A class act: why Executive Search firms are key to socio-economic diversity in financial services
With vacancies in financial services hitting an all-time high this year, it seems employers are expecting more from Executive Search firms right now.
There were 54,000 unfilled positions in April to June this year, according to research from the Financial Services Skills Commission. That’s more than the population of Durham, and a record number of vacancies for an industry that has been struggling to recruit and retain staff for years now.
None of this surprises me, so I’m interested to know whether employers are asking more of Executive Search firms. Are they asking them to find talent from outside the sector, or to widen the search beyond the usual “they need a 2.1 from a Russell Group university”?
Yes, is the answer. At Progress Together, 21% of our members already brief recruiters to be aware of matters relating to workforce socio-economic background and 38% intend to start doing this in the next 12 months. That’s big, considering our members represent 30% of the UK financial services workforce. And it’s only going to grow as the skills gap widens and socio-economic diversity becomes a focus for more and more companies.
Evidence from the Bridge Group shows that 89% of senior leaders in UK financial services come from higher socio-economic backgrounds, compared with just 47% at junior levels. Yet, across the economy, the picture looks very different. Only 52% of UK CEOs come from
higher socio-economic backgrounds. If we want to resolve the skills challenges facing us, we must level up the UK financial services sector and widen the pool of available talent so that the sector reflects the economy as a whole. Where are these employees going? What’s forcing them out of a sector with an apparent abundance of opportunity? Why aren’t they progressing?
When I speak to Executive Search firms, there is a real enthusiasm to work with their financial services clients on socio-economic diversity. They see socio-economic diversity as key to unlocking potential and plugging the skills gap. To do that they must understand their candidates’ socio-economic backgrounds. As with anything, data is key.
This isn’t about quotas but about spotting patterns of bias. If we know that 30% of candidates on the ‘books’ are from working-class backgrounds but only a fraction are making it onto longlists or shortlists, there’s an opportunity to have a frank conversation with clients. Are we looking beyond educational achievement, are we defining talent by gravitas and external displays of confidence? Are we so impressed by the veneer that we’reoverlooking the substance?
Executive search firms know that having a diverse candidate pool makes good business sense. One Executive Search firm told me “we are winning and losing clients based on having diversity data on our candidates”.
Similarly, a professional services firm told me “our recruiters select agencies based on the company’s track record of providing diverse candidates, and their commitment to diversity”.
It’s really encouraging to see so many employers and Executive Search firms working collaboratively to access a broader pool of talent. This could be a game changer, not only for diversity, equity and inclusion but for business outcomes too, especially when you consider that research from Accenture shows that businesses focussing on social mobility are 1.4x more profitable than their competitors.
I encourage Executive Search firms to:
• Expand your ‘little black book’ to ensure a range of backgrounds is included, but don’t make assumptions about socio-economic background. Ask candidates to complete a DE&I questionnaire upon registering.
• Build a diverse pipeline of mid-level talent. If there isn’t diversity at the top, keep in touch and support diverse middle management talent.
• Question what is needed for the role. Is a 2.1 from a Russell Group university needed when the candidate graduated 20 years ago, do they need experience in the same role in the same sector, or just the potential to be excellent?
• To avoid self de-selection, ask your client for transparent salaries and a maximum of five bullet points on required experience. Encourage a focus on transferable skills. • Encourage your client to choose diverse interview panels and promote inclusion so diverse candidates are retained.