VOLUNTARY CODE OF CONDUCT FOR EXECUTIVE SEARCH FIRMS

Introduction

Recommendation 8 of the Davies Report proposed that the executive search community should draw up a voluntary code of conduct to address gender diversity on corporate boards and best practice for the related search processes.

The Report proposes challenging targets for improving the representation of women on the boards of FTSE 350 companies. Search firms are committed to help their clients increase the effectiveness of their boards and acknowledge the value that diversity can bring; they readily acknowledge the important role their profession needs to play in supporting chairmen and nominations committees as they take steps to increase the proportion of women on their boards, in both executive and non-executive roles. The code, outlined below, lays out steps for search firms to follow across the search process, from accepting a brief through to final induction.

Code of Conduct: Provisions

Succession Planning: Search firms should support chairmen and their nomination committees in developing medium-term succession plans that identify the balance of experience and skills that they will need to recruit for over the next two to three years to maximise board effectiveness. This time frame will allow a broader view to be established by looking at the whole board, not individual hires; this should facilitate increased flexibility in candidate specifications.

• Diversity Goals: When taking a specific brief, search firms should look at overall board composition and, in the context of the board’s agreed aspirational goals on gender balance and diversity more broadly, explore with the chairman if recruiting women directors is a priority on this occasion.
• Defining Briefs: In defining briefs, search firms should work to ensure that significant weight is given to relevant skills and intrinsic personal qualities and not just proven career experience, in order to extend the pool of candidates beyond those with existing board roles or conventional corporate careers.
• Long lists: When presenting their long lists, search firms should ensure that at least 30% of the candidates are women – and, if not, should explicitly justify to the client why they are convinced that there are no other qualified female options, through demonstrating the scope and rigour of their research.
• Supporting Selection: During the selection process, search firms should provide appropriate support, in particular to first-time candidates, to prepare them for interviews and guide them through the process.
• Emphasising Intrinsics: As clients evaluate candidates, search firms should ensure that they continue to provide appropriate weight to intrinsics, supported by thorough referencing, rather than over-valuing certain kinds of experience.
• Induction: Search firms should provide advice to clients on best practice in induction and ‘onboarding’ processes to help new board directors settle quickly into their roles.

Embedding the Code

Our intention is that this voluntary code of conduct should be aligned with the output from the Financial Reporting Council’s consultation exercise on the Davies Report, and potentially attached as an appendix to the next revision of the Combined Code or the accompanying guidance on board effectiveness. Meanwhile, we will periodically review the effectiveness of this code and progress towards improving board diversity, initially on a six-monthly basis both with the Davies Report steering group and a small group of company chairmen, and recommend changes as appropriate.

List of initial signatories to the Executive Search Firms Voluntary Code of Conduct:

The following firms are actively engaged in this area:

• Boyden executive search
• Fidelio Partners
• JCA
• Lygon Group
• The Miles Partnership
• MWM
• Norman Broadbent
• Odgers Berndtson
• Ridgeway Partners
• Sapphire Partners
• Shoreman International
• Spencer Stuart
• Wyatt & Jaffe
• Egon Zehnder
• The Zygos Partnership

If you are an executive search firm and wish to be signed up, please contact us