Corporate Boardroom Searches to Support Diversity, Equity & Inclusion Goals -Nicole Sandford
Recent events have laid bare America’s past failures in supporting equality in our diverse culture. Perhaps nowhere has change been more anticipated than in corporate boardrooms. Yet, in 2020, we still see incremental change rather than the kind of dramatic change many have called for. Clearly, there is room for improvement.
Since joining Ellig Group earlier this year, I have talked with a broad spectrum of directors, executives, corporate secretaries, and board advisors. I’ve asked each to share previous corporate board search experiences with an eye towards enhancing the overall experience. The response was near universal frustration with the approach taken by many executive search firms in the past. Further probing identified three persistent problems: 1) List Recycling; 2) Bait and Switch; and 3) Radio Silence. I’ll cover each a little more below.
List Recycling: Recycling is good for the environment. It is not a great strategy for a corporate board search.
There is a prevailing perception that executive search firms recycle candidate lists of sitting directors and “50 most powerful…” lists. As a result of list recycling, searches do not routinely surface viable, unexpected prospects. By way of example:
● A corporate secretary reported receiving a nearly identical “long list” of candidates for two searches that were several years apart.
● One corporate board member was startled when a retained executive search firm didn’t present any off-the-radar candidates, especially because he had personally referred “dozens” of such qualified candidates to that very executive search firm.
● A nominating and governance committee chair person told me that she had specifically included a request for first-time and nontraditional candidates in the search criteria. It took three separate efforts for the executive search firm to include first timers, and even then she found the candidates “disappointing.”
The Bait and Switch: Another cause of frustration is the difference between the prospects and process described in the “pitch” versus what is actually presented for consideration once an executive search firm is selected. Two recent stories demonstrate the point:
● The nominating committee of a middle market industrial company selected an executive search firm based partially on their professed focus on diversity candidate identification. Later, the firm presented a slate with no women or people of color. When pressed for an explanation, the company was told that there weren’t any women or diverse candidates qualified to be on the board. Anywhere. In 2020. (Incidentally, the chair of the nominating and governance committee to whom the firm was presenting is female).
● An executive search firm presented a long list of prospects in its pitch to the company, implying relationships that turned out not to exist. When the time came to review the initial slate, all of the candidates from the proposal presentation were missing from the list. Ultimately, the executive search firm said that the company shouldn’t have had any expectations that they could have attracted candidates “of that caliber,” and that the names were meant to be “illustrative”.
Radio Silence: I heard variations of the following story from multiple directors:
● An executive search firm reaches out to a prospective corporate board member. He or she is told that a board is interested in their background for an opening. They are then asked to provide additional information, revise their board bio, check conflicts and review the corporate board calendar — all within a short timeframe. Next, they join a series of calls with the executive search firm, and eventually they may or may not be interviewed by the company. If the firm becomes uninterested at any point in the process, they just stop communicating. Radio silence.
● One director told me that he had been through the entire process, including a meeting with the nominating chair. He found out he had not been selected when he saw a press release announcing the successful candidate. He was never given any feedback about the rationale and what, if anything, he could have done differently. He was baffled.
Here are five steps that collectively reimagine corporate boardroom searches to support diversity, equity & inclusion goals.
1. The first failure of the executive search process may be over-reliance on proxy data and “50 most powerful” lists. It takes time to build your own network of next generation candidates, and business acumen to align these candidates with the right corporate board fit. This is what is needed to make meaningful progress.
2. Executive search firms should invest in programs to get to know potential candidates (especially those that are referred/prequalified by CEOs or experienced corporate board members), and to include some of these and other first-time directors on every panel.
3. Executive search firms should create a unique slate for each search. A firm’s business model may make this challenging. The financial pressures of public ownership, volume-based targets, or historical treatment of corporate board placements as “loss leaders” for more lucrative work can make it difficult for some executive firms to invest the time to do this work properly.
4. Nominating committee chairpersons may want to consider more probing questions about how corporate board searches will be sourced and if fees reflect market rates. Lowball pricing and “the volume play” is how we got to where we are now, and boards have the power to change that approach.
5. Prospect lists will always include people that will not be interested in a particular corporate board for any number of reasons. But one has to wonder about the ethics of “pitching” prospects that are highly unlikely to be a fit, are over-boarded, or with whom the executive search firm has no existing relationship.
6. Regardless of who is presented, executive search firms must have the courage to bring feedback to candidates, and to maintain open and transparent communications throughout the process.
In closing, I’d like to thank all of the directors and executives that took the time to share their experiences with me. I’m excited to leverage my background as a trusted advisor to boards and senior executives — and the client service fundamentals that I learned from nearly three decades at a world-class consulting firm — to help Ellig Group continue to “reimagine search” in the boardroom. If the search industry follows a similar path, we can help change the complexion of the corporate boardroom. That’s something all of us can get behind.
Nicole Sandford is a seasoned professional and qualified audit committee financial expert with extensive experience…
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