An independent review of the Voluntary Code for Executive Search Firms (the Code) has been carried out at the request of the Department for Business, Innovation and Skills (BIS) in the UK. The Code was established on foot of one of Lord Davies's recommendations in his review of Women on Boards in 2011, to ensure that executive search firms were supporting FTSE 350 companies to create more diverse boards and covered the relevant search criteria and processes.
The aim of the independent review was to test the integrity of the Code and to ensure that it continues to have a positive impact on the board recruitment process.
The Code contains provisions on succession planning, diversity goals, defining briefs, long lists, signalling commitment, candidate support, supporting candidate selection, induction and embedding best practice.
The review highlighted that some executive search firms take their commitment to the provisions of the Code much more seriously than others. The review made the following recommendations:
- Search firms should, in collaboration with their clients, discuss each woman on the long-list and aim to have at least one woman whom they would "strongly recommend" the client should meet, and put forward onto the shortlist of all executive searches for board positions;
- The Code, as it stands, should be considered to be the minimum standard and, as with the original Code, search firms should work together and articulate the requirements of an upper tier to the Code including how assessment should be made as to whom should become part of a "supergroup";
- Search firms should be encouraged to capture information gained from discussions relating to what happens at each stage of the search and hiring process and to share their statistics with the Government as and when requested;
- Search firms should be more overt on their websites, marketing literature and when talking to clients, about their commitment to the Code. They should be encouraged to share their hiring data as well as some narrative and case studies of successes;
- FSE 350 companies should challenge the search firms to further deliver against the Code's provisions and companies should include a statement in all search contracts or agreements clearly articulating that they will comply with all aspects of the voluntary Code and explain if unable to do so;
- A database of women with the skills to take a FTSE 350 board position should be created. The database creation should be led by the Lord Davies Steering Group and would be in addition, and complementary, to what is already available with the aim of connecting board chairs with talented women;
- The investor community should play a more active role on this agenda and challenge businesses further on their plans and actions to create more gender balanced boards. The Lord Davies Steering Group should create information for the investor community on why gender diversity is important on corporate boards, including the right questions to ask, what they should be looking for and what a good response sounds like;
- There have been differing legal opinions as to the ability to request "women only" shortlists as an appropriate means to redress balance on boards. The Equalities and Human Rights Commission (EGRC) should create the appropriate guidance required;
- To ensure the Code has clear prominence, a section within the BIS website should be created to publish the Code, the signatories and case studies of how the Code is working in practice; and
- The Voluntary Code for Executive Search should be referenced on the FRB website and within the FRC Guidance on Board Effectiveness, when it is next published.