment and executive search businesses that have implemented inclusive plans and are acting on the them are the firms that have improved the most since the summer of 2020,” she said.

Challenges Facing Recruiters
The challenges are dependent on the type of diversity, according to Ms. Hatton. “We look at a range of diversity including and not limited to ethnicity, age, gender, sexual orientation, religion, disability, socioeconomic status, and background,” she said. “Unfortunately, we don’t always know what people identify as when seeking talent. It has proven difficult to hire find diverse talent at senior levels of an organization; from my perspective many reasons could factor into this. First being if they are already a part of an organization who is doing diversity and inclusion well and they feel respected and valued therefore it is much harder for them to be interested in making a move as salary and career progression is not always the biggest driving factor.”

“There is also a much smaller percentage of executive search and recruitment professionals in the industry, most firms are white male owned and are surrounded by other white males at the C-suite level of an organization, there is often a smaller percentage of women, agender, transgender, non-binary, and all other gender identities at the top of an organization along with less people of color and those who identify as having a disability,” said Ms. Hatton. “Working in a white male dominated industry naturally discourages diverse talent.”

“There are clear signs of progress on the topic of diversity in the private equity space, where most of our clients are operating. However, there is still work to be done,” said Charlotte Cederwall, partner and co-leader of the consumer practice at Acertitude. “We are seeing a significant increase in the number of women in the C-suite at private equity funds and new research supports this observation. McKinsey recently documented that since 2020, women are outpacing men at a promotion rate of six percent for eligible women compared to one percent for eligible men,” Ms. Cederwall said. “Some of this momentum can be attributed to LPs demanding that these issues be addressed more aggressively which has led firms to take significant strides, improving on issues of diversity and making a tangible impact in governance. However, we are also seeing positive progress to become more accessible from the industry as a whole.”

“Of note, as more heads of human capital and heads of ESG are appointed to private equity operating teams and tasked with embedding DEI as a component of every deal, we are seeing more initiatives driven into portfolio companies and critical hiring decisions,” Ms. Cederwall said. “This type of progress should be applauded, but there is more work to be done. Private equity still lags corporates when it comes to C-suite ethnic diversity.”

“One of the biggest challenges we – and all executive recruiters – face is the shortage of diverse talent to source from at the leadership levels, particularly within certain sectors like manufacturing and tech,” said Ms. Cederwall. “We don’t have that today because different groups have historically not been afforded the same opportunities. Addressing diversity at the senior-most levels takes thought, effort, and creativity – but is worthwhile. Teams with diverse thinking, backgrounds, and experiences outperform those that don’t.”

“Firms must challenge themselves to proactively map out and build relationships with diverse candidates, groups, and affiliations to support progress,” Ms. Cederwall said. “Emphasis also needs to be placed on removing bias from hiring processes and tracking and holding consultants accountable when it comes to diversity metrics. Companies, likewise, have to invest in and train people to make sure that long term we have diverse teams operating from the bottom to the top of organizations.”

Diversity in the PE/VC Sectors
“There has been a big focus on diversity recruiting in the private equity space,” said Ms. Cederwall. “Great progress has been made around elevating females up to the leadership levels, while ethnic diversity is behind. The best private equity firms know that smartly and creatively widening their talent pools can lead to better hiring outcomes and progress on this important topic. We are seeing firms be more open minded around prior private equity experience, first time CEO experience, and academic backgrounds, for example.”

“It comes as no surprise that some funds are making bigger steps forward than others, with some modernizing at a quicker pace,” Ms. Cederwall said. “Overall, there is positive momentum but continuing to move in the right direction requires a long-term outlook and willingness to make decisions that yield benefits down the road, sometimes in contrast to the usual short term demands in the sector.”

“At Academic Search, we have been much more intentional about our efforts in this space and continue to have organization-wide conversations about diversity, equity, and inclusion and the impacts on executive search,” said Dr. Jay Lemons, president of Academic Search. “Our consultants are making concerted efforts to remain in-the-know about best practices and to incorporate those methods into the search process with each and every search.”

Diversity on Campuses
“One of the challenges we face in finding diverse talent is simply addressing the market forces and cultural/social factors that may have an influence on attracting a diverse candidate pool to a particular institution,” said Dr. Lemons. “For instance, the institution may not be in a very diverse area geographically, so it may not offer some of the cultural and social aspects of a community that a diverse candidate would seek. Or, the campus itself may not be very diverse in terms of its student, faculty, staff, or administrative makeup. Or, the campus may not be making efforts to imbed diversity, equity, and inclusion into its mission and values, whereas an institution that is actively engaging in those attempts could be more attractive to a candidate representing a marginalized population.”

As consultants, Dr. Lemons says his firm brings a level of expertise that can advise, inform, and facilitate a search process that allows for greater emphasis of best practices in building a diverse candidate pool. “This includes more intentional efforts to educate each search committee on mitigating bias at every stage of the search process and especially in the evaluation of candidates’ initial application materials as well as subsequent interviews and other interactions with the committee and/or larger campus community,” he said. “We discuss unconscious bias at every search committee meeting and as a part of our initial meeting typically have members sign a code of ethics document that commits members to an inclusive and equitable search process, including the creation of criteria for the position that do not establish undue barriers, a willingness to listen to diverse perspectives from fellow committee members, and a willingness to strive to recognize and put aside personal agendas, biases, or political positions so that each candidate is honestly and fairly evaluated based on relevant skills and experience.”

“In subsequent meetings, we also lead exercises that we believe help committee members to broaden their lenses and be more aware of where their biases may come into play in the review and evaluation of candidates,” he said.

“Within higher education, we believe continuing to make every effort to build an equitable and inclusive process is imperative to a successful search. Recruiting diverse leadership will likely remain at the forefront for higher education institutions in both the short- and long-term. It will be important for institutions to remain steadfast in their commitment to creating an inclusive environment for all and to committing the resources and support needed to move forward initiatives in this space, including the hiring of a more diverse faculty, staff, and administration to better reflect the students being served.

Diversity Within Non-Profits
“Our clients, all of whom are non-profit organizations or foundations, have long been attentive to the power of diversity, and most are quick to leverage that power — they don’t just make promises; they live the promise,” said Sam Pettway, founding director of BoardWalk Consulting. “We start with the premise that organizations are acting in good faith, and we meet them wherever they are in their respective journeys. And even though a commitment to diversity has been part of our fabric since our founding in 2002, we know our own learning journey continues as well.”

It takes a diverse effort to uncover diverse talent, according to Mr. Pettway. He says his team works hard to be strategic and creative in its research, sourcing, and preliminary assessments, leveraging who and what the firm knows to obtain the best results in each engagement. “Finding diverse talent may be easier than attracting such talent to the opportunity at hand,” he said. “Not only are the most visible prospects also the ones most inundated by search firm contacts, but the best will want to know the why behind the interest. That presumes clarity with the client and authenticity with the prospect. If either is absent, the bond is unlikely to hold. At its best, our work opens the client’s eyes to new possibilities and new ways of assessing the trade-offs any one candidate might represent against a preconceived ideal.”

Mr. Pettway notes that some of his firm’s best searches have resulted in the hiring of candidates the client would not have considered — or, in a few cases, had actually rejected — early in the engagement. “Every search presents a learning opportunity,” he said.

“We work on our own self-awareness – through candid conversations, shared readings, occasional outside facilitators and regular exposure to new environments,” said Mr. Pettway. “In our own way, each of us tests the walls of the (invisible) bubble we may live in. With clients, we watch for what is missing and listen for what’s unsaid. And we ask lots of questions. For all of us, regardless of our roles, ‘If the student is willing, the teacher will appear.’”

Historically, some fields (such as the environment) have been less attractive or inviting to leaders of color, and others (such as finance) have not been part of the routine development track available to many CEOs-in-the-making, according to Mr. Pettway. “It can take years to develop new pipelines, but the willingness to take new risks and try new avenues can be decided today,” he said. “Applying old practices to new markets, whether for services or talent, is self-limiting. An easy question: If we hope to achieve X result five or 10 years from now, what do we need to change today to ensure we’re successful? That’s hardly a new approach, but it has new consequences.”

Multinational Diversity
“Most of the larger multinational clients we work with have diversity hiring on top of their talent acquisition agenda,” said Jens Friedrich, CEO of SpenglerFox. “This is however more prominent amongst companies in the U.S. and Western Europe where diversity hiring has been the norm for many years now. Each search longlist and shortlist is scrutinized from day one to ensure we as a service provider offer a slate of candidates that meet their specific targets. As we move east into Central and Eastern Europe however, the emphasis is there, but not always that strong. Those that do consider this a priority, have most certainly ramped up their diversity mix.”

Diversity is an issue that depends almost entirely on the function, industry sector, and geography, with the latter being the least of an issue out of the three, according to Mr. Friedrich. “Some functional areas such as human resources have traditionally been dominated by females,” he said. “Finance, sales, scientific research, and the likes have traditionally had a good diversity mix and we are able to source candidates across the diversity spectrum. When it comes to engineering and technology related roles, these were and continue to be dominated by males, making it a challenge to provide a fully diverse slate of candidates in those domains. This by implication affects certain industries. Production and manufacturing, technology, mining and agriculture, and even to an extent banking and finance, are all still heavily male gender biased because there are simply not enough female candidates to choose from. This problem is specifically acute in geographies such as Eastern and Southern Europe due to historic societal norms.”

“Based on feedback received from some of our clients in PE/VC sector, the approach varies quite considerably,” Mr. Friedrich said. “Bearing in mind that the size and maturity of portfolio companies vary quite dramatically, the approach to diversity hiring, and DEI in general, is more practical, hands-on, and fit for purpose, rather than governed by formal policies. Consider too the fact fund managers must deal with portfolio company management teams in different parts of the world and across multiple cultures, with varying degrees of DEI.”

“Regardless, diversity hiring is taken seriously, and investment firms monitor progress continuously,” he said. “Bigger, more mature portfolio companies, as well as some of the bigger fund managers, may have a DEI officer, but this is not always practical within early-stage growth companies. We have also heard of cases where senior leaders are sponsored to attend executive training programs at prestigious business schools, and it is commendable to see that DEI is taking its rightful place, starting in the board room.”

At theBoardlist, COO Megan Wang says they are seeing some progress in diversifying public boards. Spencer Stuart recently published their 2022 S&P 500 Snapshot report, and most notably, said Ms. Wang, “72 percent of this year’s new directors are from historically underrepresented groups (i.e. women, underrepresented racial/ethnic groups and the LGBTQ+ community).”

Board Representation
“While there is some progress, it is not equitably across all intersections of demographic diversity — the report shows that directors from underrepresented racial/ethnic groups remain the same as last year, at 22 percent, while women directors rose from 30 percent to 32 percent,” she said. “For private companies, reporting is not as consistent. However, we’re seeing some of our venture capital partners begin to request data from their portfolio companies and organizations like Crunchbase have published reports that outline progress for funded late-stage private companies.”

“Women hold 14 percent of board seats among the companies studied, up from 11 percent in 2020 and seven percent in 2019. Nearly 40 percent of companies don’t have any women on their board, an improvement from roughly half of the companies in our 2020 study and 60 percent in 2019,” said Ms. Wang. “However, a similar story emerges that progress is not equitable across intersections — only three percent of all directors are women of color, reflecting no significant change, and 78 percent do not include a single woman of color. Lastly, women are most likely to occupy an independent director seat (56 percent) compared with an investor
director (31 percent) or executive director (13 percent) — signaling and validating challenges in diversity in the overall startup ecosystem and the road ahead for private companies to achieve parity.”

The pool of diverse talent is already vast, across many industries and functional areas of expertise. Ms. Wang says theBoardlist partners with leadership organizations that are consistently uncovering new talent that is already well qualified for board service. “It is clear to us that there is not a pipeline problem. Instead, our biggest opportunity is to work with organizations to discover rising talent – these candidates have exceptional operating experience and/or relevant thought leadership, may have some governance exposure in their operating roles or while sitting on non-profit or advisory boards, but have not had their first opportunity on a for-profit board,” she said. “Diverse candidates have been historically underrepresented, and therefore organizations being open to candidates that don’t yet have board experience is a critical element to diversifying boardrooms.”

“Since the events of summer 2020, where many companies pledged to improve and make good on their commitments to diverse hiring, we have noticed a lot more intent from organizations around hiring and developing black talent,” said Helen Tudor, managing director at Sheffield Haworth. “Organizations are being more intentional about where to recruit in terms of gaps within their organization, and also around implementing development programs specifically targeted at black talent for retention. Although organizations are more committed, it is still too early to measure however what the impact has been so far.”

Diverse talent is out there. But Ms. Tudor says she has found that a degree of flexibility from clients and an open-minded approach on the exact skills, background, level and career trajectory of potential candidates is needed to ensure a diverse range of candidates can be put forward and considered for senior opportunities. “Some potential candidates are operating at a level below the client’s hiring level, so it is important that a candidate’s full potential and transferable skills are considered in the round,” she said. “There should be commitment to provide additional support during onboarding and in the first 12 months to enable integration.” For example, leadership coaching, inclusion in networking, and access to key decision makers, would all be useful add-ons. “The challenge is often in convincing someone to put themselves forward for a role in the first place,” says Ms. Tudor. “If they don’t think they tick every box required in the job description, then they will not want to put themselves through a time consuming process. Therefore, it is essential to demonstrate real support around candidates and to help them land successfully.”

There are many initiatives organizations can put in place to better retain women and people of color. Sheffield Haworth often advises clients of some of the programs they can adopt which have been successful at keeping retention levels high in these underrepresented groups. “These initiatives and programs could include targeted mentoring with other people in the business or externally, targeted development plans and frequent check-ins to ensure the person feels supported and is receiving the development or training they require,” said Ms. Tudor. “Increasingly companies seek to bake-in this approach through linking inclusion rates to overall performance of leaders and impacting annual financial reward and promotional opportunities. It is also imperative for organizations to demonstrate a genuine commitment to helping and supporting these under represented groups, rather than it being purely lip service.”

Diversity Starts from the Top
Ms. Tudor sees it as highly important to have top leadership driving the diversity and inclusion agenda within organizations. “Genuine senior-level commitment and involvement is essential in helping the business understand why it’s important to build an inclusive culture and organization to ensure hearts and minds are fully engaged at all levels,” she said. “If the senior leadership is only seen to give lip service then the culture won’t move on and staff will become disillusioned. As younger generations come into the business, senior leaders are becoming more accountable for ensuring their workforce supports everyone across the organization. It is incumbent on them to understand the moral and business case for inclusion and lead from the front.”

“Many of our alternative investment clients have been actively looking to hire diversity candidates,” said Dawn Magnotta, head of infrastructure: accounting, operations and compliance practice at Hudson Gate Partners. “In fact, many funds are specifically looking to hire a Head of D&I. This is usually a newly created role. The head of D&I role tends to be very strategic and sometimes includes campus recruiting as well. In addition, some of our alternative clients are also hiring diversity talent sourcers. These roles are usually filled by experienced lateral recruiters who specifically target diversity candidates and are focused on achieving hiring targets. As a sign of how far many funds have come over the past few years, some of our clients now have over 50 percent of their employee base broadly defined as being diverse (including both women and unrepresented communities).”

Ms. Magnotta notes that there are challenges in finding talent for every role, gender, and ethnicity. “But recently, we have been faced with a particular challenge in finding POC diversity talent to fill crucial roles within the broader human capital function,” she said. “Within the world of HR and recruiting, we have found that there has been heavy candidate movement as of late, as firms poach diversity talent from each other. Given the focus on D&I is still a relatively recent one, the candidate pool is still developing. The large majority of available candidates only have one or two years of experience in D&I, and are spoilt for choice in terms of job opportunities. Thus, we have encouraged our clients to be open to hiring mid-level and junior candidates for HR and recruiting positions where diversity is desired. We have had good luck finding outstanding diversity talent in the functions of marketing, investor relations, finance, and legal.”

“We really push our clients to interview as diverse a slate as possible. It is our job to present them with diverse talent — which we do,” said according to Dana Feller, founder of Hudson Gate Partners. “But it is also our job to politely insist that they interview candidates whose backgrounds may not be perfectly cookie-cutter. As you might imagine, it is often a candidate whose background is slightly different who brings the most to the table in terms of experiences, creativity and perspectives. We have found our clients much more sophisticated about evaluating diverse talent versus even a few years ago.”

Ms. Feller also notes that both private equity and venture capital funds are fully embracing diversity hiring. “It is simply an automatic part of any search and assessment process,” she said. “The funds have been aggressively adding diversity talent within their infrastructure and operations teams, as well on the investment side and in their portfolio companies. It is exciting and fun for us to help our clients hire the best-in-class employees, many of whom are diverse. So far in 2022, It is also exciting for us to help these amazing candidates find outstanding new job opportunities at some of the world’s leading investment funds.”

“Premier executive search firms, have been doing what we do best — proactive networking,” Ms. Magnotta said. “We are constantly reaching out to and connecting with all types of diverse candidates and making sure that they are aware of not only the searches we are working on, but the general state of the hiring market. In addition, we are always counseling young, recently graduated, diversity candidates who are looking to make their very first job change.”

“While none will declare victory in solving some of the most pressing problems around access and inclusion, I can confidently say that we see progress and prioritization,” said Chris Bingley, SVP at Bryant Group. “Our partners are communicating and living their values around diversity and respect for all in their hiring and talent development efforts. And we are engaging in meaningful dialogue with search teams, hiring authorities, and HR leaders as they pursue their goals and live their values.”

“In our industry focused on search for philanthropy leaders in higher education and healthcare, we are finding that more deliberate focus on engaging diverse early career professionals is needed,” Mr. Bingley said. “Philanthropic work isn’t only about asking for gifts and opportunities exist for IT, HR, business analytics, and communications, to name a few.”

When addressing concerns about unconscious bias, Mr. Bingley notes that it is first, vitally important to communicate and recognize what bias looks like and how we are all impacted through training and education. “Sharing definitions, examples, and educating leads to healthy decision making and change,” he said. “And the very close second is slowing down. Slowing down in the process will create space for communication about types of bias and creates the healthy environment necessary for dialogue and change.” Bryant Group continues to actively identify candidates from underrepresented groups and this has been an integral part of our recruitment process since our founder began this work in the late 1980s, according to Mr. Bingley. “It is this commitment to the client’s best interests and respect of every candidate as a professional and as a human being that ensures the best outcome for all involved and where executive search firms must prioritize,” he said.