Moon Executive Search is one of the first 50 signatories of Change the Race Ratio, a CBI led campaign to increase racial and ethnic participation in British businesses. We signed up to this initiative as firm believers in creating an inclusive culture where talent from all areas of society is given access to opportunities to thrive.
As an executive search firm that undertakes bespoke recruitment campaigns at C Suite and Non-Executive level for listed PLCs, private equity groups, SMEs and equity-backed businesses, we have had a unique insight into trends and attitudes across the business world. This year, we’ve seen a stark increase in the emphasis on diversity and inclusion.
The body of evidence supporting the drive towards a more inclusive business community is ever-increasing. However, the latest Parker Review report into ethnic diversity in UK Boards shows progress has stalled on implementing its recommendations: 37% of FTSE 100 and 69% of FTSE 250 companies surveyed still do not have any ethnic minority representation on their boards.
Furthermore, the 2017 McGregor-Smith Review found that the lack of ethnic diversity in business is costing the UK £24 billion a year in lost GDP; suggesting that there is clear evidence for the need to focus on Diversity and inclusion. While Deloitte research suggests when employees feel included in the workplace their ability to innovate increases by 83%.
We have noticed distinct trends from our clients in 2020. More than ever, firms are placing diversity and inclusion at the top of their list of criteria when considering a candidate shortlist. Our role is to highlight recruitment and talent development processes which drive a more diverse pipeline.
The executive challenge
Diversity and inclusion should be based on organisational principles as well as the potential to provide a strategic advantage. There are multiple advantages to having a balanced workforce that reflects our society, but the challenge in Executive Search is to ensure there is also a realistic balance. We have received some requests to guarantee diversity in our shortlist but Moon always advocates that suitability should be based on qualification, experience, and skills. The counterchallenge to business is to provide pathways for talent to develop internally through effective training to ensure they are ready to grasp opportunities when they arise and this should be accessible for all.
However, there also remains a significant challenge of bringing together a workforce with different perspectives and backgrounds, especially in the context of working from home due to COVID-19. Whilst virtual meetings have a voice to all levels in a business and perhaps broken through some of the social barriers that existed previously, different lockdown experiences may have created new or heightened issues around communication, perceived hierarchy, and mental health. As a result, organisations must now invest to ensure individuals feel empowered to contribute and feel comfortable doing so.
Given that the Equality and Human Rights Commission suspended gender pay gap reporting regulations for this year, we expect gender pay equality to rise to the fore again in 2021 as compensation reporting feeds into the wider board representation discussion. In addition, we expect more campaigning on Ethnicity Pay Gap Reporting in the future as a direct result of many businesses seeking to adopt a strategic action plan to implement key metrics in this area.
Why firms are looking to change
Many of our clients consider it crucial to improve their board membership with greater diversity to bring new perspectives and a variety of skills and experience, which can deliver richer creativity, better problem solving and increased flexibility. Our clients often fall into two camps: those that are acting on diversity and inclusion for the first time, and those that are increasing the pace of what they are already doing. Many clients have found that the applicant pool has widened since the pandemic, due to there being less geographical restrictions as we work from home. However, the next stage of this hiring policy needs to consider establishing a robust succession plan which will provide them with the right leaders to continue innovating and creating stable growth for the future. So when hiring new board members, we advise that our clients select their candidate based on both current cultural alignment and the ability to bring fresh perspectives for the future.
What candidates are looking for
The candidates that we speak to are even more aware of cultural alignment and consider this and diversity and inclusion issues before agreeing to join an organisation. Boardroom diversity is built around highlighting the differences in the approach and experience of individuals and leaders must ensure their employees have a voice and influence in the company. Giving employees the space to show their authentic selves will create a bond of trust and inspire collaborative work throughout the company and the stakeholders will see the benefits in their bottom line.
No longer a moral issue
Board representation, diverse senior leadership, transparency in disclosing pay gaps and building an inclusive culture are hugely important. Diversifying boardrooms and workforces in both gender and race is no longer a moral issue but quite simply a bottom-line business imperative. Utilising the rich talent offered in the UK is essential for any organisation that is looking to build resilience and achieve sustainable growth over the coming decade. As a result, we expect more demand for transformative candidates that can facilitate an open culture, develop inclusive leadership, and implement board diversity so that UK boards resemble the changing demographics of their customers.