Alex MacLeod has a stark warning for executive search firms who refuse to take diversity seriously: “Firms who are unable or unwilling to adapt will soon be seen as outdated,” says the chair of Veredus Executive Search’s diversity steering committee.
Executive search firms – or headhunters – are seen by some as a ‘block’ to diversity in the boardroom. The power they hold by drawing up longlists for executive positions, protected by the cover of candidate anonymity, makes some nervous.
The Equality and Human Rights Commission has recently issued legal guidelines to the executive search industry around the legality of tackling diversity issues. The Appointments to Boards and Equality Law report is designed to ensure all board appointments are made on merit. It also aims to ensure due process in all executive recruitment is “demonstrated through fair and transparent criteria and procedures”.
With the legal framework set, now is a good time to look at the role of headhunters in diversity.
HR consultants The HR Lounge founder and CEO Angela O’Connor calls the majority of headhunters “very disappointing” in their approach to diversity.
“The main problem is lack of ability to challenge the client’s brief,” she says. “They should be presenting the best talent, regardless of gender or race.”
But others see the challenges elsewhere. St Mungo’s Broadway executive director of HR Helen Giles believes diversity is elusive at any level.
“We’ve tried to target diversity with our general recruitment,” she says. “While our sector has a good record, we’re not where we want to be. It can only be a good thing if you can afford to hire someone to seek out diversity. Headhunters can’t go out and target women and minorities if that’s not what they’re asked to do.”
Are headhunters really holding back gender diversity or are they a scapegoat for a wider issue?
Hire focus
The role of headhunters to promote women on boards first came under serious scrutiny when the Lord Davies Review recommended a voluntary code of conduct to monitor their behaviour in 2011.
Article eight in the Women on Boards paper’s list of recommendations called for the code to be drawn up to address “gender diversity and best practice” within the industry’s search methods. Significantly, it was also the first time the target of reaching 25% of women on FTSE 100 company boards by 2015 was set – the figure at the time was 14.2%.
It was subsequently decided search firms would be responsible for the code to ensure maximum engagement with its goals. Denise Wilson was on the Davies Steering Group. She recalls that, at the time, criticism of recruitment practices put a strain on the relationships between some headhunters and their clients.
“Back then there was a fair bit of finger-pointing,” she says. “Company chairmen were saying they were asking for women, but they weren’t appearing on the candidate lists. Whereas the headhunters were arguing that they were only working within their remit. People weren’t keen to accept responsibility.”
The final stretch
The looming 2015 deadline has spurred everyone into action. This year’s Cranfield University Women on Boards report praised executive search firms for their “significant change of mindset” since 2011. But there was a wider acknowledgement that more needs to be done.
One month later the Recruitment and Employment Confederation (REC) launched its Good Recruitment campaign, along with women on boards focusedRoom at the Top. The associated charter calls upon recruiters and employers to act fairly, ethically and legally, with particular attention on “promoting diversity and inclusion within the workplace”.
REC chief executive Kevin Green sees the relationship between headhunters and HR teams as the key ingredient in making sure this happens, particularly in executive hiring.
“HR teams should be challenging the executive search firms they work with to produce data that proves they are taking diversity seriously,” he explains.
“Both sides need to make sure the way they work is robust. HR has a big part to play in governing this.”
As we reach the final quarter of 2014, 21.6% of board members in the UK are women. Vince Cable has announced that the government is “quietly confident” it will hit its target of 25% by 2015. But what has the executive search industry learned over the past three years and what still needs to be done?
Search inside
T-Systems UK has set its own individual target of seeing 30% female representation at all of its management levels by 2015, mirroring the 30% Club’s target. HR director Sarah Sandbrook sees challenging headhunters on their choice of candidates as a crucial part of this aim.
“If a firm comes back with a shortlist of four and they’re all men, we would immediately challenge their methods in coming up with that list,” she says.
Sandbrook sees this as a pattern that is emerging within an increasing number of companies in the corporate space.
The best way that headhunters can demonstrate a robust selection process is simply by presenting the best candidates, according to HowardKennedyFSI HR director Irena Molloy.
“If a company presents a brief that suggests they’re not promoting diversity, headhunters can challenge it by showing them candidates from diverse backgrounds,” she says. “That’s one way to own the diversity issue, not just respond to a client’s immediate demands.”
Denise Wilson, who was instrumental in drafting the executive search firms’ 2011 voluntary code of conduct, was appointed CEO of Women on Boards in 2013. She has seen the parallel trajectory of the women on boards agenda and the executive search industry.
“It’s encouraging that the executive search firms are a lot more aware of this issue, as in 2010 this just wouldn’t have been on their agenda,” she says.
“The top headhunters are waking up to the fact that this affects their business and the industry as a whole. We need to keep up the pressure to make sure these changes are sustainable and beneficial in the long-term,” she concludes.
It’s clear the executive search industry has come a long way since the first voluntary code of conduct was drawn up in 2011. What is also apparent though, is that if the relationship between headhunter and client is to work going forward both sides need to communicate more effectively. The onus is on both parties to own the diversity issue and to challenge the other to show they are doing the same. Only then will business be able to say it is driving the women on boards agenda from the front.