March 4, 2021 –
As the pandemic raged last spring, chief human resource leaders stepped up around the nation. Their task: to play a starring role in helping organizations navigate and fight through a challenge that has turned out to be far greater than the one faced during the Great Recession. A recent article in The Economist noted that during the health crisis of 2020, CHROs “keep employees healthy; maintain their morale; and oversee a vast remote-working experiment.” As companies now begin to slowly emerge from the COVID-19 era, these HR chiefs have other pressing dilemmas, like whether to downsize their workforces – or to rebuild – in the aftermath.
Meanwhile, chief diversity officers have emerged as key leaders during this enormous period of transition. With a global workforce shifting in complexity, there is a growing need for diversity experts who can shape the vision, culture, and very face of organizations.
At issue: Too few women and people of color are serving in too few senior executive positions. Pandemic or not, organizations and their very cultures thrive on diverse talent and it is now falling on top DE&I leaders to make it happen.
For executive recruiters in hot pursuit of both leadership roles,
the search is on for big guns who are sophisticated, proactive, inspirational, and strategic-minded, with strong business savvy to drive their people capabilities like they would a P&L. According to these search experts, chief executives are pushing people programs to become sustained board-level agenda items – and mandates to find the best CHROs and chief diversity officers is hitting an all-time high as a result.
2020 was a ‘perfect storm’ year for organizations and for their HR functions. “Last year, HR leaders were thrust at hyper-speed into COVID-19 response, remote work, the future of work, DE&I, social justice, and organizational fatigue,” said Ruben Moreno, HR practice lead for Blue Rock Search. “Now, more than ever, CEOs and executive leaders are compelled to seek the experience, competence, coaching, and change leadership skills of these top leaders. And shareholders, consumers, and government agencies (including the SEC) are demanding transparency with respect to DE&I at publicly traded organizations.”
Last year, of course, the top priority was employee safety and health. “The most immediate COVID-19 challenge was the rapid development and implementation of a pandemic response plan which many organizations did not have in place,” said Mr. Moreno. The lion’s share of that responsibility came to rest in HR, he said. Another top priority was business continuity, “which required extensive cross-functional collaboration to ensure the processes, policies, systems, and tools were in place that would enable ongoing business operations via remote work,” he said.
A full year into the crisis with a ‘new normal’ setting in, the task at hand is to proactively prepare for what is to come in 2021. Mr. Moreno pointed to a few key points. First are the issues around the future of work: “Creating and compensating a more remote workforce,” he said. “Managerial effectiveness – building remote management capability at the individual and organizational
level via people development and technology enablement, and policy development and deployment. As we begin the process
of migrating back ‘to the office’ there are multiple policy and workplace systems that HR will need to address. Such as mandatory return, mandatory testing, and social distancing in the workplace.” It is a seriously full plate for any leader to tackle.
The pandemic has impacted the roles of CHRO and chief diversity officer uniquely. “Creating and maintaining a culture of engagement is now more difficult than ever for CHROs as existing employees, new hires and candidates alike struggle to embrace and engage with cultural norms typically demonstrated and reinforced at the workplace,” said Mr. Moreno. “As COVID-19 has forced a migration to full and/or large-scale remote work and decreased hiring, the chief diversity officer’s opportunity to effectuate organizational and culture change has definitely been hampered. Building critical internal stakeholder relationships, implementing, and leveraging employee resource groups, and increasing diverse representation in candidate slates are all exponentially more difficult in the COVID-19 era.”
Managing a Distributed Workforce
“We believe companies are recognizing the importance of HR
and the thought leadership that HR brings in dealing with complex issues around safety, engaging in a remote workplace, and creating an environment where diversity can thrive,” said Pam Noble, president of the consulting services division and head of the DE&I practice at The Christopher Group. “Creating a sense of belonging and engagement is becoming more challenging in a distributed work environment,” she said. Separately, in companies that are PE-sponsored there is a clear premium being placed on attracting, developing, and retaining top talent, she noted.
“Many believe we are not going back to what it was like pre- COVID-19,” Ms. Noble said. “Companies are looking to their HR leader for guidance on managing the new environment, ensuring the business’ success and employees’ well-being as they look to balance a distributed workforce – all by building and creating a culture rooted in shared values regardless of background, location, and tenure.”
Some companies have been forced to slow hiring and some have reduced their workforces, only adding to their staffing problems. This has brought on some challenges for organizations and their HR and diversity leaders looking to create a more well-balanced, diverse workforce. “Traditionally, many companies have used a last-in, first-out approach,” said Ms. Noble. “If diversity initiatives are new for an organization, this could have a disproportionate impact. However, for organizations with more mature diversity practices, monitoring impact during downturns should be an established consideration approaching any reductions in force.”
Ms. Noble believes COVID-19 has elevated both the CHRO and chief diversity officer roles. “Senior leadership now look to CHROs and diversity chiefs for direction on how to adapt quickly in a chaotic and rapidly changing environment,” she said. “The intersection of COVID-19 and social unrest has created a need for thoughtful leadership regarding business continuity, employee safety, communication, and employee engagement.” This all falls into a broader context of ensuring employees have a sense of belonging to an organization that values their well-being during difficult times while safeguarding the long-term success of the enterprise. Ms. Noble said she looks for specific traits when searching for top CHROs and diversity chiefs. Among them: “Self-awareness, resiliency, learning agility, values-driven, and empathetic with the courage of their convictions to have difficult conversations.”
Social Insistence for Change
Most corporate C-suites, of course, have already publicly elevated diversity, equity, and inclusion to the top of their strategic checklists. A key driver: social uprisings in 2020 organized against systemic racism, according to Ben DeBerry, executive vice president at Slayton Search Partners. “It remains to be seen whether this will go beyond the superficial and have any material impact on organizational cultures and ways of doing business,” he added. History would tell us, he said, that there will not be meaningful and sustained change in the way corporations conduct business until the negative consequences of continuing with ‘business as usual’ outweigh the fears of doing things differently. “The extent of the impact will depend upon the persistence and intensity of the social insistence for change.”
“It is the organizational culture of companies – their values, beliefs, and practices – that have produced a lack of diversity and absence of equity,” Mr. DeBerry said. “Those organizational cultures need to change, not the individuals they have excluded from their ranks. The same culture will produce the same results. Organizations need to ask, ‘What is it about our culture that reinforces racial inequity,’ and not, ‘Does this executive fit in our biased culture.’ Diversity is not just about increasing the numbers of diverse people in the workforce. It is a completely new way of interacting, hiring, and providing a healthy environment that spurs an inclusive culture for everyone.”
Setting the Tone
So many elements come into play when HR leaders are trying to build an organizational culture that diverse leaders want to join. “Absolutely critical is having a commitment from the top, whether that be a president or CEO,” said Charlene Aguilar, a consultant in the education recruiting practice at WittKieffer. “The organization’s leadership sets the tone in articulating and prioritizing culture, mission and values that promote belonging and inclusion.” Another key aspect is having a chief diversity officer or other DE&I-focused executive who has real authority to facilitate transformation, innovate and drive culture change, she noted. Another essential element is building diverse representation holistically and within the organization. “When leadership candidates interview, they want to see peer leaders, board members, and employees who are diverse and represent a multifaceted community of stakeholders. This gives candidates an understanding that the organization they are thinking about joining is the right one for them,” she said.
Array of Obstacles
“I’m optimistic that many leaders and the organizations they represent now take diversity, equity and inclusion much more seriously than ever before,” said Donna Padilla, managing partner and healthcare practice leader at WittKieffer. “The messages coming from the Black Lives Matter movement have resonated and organizations have been inspired to act towards social change. Meanwhile, the pandemic has highlighted a glaring need to address the great discrepancies in the health and well-being of communities. We see a greater commitment in our search work, as clients are prioritizing diversity more than ever as they look for new executives. Many institutions are also, for the first time, recruiting or elevating chief diversity officers and other diversity-focused leaders. These are positive trends that I hope will continue well after the pandemic passes,” she added.
There is an array of obstacles that diverse candidates must overcome. “Historically, organizations have not done a great job
of recruiting, identifying and developing diverse talent within their organizations,” said Ms. Padilla.
“Additional challenges include lack of mentoring and continued development opportunities, the way that executive roles are defined and structured within organizations, implicit bias in organizations’ hiring and retention processes, and lack of proper onboarding and organizational support for diverse executives to succeed when placed in senior roles. These are things that can inhibit leaders who have already been successful in their careers from reaching the top echelon of their organizations.”
Committed, Active or Passive
“Since the start of the George Floyd protests last spring there has been a heightened interest in addressing diversity, equity and inclusion issues across all for-profit and non-profit organizations,” said Ted Pryor, managing director of Greenwich Harbor Partners. “There has been significant fresh interest in hiring diverse candidates for C-suite roles and board of directors. There has also been an increase in effort to create more welcoming environments for diverse employees such as creating mentorship programs. I would say one-third have been very committed to diversity for a long time, one-third have been interested and are increasing their level of activity now. And one-third are still somewhat passive and just beginning to think about what more they can do.”
Mr. Pryor said there is a shortage of diversity in the C-suite partly because of the time it takes for people to development and partly because people tend to want to hire people like themselves. “It takes extra effort to hire someone with a very different background and style of doing business,” he said. “One of the common stated objectives is the desire to hire people who fit in, but this can be a not-so-subtle screen for people who look and talk and think in different ways. If the C-suite executives all need to be golfers to fit in, then you will screen out a lot of people. However, if you focus on skills and experience, you will find a lot of diverse talent. In truth, the C-suite has become a lot more diverse in the last 30 years especially in marketing, HR and legal as people have risen through the professions,” Mr. Pryor said.
Finding Female Leadership
Women workers, to be sure, have been hard hit by the current economic crisis. The number of women who lost their jobs when the pandemic began exceeded all of the jobs created for women in the years between the Great Recession and today. So, what is being done to promote female leadership? What are executive search firms doing to promote women into senior leadership roles? Is there a concerted effort?
“I think it depends on the search firm,” said Judith M. von Seldeneck, founder and chair of Diversified Search Group. “In some cases, you are seeing a more concerted effort to diversify the ranks, and at others it doesn’t seem to be a priority. At the end of the day, it is a matter of intentionality: How important is this to you? Obviously, it is very important to us. We are the largest woman-founded executive search firm in the world. Our founder, me, is a woman, our president is a woman, and the three firms we acquired in 2019 – Koya Partners, Grant Cooper, and Storbeck Search – were all originally founded by women. So, we are clearly intentional about the importance of female leadership,” she said.
The country is, too, she added. “We have more women in Congress than ever, and the first woman vice president in the history of the nation. I think it’s important, as the people who find leadership for the country, that our leadership in executive search reflect our commitment to diversity.”
Ms. von Seldeneck also noted that women are getting the top-level positions more than they used to. “Women being considered for top C-suite roles, which would have been groundbreaking when I started Diversified Search in 1974, is now something completely taken for granted,” she said. “That’s very gratifying. But the executive search industry itself still has some work to do in this regard. There are no other women heading up major U.S. search firms, which just seems astonishing in 2021. As an industry, we should be leading our clients on this, not the other way around.”
One area Ms. von Seldeneck feels good about is equal pay. “The good news is we are making some headway,” she said. “Five years ago, women earned 74 cents for every dollar a man earned; today, the uncontrolled gender pay gap is 81 cents for every dollar. When you control for identical education and backgrounds, it goes to 98 cents for every dollar, which seems terrific. But, she noted, it still does not explain why women with identical experience and qualifications still make two percent less than men do.
“It gets a little trickier when you get into the issue of people of color, but the fact remains that black and Hispanic executives still
lag far behind their Caucasian counterparts,” Ms. von Seldeneck noted. “Again, the solution here is that companies have to be more intentional. We are seeing a lot of clients who are undertaking a compensation audit and comprehensive job analysis, or abandoning salary history as a metric, something that is also being actively legislated. Anti-bias training, increased use of flexible or remote working arrangements – there are a lot of tools that can be activated to address this. You’re starting to see them used more robustly.”
“There is universal understanding that workplace equality isn’t going to be achieved by accident –there simply are too many structural impediments for women and people of color – and so companies need to be intentional about distributing opportunities to under-represented demographics,” she concluded.
Deliberate About Diversity
Lisa DeConto, a partner in the asset, wealth, alternative investments, and leadership advisory practices at Odgers Berndtson, and co-head of the firm’s DE&I committee, said her firm works hard to be deliberate about diversity. “We formed an employee resource group, Women of Odgers (WOO), whose mission is ‘to promote the advancement of women at Odgers and at our clients globally,’ and so we spend a lot of time thinking about ways to implement our mission, both internally and externally.”
“We know that awareness is the beginning of all change and so we’re working hard to increase our self-awareness as a firm, as leaders, and as counsel to our clients,” she said. “If our clients do not request a diverse slate of candidates, we present one anyway – and we raise the issue. If our clients give us a job description for which few women or people of color are liable to fit the bill, we push the client to reimagine the role description, its prerequisite experience and work flexibility,” so that a wider swath of candidates will consider the opportunity.
“We remind our clients that they need to redefine diversity for each search,” Ms. DeConto said. “No person is diverse on their own; they’re only diverse as it relates to their context. In some teams and settings, women remain extremely underrepresented; in others, a wider definition will constitute the kind of cognitive diversity our clients seek. Hiring women does not mean companies don’t also need to hire people from diverse and under-represented backgrounds.”
Like, Ms. Von Seldeneck, Ms. DeConto has seen improvements in the pay gap between men and women. “In the last few years, there has been one big positive in addressing the pay gap: the pay equity laws enacted by a number of states and local governments, which prohibit employers from seeking historical salary information when making new hires,” she said. “Candidates are growing accustomed to these laws and learning to provide their “target pay” for a particular role rather than providing their present or former salaries.”
The result is that companies are now making offers based on their understanding of the value of the role rather than the candidate’s previous comp levels – levels that, with women and people of color, were often below market. “I don’t mean to say that there isn’t a gap, and that there isn’t more to be done in terms of eliminating bias from compensation,” said Ms. DeConto. “But the last few years have seen some positive developments.”