In
the world of executive search, financial services clients are often enticed by
the prospect of a firm's extensive network, connections amassed over years of
industry presence. And this is undoubtedly a benefit.
At
Hanover, we have over 25 years of experience, and our networks open
doors that might otherwise remain closed. But the true strength of an executive
search firm is not merely in the contacts it has; rather, it’s in how it
operates.
Indeed,
as years pass, the reality of retirement refines these networks anyway, pruning
away the stalwarts of the industry and making room for new, dynamic and often
diverse talent waiting to be discovered. The more we, as an industry, lean on
the 'old boys' network, the weaker our collective capabilities become.
As
a search firm, we must be looking beyond the existing and traditional and
towards the emerging talent - otherwise, we’ll see the same names being
recycled, with the underpinning lack of diversity, lack of freshness and the
seeming lack of ambition on our part that entails.
But
increasing diversity with emerging new talent isn’t just on search firms, as
I’ll explore later in this post - it’s also on you as a financial services
firm.
Rethinking executive search in the modern age
Recent
years, marked by the pandemic and socio-economic shifts, have imparted a
crucial lesson: businesses must evolve to stay relevant. This applies as much
to the executive search industry as it does to the financial services sector we
serve.
With
the emergence of forward-thinking and dynamic businesses, the demand for fresh,
innovative talent is growing. Our clients increasingly wish to see new entrants
in our market mapping alongside the established 'best in show'.
Moreover,
there’s a burgeoning interest in how diverse leadership can drive success, with
81% of our clients keen to learn about the diversity initiatives that other
firms are implementing. This interest isn’t just in financial services of
course, but across industries - and there are some astounding stats that
demonstrate the power of diversity at executive level.
According
to a McKinsey report:
- Companies
in the top quartile for gender diversity on executive teams were 25%
more likely to have above-average profitability than companies in the
fourth quartile - and the greater the representation, the higher the
likelihood of outperformance
- Companies
in the top quartile for ethnic and cultural diversity outperformed
those in the fourth quartile by 36% profitability
- Companies
in the fourth quartile for both gender and ethnic diversity were 27% more
likely to underperform on profitability than all other companies
Harnessing diversity for the future of financial
services
For
decades, financial services have been marked by unintentional exclusivity,
often attracting a specific demographic and sidelining others. This is no
longer acceptable nor beneficial in a world that values diversity and
inclusion. In 2015, I remember looking out onto the courtyard of The Gherkin in
London’s insurance district. It was populated predominantly by white males -
hardly the image of diversity that encourages inclusivity.
Today,
the landscape has shifted significantly - but still hasn’t gone far enough. But
financial firms are now prioritising flexible working conditions and actively
working to attract previously marginalised groups. While this transformation
can't be realised overnight, it has to be recognised as an important step in the
right direction. It also demonstrates the power of presenting our clients with
talent they haven't seen before.
At
Hanover, we pride ourselves on conducting searches without prejudice,
delivering longlists and shortlists that truly represent the diversity in the
market. As an Associate, it's rewarding for me to uncover hidden talent and
provide opportunities to those who may have previously flown under the radar.
The diversity of thought new candidates bring is invaluable.
Even
if the gender
or ethnic demographics don't seem significantly different from what we
presented years ago (this is something that’s highlighted clearly in the
McKinsey report I referenced above), these new faces symbolise a freshness and
innovation that goes beyond traditional parameters.
The
way forward is clear: to champion diversity, we must continually refresh our
perspectives, break away from traditional networks and uncover the full
spectrum of talent available in the market today. Hanover’s and my commitment
to diversity, equity and inclusion isn’t just a strategy; it's the
cornerstone of our vision for a resilient and prosperous future in the
financial services industry.
What financial services firms can do better
But
it’s not just on Hanover and other executive search firms to help financial
services firms drive diversity - it has to start with you.
While
strides have been made, there's still much to do in the sphere of diversity,
equity and inclusion within financial services. Some firms are still guilty of
paying lip service to DE&I initiatives rather than committing to authentic
and meaningful change. It's crucial for these firms to remember that diversity
can't simply be retrofitted at the executive level; it's a philosophy that
should permeate all levels of an organisation.
Building
a diverse pipeline starts at the junior recruitment level. Firms should be
proactively seeking out diverse talent for their junior positions, thereby
fostering a diverse pool of potential leaders for the future. If this pool is
not diverse to begin with, it's unrealistic to expect executive search firms to
be able to produce a diverse range of senior candidates.
Additionally,
it's crucial for FS firms to follow through on their commitment to diversity
when it comes to hiring decisions. It's not uncommon for firms to express a
desire for diversity, yet when presented with a longlist of diverse candidates,
they revert to familiar patterns and hire a candidate who fits the traditional
mould.
My
take on this is that financial services firms shouldn’t be surprised if search
firms struggle to find diverse high-level talent when they either haven't
nurtured diversity at the junior level and/or they’ve failed to convert a
diverse longlist into a diverse hire.
There’s
an onus on these types of firms to make diversity a priority at every stage of
the recruitment and hiring process. It's not just a question of 'finding' the
right candidates; it's about creating an environment where diverse talent can
thrive and grow.
If
you’re looking to hire high-performing senior talent at your financial services
firm, contact me directly and let’s set aside time for a
call.
