Diversity in Recruiting for C-Suite and Board Positions – the Pontos Framework

Diversity in Recruiting for C-Suite and Board Positions – the Pontos Framework
Pontos' General Councel Elina Lae

“Diversity & Inclusion continues to be a major focus among corporates, for a good reason. We all suffer from implicit bias. As Professor Mahzarin R. Banaji of Harvard University has noted, the first step in working towards a more diverse team is to recognize where our own biases lie. Therefore, implementing diversity starts in recruiting – and most importantly, the correct processes in recruiting. As an active, long-term investor, Pontos has established a framework to promote diversity in practice,” writes Pontos General Counsel Elina Lae.

Unless the decisionmakers are really thoughtful about the processes they use, it is easy to default to the easiest ways of working – recruiting from your existing network, recruiting candidates with conventional backgrounds, recruiting people who already have held the specific position you are seeking to recruit them for.

While having a small core organization, Pontos has a notably large footprint – our portfolio companies have more than 4000 employees. Pontos Group representatives sit on 20+ boards. We coinvest in VC, PE and RE with 100+ investors. We network with hundreds – if not 1000+ – organizations every year, oftentimes with other institutional, private equity and real estate investors who have a similar large footprint. As we participate in peer networks and share views and best practices, we have a significant opportunity to act as thought leaders in these matters.

So, how do we do it and what is there to consider in recruiting to ensure diversity-driven value-add?

1. Select recruiting firms appropriately and incentivize them

Board and C-suite recruiting processes are regularly handled by external recruiters as they require specialized understanding of the skillset, good judgment, exceptional networks and ability to think broadly.

We only work with recruiting firms who are open to implementing proper processes regarding diversity in their search. Thus far, we have only encountered positive reactions from recruiting firms once we have presented them with our framework. All of them have found it helpful to have concrete guidelines in implementing diversity to be an integral part of the recruiting process.

To further reinforce the incentive to execute the search in an unbiased manner with best possible results, we have also implemented diversity bonus structures whereby the recruiting firm are rewarded with a bonus if a candidate who possesses diverse characteristic is in fact hired.

2. Carefully analyze the core competences required for the position

Before any recruiting posting is out to the public, the relevant stakeholders in the organization need to think hard about the 3—4 core competences required to perform well in the position.

Notably, core competences are not the same thing as prior positions. There is a danger to fall into a common pitfall – it is a safe bet for a recruiter to put forth candidates who have held the same position at a different firm – what could better ensure that you actually know “the job”? This is why you as the client or a recruiting organization need to go an extra mile to push your providers to find and present you with candidates who possess the required competences but have not necessarily held the same position previously.

To illustrate, quantitative skills can be possessed by a math PhD, a fresh university graduate with an engineering degree or a history major who has worked in finance post university. An attorney may be competent in financial analysis because they worked on derivatives in a financial institution, even though they also possess legal skills. And a PR professional could be competent in risk management because they have worked on matters involving reputational risk.

In this light, organizations should also pause before setting limitations in field of study, unless, of course, a license is specifically required by the position. Oftentimes, a university degree suffices to achieve the objective. After all, what is usually intended by setting a degree requirement is an ability to independent and critical thinking – and that skill is taught across all fields.

As for industry experience, I also challenge you to think broadly. Instead of knowledge of a specific, narrow industry – say, automotive – you may consider using a broader categorization – say, complex manufacturing – to make sure you do not unnecessarily exclude qualified candidates.

3. Pause to think hard of the language skills requirements

Oftentimes, language requirements are listed on the job posting without deep reflection of their necessity.

This poses a grave challenge when the language required is rare such as to limit the candidate pool to a very small population of potential candidates compared to the group of potential candidates that may possess the relevant competences for the position – such as is the case for Finnish.

This may mean a severe compromise on the level of competence available for the position.

After all, if the hiring organization requires English, they may dip into a global talent pool, a pool of 1,5 billion people who speak English as a first or other language vs. a local talent pool, say proficient Finnish speakers, 5,6 million people.

Anyone who claims that this does not have an impact on the talent pool available for the position is not being honest with themselves.

So – ask yourself – are you willing to make this compromise on competence?

Also, the matter is a bit more nuanced than it first seems. Is conversational knowledge of a local language good enough for the job, after all? Are there specific tasks related to the job that could be delegated to someone with knowledge of the local language? Perhaps some portion of the interview could be conducted in local language to test the skill, if needed?

If English proficiency is required, all recruiting materials, application forms, communications and initial interviews need to be in English language. Otherwise, the process implicitly discourages candidates who operate more fluently in English than the local language.

As a reference point, employers in the U.S. do not require native level English from job candidates – the requirement is professional proficiency, which is a lower level of language skill. Furthermore, also often confused with language skill, an accent is not – and could not legally be – a point of consideration in recruiting.

4. Define what constitutes diversity

Because of the lack of an existing framework for the matter, we at Pontos have crafted a list of characteristics that we view as contributing to diversity – gender, age, ethnic background, LGBTQ, diversity of thought (political, worldview, culture, education), disability (mental, physical, functional restrictions).

Admittedly it is awkward to make such lists, but in our experience, the more concrete our own thoughts around the matter, the easier it is to execute by the recruiter. They have agreed. By no means does this mean that we would not consider other characteristics as constituting diversity – the list is ever expanding as the thought leadership on inclusion develops.

In addition, we have set clear instructions to recruiters about how many of the diversity criteria is to be fulfilled to consider the candidate as diverse. At least 30% of candidates presented to us by the recruiting firm need to fulfill the diversity criteria and at least two diverse candidates need to be interviewed by the recruiting firm.

5. Anonymize resume review

To prevent implicit bias, we review resumes as anonymized.

The recruiting firms removes all information about name, address, family status, pictures, hobbies from the resume before presenting it to the hiring organization. Once candidate has been selected for interview, the full resume may be provided to facilitate conversation.

6. Test candidate skills rather than basing on assumptions

A Big Four consulting firm style case study, or the applicable task for the position, may be a good way to analyze the candidate’s skills to actually “do” the job.

This is of course not always possible, but should be implemented whenever opportune, as it could provide a very valuable datapoint on the candidate. It is too many times that a candidate is able to maintain a pleasant high-level conversation but when “put to work” is not able to perform.

When selecting board members, in some ways less is at stake because no single director has a critical role, with perhaps the exception of the chair. But in the selection of a C-suite executive it is essential to have a doer and not just a speaker.

What kind of framework does your organization have for inclusion? We are always developing our thinking further. We would love to hear how you have dealt with this topic.


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Further information:

Lae Elina

Elina Lae

General Counsel

+358 50 596 1083