Unlocking business potential through socio-economic diversity

By Julia Fearn, Partner, Warren Partners

In the ever-evolving landscape of business leadership, a new dimension of diversity is gaining prominence: socio-economic diversity. This shift, while still nascent in the executive search community, is beginning to reshape how organisations approach talent acquisition and leadership development.

The demand for socio-economically diverse candidates in executive roles is not just a matter of ticking a box in diversity quotas; it represents a strategic move towards a more innovative, resilient, and dynamic business environment. Research by McKinsey underlines this, indicating that organisations with greater socio-economic diversity representation are more likely to outperform their less diverse counterparts in terms of innovation and financial performance.

These findings are echoed by a Thomson Reuters Regulatory Intelligence study, referenced here by Oliver Wyman, which points out that the Bank of England and regulatory authorities all link greater socio-economic diversity to improved decision-making and long-term risk mitigation.

Challenges and opportunities in executive search

Focusing on socio-economic diversity is a relatively new initiative for the executive search community. To an extent, we are still educating ourselves; and are fortunate to have membership bodies such as Progress Together, to partner with and guide us on this journey. Those from a less advantageous socio-economic background are not hugely visible but, by asking the right questions of candidates, we can ensure we are championing and supporting social mobility.

Numerous executive search firms use guidance questions from the Social Mobility Commission to define social economic diversity, such as ‘What was the occupation of your main household earner when you were about aged 14?’

In other words, for many executive search firms, the approach to enhancing socio-economic diversity begins with understanding and identifying candidates’ backgrounds. What’s encouraging is that generally candidates are extremely receptive to such inquiries and people are increasingly prepared to share this kind of information about their individual circumstance. They see the importance and the purpose behind the question. This openness is pivotal in identifying and nurturing talent from diverse socio-economic backgrounds.

The most successful approach is to use a mix of traditional and non-traditional recruitment channels, from professional networks to community-based organisations. Collaborating with organisations whose purposes are aligned helps drive engagement with underrepresented groups.

Real-world impact and client demands

The absence of socio-economic diversity in leadership can lead to decisions that fail to consider the realities of a less privileged workforce. For example, a financial institution whose Board decided on a pandemic-influenced staff bonus payment unwittingly caused some members of staff to see their family credit allowance cut by the government. It’s an example that shows the need for leaders who can empathise and connect with socio-economic diverse employee bases.

However, there are many success stories from the world of executive search too. For example, a leading higher education institution wanted to appoint a younger non-graduate Non-Executive Director to its Board to gain a better understanding of the perspective of those individuals choosing a vocational route in the job market rather than via university.

Elsewhere, a national workplace pensions provider looking to appoint a new CEO wanted evidence as part of the tender process that the appointed search partner could identify and access candidates from lower socio-economic backgrounds. In this instance, it was especially important to the Board, as their members are typically from a lower to mid income background and see the importance of this being reflected in their senior management team.

Initiatives in promoting diversity

An executive search firm’s commitment to diversity should not be limited to external searches; an inclusive culture where diverse voices are heard and valued should also be fostered internally. This involves continuous learning and development programs to educate and sensitise its team on the nuances and importance of socio-economic diversity.

As the corporate world increasingly recognises the value of diverse leadership, the role of executive search firms becomes crucial. By actively seeking out and advocating for candidates from diverse socio-economic backgrounds, these firms play a pivotal role in shaping the leadership landscape of tomorrow.

Because the integration of socio-economic diversity into executive search is more than a trend. It’s a necessary evolution in the pursuit of equitable and effective leadership. Through dedicated efforts and strategic collaborations forward-thinking search firms can lead the charge in this vital aspect of diversity, inclusion and, crucially, business growth.