Quick takeaways
- Diversity questions are now routine in executive search, and rightly so — but they need to be asked at the start of the search, not after a strong shortlist has already been completed.
- The four diversity factors identified by BCG and the Technical University of Munich were industry background, country of origin, career path, and gender, all of which were found to positively correlate with innovation.
- McKinsey’s later research continues to argue that the business case for diversity, equity, and inclusion remains strong, with its 2023 report describing diversity as linked to broader business and social impact.
- In Australia, diversity remains a live governance issue: the 2026 Board Diversity Index examines ASX 300 board diversity across gender, cultural background, age, tenure, independence, First Nations representation, LGBTQ+ representation, and skills.
- The goal is not to manufacture a diverse shortlist for appearance. The goal is to ensure the search has explored the widest relevant market before judgement is applied.
Over the last 12 months in particular there has been an increase in the number of hiring managers asking questions about the diversity of an executive search shortlist. This has even occurred when the search has been successfully completed and the shortlist of three or four candidates represent an exceptional opportunity for hiring organisation.
It’s not surprising that this is happening. With an increased level of corporate social responsibility towards diversity, it’s the kind of thing that now just appears on job briefs and checklists routinely. If it doesn’t, arguably it should be included by the search consultant.
Almost 2 years ago McKinsey and Co produce research that identified companies with high levels of diversity often outperformed their competitors. AESC recently quoted McKinsey:
“McKinsey’s research showed that companies with ethnically diverse leadership are 33% more likely to outperform on profitability and 21% more likely to have above-average profitability with gender diverse leadership teams.
BCG and the Technical University of Munich found a direct correlation between innovation, diversity in leadership teams and profitability of new product releases. They discovered that four types of diversity—industry background, country of origin, career path, and gender—positively correlate with innovation. “
McKinsey, ‘Delivering Through Diversity’ 2018.
Diversity is not a shortlist afterthought
There is a difference between asking about diversity at the beginning of a search and asking about it after a shortlist has been finalised.
The first is useful. The second can become cosmetic.
If a hiring manager asks about diversity only after three or four exceptional candidates have been presented, the question becomes difficult to answer properly. Not because diversity does not matter, but because the right time to explore it is during the design of the search strategy.
That is when the consultant and hiring manager should agree:
- what kinds of diversity are relevant to the organisation’s challenge
- how wide the market should be mapped
- what assumptions about “ideal background” need to be tested
- which adjacent sectors may contain strong transferable talent
- whether the role criteria are genuinely essential or simply familiar
- how candidates will be compared fairly
A diverse shortlist is not something a consultant should “add” at the end. It should be the natural outcome of a properly constructed search.
Diversity is not the opposite of merit
A common mistake is to frame diversity and merit as though they are competing ideas.
In executive search, the best interpretation of diversity is not “choose someone because they are different.” It is “make sure you have searched widely enough to know where the best talent actually is.”
That matters because leadership potential is often filtered through assumptions. A hiring manager may believe the best candidate must come from the same industry, the same type of organisation, the same country, the same commercial model, or the same career pathway.
Sometimes that is true. Often it is not.
The role of the search consultant is to test those assumptions. Not to lower the bar, but to make sure the bar is attached to the real challenge, not to habit.
Diversity, properly applied, improves the quality of the search. It broadens the evidence base before the final judgement is made.
The 4 diversity factors in executive search
The BCG and Technical University of Munich research identified four types of diversity that positively correlated with innovation: industry background, country of origin, career path, and gender.
For executive search, those four factors remain useful because they move the diversity conversation beyond a narrow or purely demographic frame.
1. Industry background
Relevant industry experience can matter, but relevant does not always mean identical.
A candidate from the same industry may understand the market quickly, but a candidate from an adjacent or more advanced sector may bring new thinking, stronger systems, sharper commercial discipline, or experience solving the same problem in a different environment.
This is often where the search consultant adds value: helping the hiring manager distinguish between industry familiarity and challenge relevance.
2. Country of origin
At executive level, country of origin should not be treated simplistically.
For some roles, international experience, global mobility, regional market knowledge, or cross-cultural leadership may be highly relevant. For other roles, the practical issue may be legal work rights, relocation feasibility, or long-term commitment to the Australian market.
In Australia, the point should not be country of origin as an identity filter. It should be whether the candidate’s background, experience, mobility, and legal work status match the real needs of the role.
3. Career path
Career path may be the most underappreciated diversity factor.
Two executives can have the same title and very different leadership formation. One may have grown through finance, another through operations, another through product, another through sales, another through transformation.
That matters because career path shapes judgement.
A turnaround role may require a different career pattern from a growth role. A founder-led business may need a different leadership profile from a heavily governed corporate environment. A private equity-backed organisation may value different instincts from a member-based organisation or government enterprise.
The question is not “Does this CV look familiar?”
The question is “Has this person been shaped by experiences that are relevant to the challenge ahead?”
4. Gender
Gender remains one of the most visible and debated diversity factors in leadership.
In Australia, progress has been real but uneven. As of 31 January 2026, women held 37.6% of ASX 300 directorships and 38% of ASX 200 directorships, while the ASX 100 had reached 40%.
That is encouraging, but it does not mean the work is finished. The same AICD update noted that women remain less represented in Chair and other senior board roles.
For search consultants, gender diversity is not about passing over one candidate for another. It is about ensuring the market has been properly mapped, unconscious bias has been challenged, and candidates are assessed against clear criteria rather than familiar patterns.
What good executive search consultants should do
A good executive search consultant should not wait for the client to raise diversity.
They should build it into the search discipline from the beginning.
That means:
- testing whether the role criteria are too narrow
- challenging “same industry only” assumptions
- mapping adjacent sectors where relevant talent may exist
- using structured assessment criteria
- asking whether the organisation is genuinely ready for a different profile
- making sure shortlist decisions are evidence-based
- documenting the search strategy and market coverage
- protecting the client from both unconscious bias and superficial diversity
The consultant’s role is not to deliver a shortlist that looks diverse on paper. It is to deliver a shortlist that reflects the best available talent after the market has been properly searched.
That is a different standard, and a much higher one.
The Australian context: progress, gaps, and governance
In Australia, diversity in leadership is no longer a side issue. It sits across governance, workforce strategy, social licence, and organisational performance.
The latest WGEA Gender Equality Scorecard is based on reports from 8,239 employers, covering more than 5 million employees across 19 industries. It shows the average total remuneration gender pay gap at 21.1%, or 79 cents earned by women for every dollar earned by men.
Board diversity has also moved beyond gender alone. The 2026 Board Diversity Index examines ASX 300 boards across gender, cultural background, age, tenure, independence, First Nations representation, LGBTQ+ representation, and skills.
The lesson for executive search is straightforward: clients are increasingly asking broader questions because leadership diversity is now tied to governance quality, market relevance, and organisational readiness.
But broader questions require better search discipline.
Inclusive recruitment is also about process
Diversity in executive search is not only about who appears on a shortlist. It is also about how the process is run.
The Australian Human Rights Commission’s guidance on preventing recruitment discrimination emphasises practical steps such as casting the net widely, treating candidates consistently and fairly, accommodating people who require adjustments, avoiding irrelevant personal information, and focusing on the essential requirements of the job.
That is as relevant to executive search as it is to general recruitment.
At senior levels, bias often appears more subtly. It can sit inside assumptions about “gravitas,” “fit,” “polish,” “commerciality,” “track record,” or “board presence.” None of those terms are wrong, but each needs to be unpacked carefully.
The more senior the role, the more important it is to define what success actually requires.
Diversity without inclusion is fragile
A diverse appointment is not the end of the work.
In some cases, organisations are very focused on appointing diverse leaders but less prepared to make sure those leaders can succeed. That is where diversity becomes fragile.
If a candidate is brought into an environment where informal networks are closed, decision rights are unclear, cultural norms are rigid, or different perspectives are quietly resisted, the organisation may achieve representation without inclusion.
That is not a search problem alone. It is a leadership and change problem.
This is why search consultants need to understand the environment they are placing people into. A candidate can be exceptional and still fail if the organisation is not ready for the kind of difference it says it wants.
The question is not simply: Can we attract diverse talent?
The better question is: Can we retain, hear, and make use of diverse talent once it arrives?
Better questions hiring managers should ask
Instead of asking, “Is the shortlist diverse?” at the end of the process, hiring managers should ask better questions at the beginning.
For example:
- Which sectors should we consider beyond our own?
- Which parts of the role genuinely require same-industry experience?
- What career paths could produce the leadership capability we need?
- Are we overvaluing familiar CVs and undervaluing transferable experience?
- Have we mapped the market widely enough?
- What criteria will we use to compare candidates fairly?
- What assumptions might exclude strong candidates unnecessarily?
- Is our organisation ready to support a leader with a different background?
Those questions are more useful than a late-stage request to “add diversity” to a shortlist.
They make diversity part of search quality, not shortlist decoration.
What this means for executive search
Executive search should never be reduced to finding people who look like the last successful appointment.
The best search work combines market intelligence, evidence, judgement, and challenge. Diversity strengthens that work when it forces the search to look harder, think more broadly, and test inherited assumptions.
For the consultant, the task is to balance three things:
- Relevance — does the candidate match the real challenge?
- Breadth — has the market been searched widely enough?
- Readiness — is the organisation prepared to benefit from difference?
That is why diversity in executive search is not a compliance exercise. It is a search discipline.
FAQ
What are the four diversity factors in executive search?
The four diversity factors commonly discussed in executive search are industry background, country of origin, career path, and gender. Research from BCG and the Technical University of Munich found that these four types of leadership diversity positively correlated with innovation.
Why does diversity matter in executive search?
Diversity matters because it broadens the field of relevant talent, challenges narrow assumptions, and brings different perspectives to leadership decision-making. McKinsey’s research series continues to link leadership diversity with business performance and broader organisational impact.
Does a diverse shortlist mean lowering the bar?
No. A diverse shortlist should mean the search has been wide, disciplined, and evidence-based. It should not mean compromising role requirements or selecting candidates for appearance rather than capability.
When should diversity be discussed in an executive search process?
At the beginning. Diversity should shape the search strategy, market mapping, role criteria, and assessment process. If it is raised only after the shortlist is complete, it can become superficial.
What does industry background diversity mean?
It means considering whether candidates from adjacent or different sectors may bring relevant experience, fresh thinking, or better capability for the organisation’s actual challenge. Relevant does not always mean identical.
What does career path diversity mean?
Career path diversity recognises that leaders are shaped by different functional, commercial, operational, transformation, and governance experiences. The right career path depends on the problem the organisation needs the leader to solve.
How can search consultants reduce unconscious bias?
Search consultants can reduce unconscious bias by using structured criteria, widening the market map, challenging unnecessary requirements, comparing evidence consistently, and, where useful, removing identity cues from early-stage documents.
What is the difference between diversity and inclusion?
Diversity is about who is represented. Inclusion is about whether those people are heard, supported, and able to contribute fully. An organisation can appoint diverse talent and still fail if its culture cannot make use of difference.
