Driving change in a biased industry

The traditional senior talent recruitment system is ripe for change. It is riddled with bias and relies on requirements that lock out women and Black, Asian and minority ethnic people in favour of an overwhelmingly male and white workforce. 

I know this as I spent nearly 8 years of my life headhunting top talent, filling top management and board seats of private equity-backed portfolio companies with leadership talent. During that time I have met and interviewed hundreds of CEO, CFO, Chair, Board and aspiring leaders, however, the number of female and non-white applicants I met I can count on one hand.

There is no shortage of diverse individuals with the potential to excel in top leadership jobs. Time and time again the leadership capability of women and people of colour has been clearly demonstrated. Instead, it is the result of a number of factors that restricts the talent pool and creates bias towards a certain type of candidate. 

The result: a no-show of diversity.

How, then, do we begin to deconstruct this system and peel back the layers of bias that have prevented countless people from reaching their full potential? 

First, we need to understand and acknowledge all of the barriers to entry and how they reinforce each other. Then piece by piece we can create methods that proactively shift these biases. (comment: most of my observations are gender-focused).

Below are the three barriers that continually stifle the hiring process, based on my years of experience working with investors and their portfolios.

1. The current state of the senior management pipeline

The sector I predominantly focused on was Industrials - a wrapper term that includes automotive, aerospace, chemicals, manufacturing, metals & mining and construction sectors.

While some may argue these fields are traditionally dominated by men and the pool of female talent qualified for an executive role isn't large enough1, the reality is that only about 20% of portfolio companies across all sectors have gender-balanced senior leadership teams, while nearly 70% are all male.2

Leadership roles that I worked on typically required:

  • top management level experience 
  • in a specific field of industry
  • previous involvement in a private equity financing round
  • an untarnished and successful track record.

In short, the requirements expected a candidate who had “been there and done it all before successfully”. 

This very specific wish list defines a narrow pool of possible candidates. 

2. Process and pressures

Similarity bias is rife throughout the recruitment process for senior hires. Using a network of mostly white male candidates to get referrals naturally results in more recommendations of the same network with people that share the same attributes. This is also referred to as the “Thomas cycle”, referring to the most common name among Germany's executive board members. Board members tend to have similar profiles when it comes to gender, education, age and origin.3

There was also the reality of client expectations: during the entire time that I worked in the portfolio recruitment industry, I cannot remember one single client ever requesting to see more diverse talent in the process. This may have changed towards the end, but mostly for Non-Executive Board roles. Homogeneous shortlists were the norm and what was expected. Nobody challenged it.

In fact, even if one diverse candidate made it on to the shortlist - the odds were against them. Statistically, one single minority candidate stands zero chance to get selected.4 This is due to a well-known bias - people have a bias in favour of preserving the status quo; change is uncomfortable.5

Time was scarce, the mandate valuable and there was no time for experiments or the need to change a winning formula. Everyone just wanted “the best man for the job” quite literally.

3. Bias traps

Even if a couple of diverse applicants were identified in the screening phase, they would become practically invisible during the next recruitment phase due to two common bias traps:

Language used in role specifications to describe desired attributes would often be heavily masculine-coded. For example, “assertive”, “leads from the front”, “thrives in fast-paced environments”, “can cope with high pressure” - were all regularly listed as desirable characteristics. 

On top of that, the image of the ideal candidate was portrayed in an explicitly biased way. Client requirements would specify attributes like a “grey-haired Chairman” or “seasoned statesman” demeanour. Who, other than seasoned, male candidates, would feel addressed by this? 

What I know from my work with Equality Group is that the use of gender-specific language significantly alters our sense of who belongs in a particular position. Women who read male-specific language in a role specification or hear it during an interview, feel less belonging, less identification with the job, and less motivation to do it well.6

The above are just a few examples of how personal biases, both conscious and unconscious, have a direct impact on the talent pipeline.

Deciding to be the change: 

To equalise the recruitment playing field all of these biased methods required drastic correction. But the task at hand was not straightforward. 

Often frustration can act as a catalyst for change. In 2019 I joined the Equality Group’s founding team to change the status quo and help build a more diverse and inclusive private capital industry. 

Since then as a team, we have developed our methodology to proactively shift these entrenched biases. We work on holistic strategies driven by data and based on science in four service areas: Strategic EDI Consultancy, Inclusion Education, Diverse Talent and Honordex, our EDI data measurement platform that gives insight into your company's EDI maturity.

It is important to recognise there is no quick fix or one-size-fits-all advice. We acknowledge that every firm has a unique combination of EDI challenges. Improving EDI requires a deep commitment to change the way things are being done on a day-to-day basis. A lot of it comes down to changing individual and organisational behaviour and communication patterns, as well as the system encompassing the organisation that sets organisational norms, rewards and incentives. 

That said, there is a clear starting point for every company’s EDI journey which is: 

  • Data
  • Ownership and 
  • Leadership

Over the coming months, I will share some of my insights and tips on how to support your organisation effectively on their EDI journey.

Closing comment / reflections:

My observations about the talent industry date back a number of years. Between now and then a lot has happened that has put EDI on the business agenda and I am aware that many firms have started adopting measures to welcome diversity into their business, for example by requesting diverse shortlists from headhunters and bringing more diverse talent into their businesses. However, there is a long way to go. In my series of blog posts, I will share some practical advice and personal insights on how to advance EDI at your company.


Sources:

1. DW, Germany's record for women executives is no accident

2. IFC, Oliver Wyman, Moving towards gender balance in private equity and venture capital markets

3. DW, Germany still lags behind on number of female executives

4. HBR online, If there’s only one woman in your candidate pool there’s statistically no chance she will be hired

5. Samuelson & Zeckhauser, Status quo bias in decision making

6. Equality Group, Micropositives

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