This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.
Author: Silvia Wiesner, Consultant, Leadership Advisory, Egon Zehnder
- Diversity in executive and non-executive appointments across is hugely dependent on external pressures and individual efforts.A fundamental reset of the executive search process is needed to address inclusion at every step of hiring senior leaders.Joint efforts by hiring and recruiting teams will be key to see more diversity in the boardroom.
Progress has been made worldwide in terms of promoting diversity in leadership appointments. For example, female representation on corporate boards, according to MSCI (an analyst group that tracks gender diversity of corporate boards) has reported that 38% of companies in its All Country World Index had at least 30% of their board positions filled by women in 2022.However, this progress largely comes from external pressures and individual efforts rather than the system itself. Therefore, it is time to challenge some of the established practices in the selection of senior leaders that have been in place for decades.
Prioritizing inclusivity in leadership appointments
Inclusivity is not only a moral obligation, but a business case linked to driving innovation, improving decision-making, expanding market reach, attracting top talent, and ultimately leading to improved business performance and success. Therefore, it is critical to prioritize inclusivity in the design and execution of hiring processes – up to the top.
We know that our personal worldviews and core beliefs guide our thoughts and feelings. This is also true when it comes to leadership appointments, which are influenced by all kinds of cognitive biases and group affiliations. Overall, efforts toward greater diversity are too reactionary. Most organizations are addressing a narrow set of diversity priorities and fighting today’s battles, rather than becoming future-proof, thoughtful and comprehensive.
A holistic approach is needed to achieve this, with collective and individual action from multiple stakeholders. We need to support, role model, and demand an inclusive recruitment process. Strategic levers for inclusivity in the executive search practice have been identified and published in a recent book called Search 2.0 by Egon Zehnder, driven by the work of consultant Satyajeet Thakur. Each step of a senior leadership appointment must be addressed and redefined. With inclusivity at its core, such a process doesn’t exclude any leader or seek predetermined outcomes and will lead to more diversity in executive and non-executive appointments.
Making leadership appointment processes more inclusive starts with the role of the people involved in the search process.Starting with the organization that wants to appoint a new leader, the composition and diversity of the hiring team matters. Egon Zehnder analysis shows that if more than 40% of the hiring team is female, there is a 40% or more chance of there being a female hire on the project. The sweet spot seems to be a hiring team that is 40-60% female, which roughly equates to 47% female hires.
Though research is at an early stage, current analysis shows similar results for the composition of the recruiting team, the team assigned by the executive search firm. Female consultants on average end up presenting more female candidates for interviews than male consultants. Searches led by female consultants outperformed searches led by male consultants by 25% in terms of presenting at least one female candidate to the interview stage across the firms’ global searches.
Knowledge of diversity, equity, and inclusion (DEI) is just as important. Analysis shows a positive correlation between engagement in DEI knowledge, language, capabilities and participation, and a higher proportion of diverse hires. Consultants who are designated as DEI champions made 20% more female candidate hires than the wider consultant pool, irrespective of their gender.Vetting candidates. Looking at candidates as the third key stakeholder group in executive search, distinctive candidate access goes beyond the ability to reach a candidate. It extends to differentiated non-public insights about candidates that can only come from the credibility, intimacy and trust that has been built up over time by individual consultants within an executive search firm or by in-house recruiters within a big corporation. Research has shown that access to and acceptance into networks that share a certain characteristic (e.g. gender, ethnicity, sexuality, disability, age, socioeconomics, national identity, regional identity, religious identity, etc.) is positively correlated to possessing that characteristic yourself, again pointing out the relevance of diversity within recruiting teams.
What’s the World Economic Forum doing about diversity, equity and inclusion?
The COVID-19 pandemic and recent social and political unrest have created a profound sense of urgency for companies to actively work to tackle inequity.The Forum’s work on Diversity, Equality, Inclusion and Social Justice is driven by the New Economy and Society Platform, which is focused on building prosperous, inclusive and just economies and societies. In addition to its work on economic growth, revival and transformation, work, wages and job creation, and education, skills and learning, the Platform takes an integrated and holistic approach to diversity, equity, inclusion and social justice, and aims to tackle exclusion, bias and discrimination related to race, gender, ability, sexual orientation and all other forms of human diversity.
The Platform produces data, standards and insights, such as the Global Gender Gap Report and the Diversity, Equity and Inclusion 4.0 Toolkit, and drives or supports action initiatives, such as Partnering for Racial Justice in Business, The Valuable 500 – Closing the Disability Inclusion Gap, Hardwiring Gender Parity in the Future of Work, Closing the Gender Gap Country Accelerators, the Partnership for Global LGBTI Equality, the Community of Chief Diversity and Inclusion Officers and the Global Future Council on Equity and Social Justice.
The search strategy: As part of the search strategy, overly precise search criteria can have a drastic impact on the diversity of the candidate pool because of the law of small numbers – the reality that underrepresented candidate pools are not numerous in senior leadership ranks. When it comes to role specifications, it is important to note that cognitive biases can flow through writing styles, for example, by choosing masculine forms of words. Certain words may trigger some candidates, evoke an emotional reaction, or cause offense.The ‘shortlist’. As far as the search execution is concerned, candidate profiles should be presented with focus on what matters most. The most recent work experiences should have more weight and appear before, for example, age or nationality. Interviews should not commence before there is a diverse pool of candidates. Egon Zehnder analysis shows that if a “short list” is diverse, it materially increases the chances of a diverse hire. For example, having just one female interviewee creates a 30% chance of a female hire, increasing to 45% when there are two and 60% with three.
The interview. There is much more to be taken into consideration during the interview phase: candidates’ lived experiences that go beyond what can be seen on a CV should be valued as they can be catalysts for personal and professional growth. Diversity statistics can help ensure focus. Interview processes must be structured so that each candidate answers the same questions in the same order, preferably enriched by work sample tests. Effective candidate calibration requires awareness of potential biases and should involve calibration templates for structured discussion.The final decision. Finally, once a hiring decision has been made, inclusive terms and conditions must be crafted, and active support for integration in the first 180 days should be offered to the senior leader joining an organization. Ultimately, inclusivity should be the starting point, not an afterthought in executive search processes. Hiring companies and executive search firms are already experimenting with the inclusive rework of their search initiatives, and others should follow suit. BP has implemented a number of data-led initiatives, one of which, “hiring inclusively”, is already showing positive impact. The executive search industry and their clients must ensure that inclusivity is a priority on all hiring mandates. Testing and refining these efforts are crucial for a truly inclusive leadership appointment process and more diverse
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