Day: November 10, 2022

Business

David Johnson and Brandon Johnson, the Power Duo at the Helm of Trusted Supplement Manufacturer Aurora Nutrascience

by CEO Weekly Staff

November 10, 2022

The recent advancements in technology have allowed ventures and entrepreneurs alike to better meet market needs. When wielded strategically, these ...

Business

DEI and CHROs in 2022: A conversation with Ellig Group CEO Janice Ellig

by CEO Weekly Staff

November 10, 2022

As CEO of leading Diversity, Equity, and Inclusion-focused executive search firm Ellig Group, Janice Reals Ellig is a recognized expert ...

As CEO of leading Diversity, Equity, and Inclusion-focused executive search firm Ellig Group, Janice Reals Ellig is a recognized expert in the field of human resources/DEI in the corporate world. We sat down with Janice to discuss the current status of the push for diverse corporate leadership, as well as the growing prominence of the Chief Human Resources Officer (CHRO) role. CEO Today: You’ve supported and promoted a simple and effective action plan for achieving boardroom parity: fill every other opening with a woman. Does this apply to the C-suite as well? Does this plan work when managers are hiring for a specific role with specific, often hard to find skills/competencies? Janice Ellig: Any vacant position in the boardroom and/or the C-suite, requires identifying the specific criteria needed to enhance the company’s strategy and complement the existing leadership skills. At the same time, given inevitable changes, it's important to open the aperture to be sure you're including all skills and experiences needed for the company’s current as well as future state. As an example, when looking to fill a board seat being vacated by a director who is a financial expert, the natural impulse is to replace that skill and seek candidates who are or have been a CFO. However, opening the aperture to consider others who may have broader skills where they had the finance function or a CFO, and other functions reporting to them, may bring additional experiences that will further enhance your board, while also meeting the qualifications of a financial expert. So, the point is to broaden thinking in selecting a director who will strategically offer multiple experiences while meeting a specific need. For executives looking to fill a very specific leadership role in the organization, it is important to identify the must have versus the nice to have skills. If, after evaluating all pools of candidates (with a good representation of diverse talent) that fit the must haves, a non-diverse individual is selected, it should be obvious the most qualified was chosen. On the next opening, expanding the pool of diverse candidates and evaluating them on the most critical competencies is a business imperative. It is important to be inclusive and not continue to hire in our own image while at the same time selecting the most qualified. While women make up 50% of the population, how does this apply to other underrepresented groups?  When we focus on achieving parity for women on boards, it's because over 50% of the workforce are women and therefore should be included for consideration at the highest levels of an organization including the boardroom. While other underrepresented groups, such as LGBTQ, American Indians, disabled veterans, do not currently represent 50% in the workforce (but that’s a changing dynamic), board and C-suite executives should ensure these candidates are being evaluated for C-suite and board positions. If working with a search firm or third party, insist the candidate slate has not one but 50% or more women and diverse candidates. What are your thoughts on terminology? Chief Human Resources Officer, Head of HR, Chief People Officer, Chief People & Culture Officer – is there one of these titles you favor over the others? Are they essentially different names for the same role, or do they reflect meaningful differences in an exec’s portfolio and/or skills? Every company will have a different executive structure for the C-suite positions and titles. The CEO and board will look at the structure of the company, and the reporting lines to ensure good corporate governance for internal control and external regulatory purposes prevail. The only titles that can really be compared across industries are the CEO and CFO of a publicly traded company – after that titles reflect internal structures, market trends, or regulatory requirements. With regard to the HR function, there are a variety of titles, especially when that individual is responsible for other areas such as Marketing, Communications, Real Estate, Analytics, the company’s Foundation. Typically, the Chief Human Resources Officer reports directly to the CEO, as I believe it should. However, in some companies where there is a Chief Operating Officer, especially when they are being groomed to be the next CEO, functional areas such as the CHRO, CTO, CMO may report there. It depends upon the structure of the company and its direction, strategy, size, and governance to name just a few. It should be noted that when recruiting talent for a position, titles and reporting relationships are important to candidates as they convey the scope of one’s responsibilities, and level of importance in the hierarchy, as well as how the role may be viewed inside the company. Titles need to be easily understood internally as well as externally. As for the title for the HR role, some companies are deleting the word “Chief” from many functional titles. So, the advice we give our clients is to have clarity around titles, reporting relationships and staying current with the market trends, to do what “fits” the company’s culture and make the position compelling so you attract the best and brightest candidates. What about a “Chief Diversity Officer”? Should the role be separate from the CHRO? Again, it depends upon multiple factors like the size of the company, its structure, the DEI strategy, current state of progress made and the responsibilities of the DEI role. Given these and other factors, the Head of DEI may report to the CEO, the CHRO, or a COO. The Head of DEI has typically reported to the CHRO, but that is changing, and we recently filled a DEI role reporting directly to the CEO for a mid-size financial services organization. Another example is Yahoo. Yahoo recently hired a Chief Diversity Officer reporting directly to the CEO, with a separate CHRO also reporting to the CEO. Again, it very much depends on initiatives under way, a new or refreshed DEI strategy, the message the company wants to send to employees, to investors and to candidates in order to enhance representation of underrepresented groups in the organization. We are hearing that more CEOs want a direct or at dotted line working relationship with the DEI function as the CEO ultimately owns that responsibility. Regardless of where it reports, DEI needs to be fully integrated and embedded into business strategies and talent practices, tracking progress and outcomes, and holding people accountable along the way to be successful. As diverse candidates consider roles, what do they look for in making a decision? Does a diverse DEI head or diverse CHRO make a difference? I don't think those specific positions make a difference when candidates are evaluating a company’s commitment to DEI. A Caucasian male as the CHRO is suitable, as long as the C-suite and the board reflects women and underrepresented groups. Candidates look at the whole picture of a company’s structure. The CHRO does not have to be the diversity figurehead, but they do need to walk the DEI talk along with the entire leadership team. In essence, DEI should be owned by the board and the CEO who ensures it cascades all the way down the organization. The question candidates ask: “Is DEI in the DNA of the organization?” That is, do the faces they see in the boardroom, the C-suite and at all levels of the organization reflect DEI as part of the DNA. The responsibility of the leadership is not to just say it in their annual report, or town hall meetings but in their actions, to demonstrate commitment to diverse representation at all levels. Additionally, I would add that for the lower and mid-levels, companies need to over hire in order to ensure they are creating a pipeline for more diversity at the top. In addition to ‘over hiring’ companies need to take a good look at their programs and practices. The McKinsey and LeanIn annual analysis notes that there is a leaky valve in the middle of the pipeline where women and underrepresented groups leave mid-career, this is referred to as the “hollow middle.” To compensate for this, companies need to over hire at these levels so, over time, enough diverse talent will move up the ranks. And better yet, ensuring these diverse employees feel a sense of belonging and ability to make an impact so they can have multiple careers with your organization. As some believe this, how do we move away from the narrative that DEI = discrimination against white men? Companies absolutely need to be focused on DEI efforts and results, yet at the same time every hire should be the most qualified candidate for the role without marginalizing any group. That said – to get to parity at all levels, companies need to hire more diverse candidates while also considering Caucasian men. The numbers tell the story whereby the majority of the top positions, C-suite and board positions continue to be filled by Caucasian men, and men in general. According to the 2021 Spencer Stuart Board Index, 57% of new board positions were filled with men. And board seats currently held by men is 70% with women in the S&P 500 30%. Therefore, more companies are intentional and highly focused on changing that landscape to be 50-50 in terms of gender as well as representing other subgroups. Candidates that represent all underrepresented groups – whether it be women, ethnicity, national origin, age, LGBTQ+, disabled – must be in the pool of candidates being considered for roles. And you cannot have just one diverse candidate being interviewed; any slate of candidates for any role should be highly diverse and I would suggest 50%. The issue today is, we have a fifty-year-old problem that we're trying to correct in a relatively short period of time. We cannot change the representation especially at the top of companies overnight, but we can set three-year targets, measure progress and be transparent in communicating with employees, customers, communities, and investors. Say you’re the Head of HR at a startup who has recently gone public, whose founders and pre-IPO shareholders are all white men. How do you approach this diversity issue? What about from your own as an executive search consultant?  As a publicly traded company representing all constituents, again – employees, consumers, communities, investors – all leaders need to recognize diversity is a business imperative. This is a very common situation, particularly in Silicon Valley, with high tech firms, where the founders and board are predominantly white men, and there's no diversity. As the head of HR, you have a responsibility to educate the board and the CEO. The press has raised this issue and CEOs such as David Solomon, CEO of Goldman Sachs, said, essentially, “We’re not going to take a company public unless there’s at least one diverse board candidate, with a focus on women.” And of course, the NASDAQ has also come out with a listing requirement for greater diversity. I was part of an IPO in the nineties where there was a male CEO and no women on the board. As the CHRO with added responsibilities for Marketing and Real Estate, I worked hard and advocated for more women on the board and in the C-suite. I will admit I was not successful. But since that time there is momentum, some of which was pressure from large institutional investors such as BlackRock, State Street, Vanguard; from regulatory bodies such as the SEC; from listing requirements for IPOs at the Nasdaq; from social unrest including the murder of George Floyd; from quotas in place globally; and, from the media about board diversity. This confluence of forces has created more intentionality by boards. That is good and that is progress, but clearly for good corporate governance and the business imperative driver, there is a need to push harder to ensure this is not just a moment in time, but a momentum in time. Janice Ellig is CEO of New York City-based global executive search firm Ellig Group. Heralded by Bloomberg Businessweek as one of “The World’s Most Influential Headhunters,” Janice is often consulted for her expertise and her commitment to gender parity, inclusion, and diversity.

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