Diversity, Inclusion, ESG Are Key Focuses for Headhunters Seeking CIOs – Chief Investment Officer

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The combination of the COVID-19 pandemic and the groundswell for racial justice that dominated 2020 have profoundly changed how and why CIOs are hired at family offices, endowments, and foundations, according to a panel at CIO’s 2021 Symposium on Thursday.

The headhunters on the panel said the events of the past year have intensified their focus on matters of diversity and inclusion, as well as a candidate’s experience with environmental, social, and governance (ESG) investing, during the hiring process.

The panel was moderated by Walter Kress, CIO of EY, and included headhunters Renee Neri, head of asset management, Americas, Heidrick & Struggles; Elizabeth Havens, a partner at David Barrett Partners; and Jeff  Warren, co-head of Russell Reynolds Associates’ private equity practice.

With the pandemic causing so much workplace disruption in 2020, adaptability and flexibility were key themes for the headhunters searching for their next CIO to target.

“For clients who never thought that they would be able to make a decision based on a virtual interview process, they’ve all adapted,” Warren said. However, he added that we’re at a point in the pandemic when clients are looking at the final rounds as a safe in-person exercise, rather than something to be conducted remotely.

But perhaps an even bigger impact on CIO headhunter searches than the pandemic has been the social upheaval over racial injustice during the past year. Now, the topic of diversity and inclusion has been the focus of every search for Havens at David Barrett Partners.

“Previously, it might have been a focus on some clients,” Havens said. “But now every single search that we’re working on, it is first and foremost.” She added that the focus on diversity and inclusion isn’t limited to seeking out CIOs who come from diverse backgrounds, but also encompasses those who embrace diversity. She also pointed out that the retention of diverse talent is just as important as the hiring of diverse talent.

Sustainability and ESG issues have also been a key focus for headhunters during the past year.

“How do you factor [ESG] into talent decisions?” Warren asked. “Are you hiring with an ESG lens, and is it a key competency when you’re not only selecting people but also when you’re promoting them and rewarding them?”

Warren added that ESG matters should be embedded in the strategy of a business, and need to be more of a mindset overall in the organization and become part of the culture.

“It’s really a fascinating moment in time on this topic,” Neri added. “The regulatory environment has also meaningfully influenced the ESG and sustainability dialogue,” she said, noting that the US Securities and Exchange Commission (SEC) has recently appointed an ESG overseer. “We’re going to hopefully see a little less greenwashing and a little more truth in marketing.”

Havens added that nearly all of her firm’s CIO searches today have had an ESG element. She said CIOs interviewing for jobs should expect to be asked questions from the investment committee about their thoughts on ESG issues.

“If you are in an interview at, say, an endowment, make sure you know where on the spectrum they fall,” Havens said, “because nine times out of 10 you will get a question and now it’s becoming more and more of a priority.”

Neri also said another “prominent emerging theme that we’re picking up on is activity and engagement in the family office space.” She said family offices are focusing on integrating ESG approaches into their investment decisionmaking, and some offices are thinking about “the lens of sustainability as it applies to every single asset class that they’re allocating to.”

And Warren pointed out that the impetus for the drive for ESG investing is coming from the younger generations, noting that this isn’t how his parents invested.

“We haven’t seen it before,” he said. “So CIOs are having to adapt and adjust portfolios accordingly.”

Related Stories:

The Lure of the Family Office

Milton Friedman, Ha! Anti-ESG Types Wouldn’t Ruin Companies Long Term

CIOs, Constituents and Cooperation

Tags: cio, COVID-19, David Barrett Partners, diversity, Elizabeth Havens EY, ESG, headhunter, Heidrick & Struggles, hiring process, inclusion, Jeff Warren, pandemic, Renee Neri, Russell Reynolds Associates, Sustainability, Walter Kress

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