Executive recruiting firms are playing an increasingly key role in making money managers more diverse and inclusive organizations.
Most executive recruiters with whom Pensions & Investments spoke said that more money management clients are insisting on a diverse shortlist of candidates — mostly from a gender point of view — and this demand has grown over the past few years.
But while more money management clients are requiring a more diverse shortlist, few are dictating quotas on the headhunting firms.
"Every client we work with on the investment management side is focused on diversity, equity and inclusion," said Meredith Coburn, executive director and consultant on the financial services sector and asset and wealth management and insurance practices at executive search firm Russell Reynolds Associates, New York. "We have clients ensuring that we deliver a diverse slate (of candidates)."
Ms. Coburn added that the push for delivering a diverse slate comes from just as much within Russell Reynolds as it does from the client.
Paul Battye, CEO of the U.K.-based global executive search firm and HR consultancy Hoffmann Reed, said via email that "every mandate we undertake now has an element of diversity to it. It's no longer acceptable to present an all-male shortlist."
Mr. Battye added that while diversity is important, "it's also important to note the need for inclusion," which is about creating a culture that fosters diversity and makes a firm's diverse employees feel essential to the organization.
"Inclusion is the glue that makes diversity stick," he said.
While Hoffmann Reed is rarely given quotas when taking on a mandate, Mr. Battye explained that clients almost always make it clear that having a diverse group of candidates on the shortlist is essential.
"We aim to have at least 30% of our shortlisted candidates come from diverse backgrounds," Mr. Battye said, adding that by diverse backgrounds, he's referring to "gender, ethnicity, age, cultural (background and) education," among others.
Mr. Battye added: "It's too easy think of diversity as men and women and as such, it's our aim to bring true diversity to our clients."
Jackson Baker, manager and head of U.S. business development at recruitment agency Rutherford Search Ltd. in London said that managers requesting either a 50-50 gender split of candidates or some form of diversity has "definitely been increasing."
Mr. Baker added that managers he works with are requiring a shortlist of a "specific ratio" of candidates and looking at candidates on an anonymous basis.
The main challenge is still to come up with a specific pool of candidates. "It becomes difficult when there is (a finite number) of women, who can meet the requirement of a position," Mr. Baker said.
For example, compliance roles need to be filled fast, and it ultimately means that the candidate is chosen based on skill set. "When there (are) not enough women in the talent pool ... firms end up going with a male (candidate)," he added, referring to a lack of readily available female talent for compliance roles in particular.