Delivering diverse slate of candidates is now the expectation

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.

TC Jefferson, director in London of Plenum Search Ltd., said the conversation on diversity and inclusion has "changed lots" over the years.

"Twelve years ago, it wasn't on anyone's radar. Now, it's mentioned for every search," he said, adding that "it still feels like we're talking about it rather than doing something about it."

"The only way to get a female shortlist is to start with a female longlist. Get them on to the front stage," the Plenum Group executive said. "We need to make sure it's not 90% white male."

Mr. Jefferson noted that the challenge in addressing the gender imbalance is that, in his experience, men tend to be more outgoing and confident in their abilities when seeking positions and negotiating their salaries.

"We find a lot of male candidates we talk to may bring only 60% of what's required for the role yet still raise their hand and say, 'Yes, I can do this,' whereas you get a lot of female candidates that bring 80% of what's required but focus on the 20% they can't bring and say, 'I don't think that's for me,'" Mr. Jefferson said.

Senior DEI officers with whom P&I spoke explained that a more diverse and inclusive workforce will ultimately lead to a better, more profitable company.

"We're fully engaging our fully diverse staff, making sure people have a seat at the table and that their ideas are being heard," said Marques Benton, chief diversity, equity and inclusion officer of Loomis Sayles & Co. in Boston. "And that will help us become a better asset manager."

Alan Bowser, co-head of the Americas region and chief diversity officer at Bridgewater Associates, Westport, Conn., told P&I: "We want a wide range of ideas, beliefs, and perspectives. We hire people from a wide range of disciplines. We want people who are curious, relentlessly inquisitive, and high-quality thinkers." He added that he wants Bridgewater to foster a culture where "the best idea wins."

Although money management firms are pushing for greater diversity and inclusion, Laura K. Pollock, New York-based founding partner at global executive and talent strategy firm Third Street Partners LLC, has noticed that many are focusing on short-term role replacement rather than growing employees over the long-term.

"When firms are serious about diversity, they think about it a year or more in advance," she said. "They start to get to know people and establish a relationship" before they are hired. But Ms. Pollock said that managers aren't keen on long-term negotiations and tend to focus on replacing employees as soon as possible.

The Third Street founding partner encouraged firms to take 36 months to meet more female candidates. "I have been pitching this for two years and none of the managers has taken me up on that," she said.