Gender diversity data from PER’s 2020 UK Private Equity Investment Professionals Compensation Report reveals that 75 percent of firms have no female operating partners. Sadly, that figure is not surprising and broadly reflects the gender balance at senior levels in funds. What is surprising is that the industry has not taken a simple, low-risk and potentially high-return measure that will have an immediate impact on female representation among operating partners.
When faced with historic inequalities, it is important to be mindful of how they came to be. Crucially, most operating partners are not usually hired through a recruitment process. Firms tend to appoint someone they know, often through first-hand experience of the value they have already created. Operating partners hold a position of trust and, as such, are often someone who is already an established member of a firm’s network.
This, of course, is good business sense and no-one is suggesting that these tried and tested routes for finding operating partners have had their day. That said, why should firms limit themselves to this group? A broader range of talent can benefit decision making and help to access investment opportunities that the fund may not have at first thought of, bringing a different perspective to a broad range of operating issues.
Valuing different experiences and perspectives
A small change that would have a massive impact on this industry would be for every firm to consciously welcome on board one additional operating partner who is female. This first step would have an immediate impact on the industry’s gender balance at this level.
I am by no means suggesting private equity adopts the ‘one and done’ strategy that has been highlighted by the Hampton-Alexander Review into the lack of gender diversity on the boards of FTSE 350 companies. But it is a start that we need to consider.
One of the challenges in taking this first step is that there is a perception there are not as many women who have the same depth and breadth of experience as their male counterparts. And for sure, there may not be the same absolute number. But operationally successful women do exist.
If firms are prepared to hire an operating partner who is not instantly known to them, and instead focus on bringing on board a proven business leader whose experience may lie elsewhere in the corporate or advisory world, then they will open the door to a world of talent that might surprise them.
Positive action is necessary to increase female representation at the operating partner level and we are all going to have to try a little bit harder to make it happen. It is by no means an easy win; it is a challenging win – and aren’t those wins all the sweeter for it? There is no doubt in my mind that firms with a diverse operating partner group are at a competitive advantage in this market. The new perspectives that women can bring should be valued in the same way as the tried and trusted experience that firms have opted for in the past.
Gail McManus is founder and managing director at search firm Private Equity Recruitment