Business Society

Bending the Pipeline? A New Look at Executive Search and Gender Inequality

One of the issues that the recent election highlighted was the “glass ceiling” that women face as they come closest to the highest levels of organizational power. At the same time they considered the possibility of the first female president, many female executives were drawing parallels to their own careers. Indeed, it’s hard to have a discussion with a female executive and not, at some point, touch upon real, and perceived, biases that increase as women get closer to the CEO role in a major corporation. While there are many opinions about the nature and cause of limits placed on women’s advancement in the corporate environment, it’s hard to find specific analyses that explain just how biases in executive selection function in the real world.

Depending on whom one speaks with, the bias may lie in those who select candidates (demand-side bias) or lack of qualified and/or willing candidates (supply-side bias) or both. Untangling this complex issue is not easy, and, perhaps as a consequence, most research on the lack of women at the C-suite level has tended to focus on documenting imbalances and not so much on the process that yields those outcomes.  However, a recent paper by Isabel Fernandez-Mateo (London Business School) and Roberto M. Fernandez (MIT Sloan) provides a fascinating analysis of one of the most important mechanisms through which women reach, or don’t reach, the C-suite: executive search.

Using data taken mostly from a real (though anonymized) search firm, “Execo,” they examine in detail how women candidates move through the firm’s search and selection process. The authors focus their paper on a clear question: do executive search firms, who fill about 50% of C-suite roles, help or hinder the selection of women executives? This is an important question intrinsically but also because in some countries the perception is that these firms hinder and so regulation is needed to address their perceived bias.

As executives know, search firms work for employers and their financial well-being depends on providing candidates that clients are willing to hire. It’s for this reason that many people believe that these firms reflect traditional biases in corporate life against women executives. In other words, the argument goes, search firms are never going to do anything different than their clients; thus, if corporations are biased, then so are the search firms they hire. Interestingly, however, the authors reach quite a different conclusion:

Contrary to received wisdom, we find limited evidence that demand-side screeners strongly contribute to gender disadvantage in this setting. What gender differences exist tend to play out at the start of the hiring process and are driven both by supply-side and demand-side actors.

To their credit, rather than just look at outcomes, the authors examined all aspects of the executive search process: from the drafting of the prospect list through search and client interviews, to selecting and hiring at the end. What the authors found is that there is really only one step of this process at which women seem to be under-represented, and that is in selection for the first screening interview, e.g., the transition from theoretical candidate to the list of people who will be presented to the hiring manager. Furthermore, this effect is present regardless of the screener’s gender. While noting this phenomenon, the authors reach no conclusion about the reason for its existence. They do, however, highlight that both demand and supply side factors are probably at play:

We cannot be sure why women are more likely to decide not to participate in the process; it could be for any number of the supply-side reasons discussed above, including self-steering in anticipation of demand-side discrimination. With regard to the search firm’s decision, we are unable to deduce from the quantitative data why search consultants are more likely to consider women than men to be not suitable for an interview.

As they further note: “Theoretical clarity is hampered by the challenges of empirically disentangling the influence of supply and demand processes, which is especially problematic in the case of senior executive jobs.” That said, the authors take some liberty to speculate on two possible factors. One is that women themselves may be declining to move forward because they think they will never be hired. As the authors note: “There is little  evidence of pipeline bending against female candidates yet reasonable evidence of women self-steering away from consideration for these jobs.” That women are opting-out in some, or even many cases, would come as no surprise to any female or minority executive. They know that often their inclusion is merely “HR air cover,” as one female executive called it, for the inevitable hiring of a traditional candidate. If any aspect of the position and company description hints in that direction, it would be natural for any woman executive to decline to move forward.

The other factor the authors speculate on is the quality of the candidates themselves: “A plausible reason for this effect is the existence of quality differences between male and female candidates.” In other words, maybe as a whole male candidates put on the initial target list are somehow better. This seems, prima facie, hard to believe, given the number of outstanding female executives, but further analysis may show their speculation to be correct. Perhaps a simpler explanation is one the authors note themselves: search firm’s unwillingness to push too many female candidates to largely male hiring teams. In interviews with search firms, the consultants admit to this reticence:

Our informants’ explanation hints at their tendency to be conservative when screening candidates—so as to make sure the client will be pleased. This tendency is revealed in the following comment, which is typical: “We are very conservative, quite risk averse, so we tend to put forward people with a proven track record, rather than the nontraditional diversity candidate.”

In addition to their internal analysis of search firms,  the authors also compare their results with the results of searches filled by the clients themselves without exec search help. This is yet another eye-opening outcome:

Execo placed a female candidate in 12.5% of the vacancies on average; by contrast, for those vacancies that Execo did not fill, the percentage of female hires was only 6.7%—a figure that reflects 9.4% female hires for jobs that were filled by the client with an external candidate, and 0% for those filled with an internal candidate. Thus, candidates hired though the search firm are more likely to be women than those hired externally by the client, which in turn are more likely to be women than are internal hires.

Interestingly, the worst situation for a woman to be is trying to get a C-suite job inside her own company, which says a lot in and of itself. Moreover, contrary to perceived wisdom in some corners of the corporate world, search firms actually produce a higher number of female C-suite hires than internal search teams, despite the interview issue noted above:

…by the time women have made it to the executive labor market, the role of demand-side hiring agents may be less influential than has been supposed. Their role also seems to be limited at the very beginning of the hiring process, before the client is involved in screening candidates and before short lists are assembled.

To their credit, the authors note that their analysis is preliminary and has some limitations. They do not, for example, know wether the initial list that search firms draw up is representative of the quantity and quality of female candidates. Nor can they reach any conclusions about what is driving interview selection, be that risk of alienating clients or inherent biases in the search consultants themselves. Nor to the authors examine some of the most important variables in whether someone is put on a client interview list by a search consultant, e.g., salary demands, willingness to move, etc.

That said, this is a paper that all CHRO’s should read, for the authors rightly note that anyone who wants to reach conclusions about the composition of gender in the C-suite ranks must look at the entire process: from self-selection to identification to interviews to hiring. This paper suggests that the first area of focus should be the gateway between theoretical and actual candidacy. Perhaps this stage  should be designed carefully so women with doubts about the fairness of the playing field are reassured. Perhaps internal teams should work with the search consultant in this initial screening. Whatever the true cause and solution, I hope this research continues to shed light on a process that can and should evolve to reflect not just a desire for equality but its specific and tangible realization.

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