The private equity industry has taken steps forward in emphasising the importance of hiring a diverse staff in recent years, but there is still a long way to go before diversity across the whole industry is achieved.
In May 2018, Level 20, a non-profit dedicated to improving gender diversity in the private equity industry, and the British Private Equity and Venture Capital Association published a report surveying 178 private equity firms with a presence in the UK. It found women make up just 6 percent of senior positions and 29 percent of the overall private equity workforce.
This isn’t exclusive to UK firms, says Mercedes Chatfield-Taylor, managing partner of Caldwell Partners’ private equity and venture capital practice. Large global private equity firms based in the US also have issues with diversity.
“I’m looking at one right now that’s a $100 billion fund and on the first page there are two women and eight men [in principal roles], and I think that firm does a particularly good job highlighting and hiring women for senior positions,” Chatfield-Taylor tells Private Equity International. “It’s a male-dominated field and that’s changing slowly.”
Data on diversity in the industry is sparse, but a report published in January by EY shows private equity firms are looking to improve gender diversity in their workplaces. Of the 103 firms surveyed, 79 percent said they are changing their talent profile in an attempt to increase gender diversity in their workforce.
In October, mega-firm Carlyle Group hired a former BlackRock executive, Kara Helander, to the newly created role of chief diversity officer in a move sure to influence others across the industry. “The commitment is more explicit today than even just a few years ago,” Helander tells PEI. “There is a growing recognition that if you are not diverse, you are leaving value on the table.”
Ignoring diversity issues can have some very real consequences for firms. In June 2018 sister publication Infrastructure Investor reported that a lack of workplace diversity contributed to Blackstone Group and Brookfield Asset Management being passed up for a $50 million infrastructure allocation by the $10.8 billion Chicago Teachers’ Pension Fund.
So what are firms doing to move the needle? Some are asking recruiters to make sure candidate shortlists feature a set proportion of women, says Gail McManus, founder of London-based Private Equity Recruitment.
“Every female in M&A and leveraged finance is having a large number of headhunters trying to call them every day,” McManus says. A PER compensation survey in July found only 14 percent of the 547 private equity investment professionals who responded were women.
One female partner at a Europe-headquartered private equity firm says the supply of suitably qualified female candidates willing to move outside the so-called big four accounting firms and across to private equity is partly hindered by a lack of flexibility on the part of some PE firms. In her experience, fears that the demands of parenthood might conflict with time-intensive investment roles had occasionally deterred women from the asset class.
“GPs need to take positive action and be more flexible in their attitudes to working, particularly as families come into the picture,” she says.