Addressing Gender Imbalance in Private Equity

A few weeks ago, I had the pleasure of hosting a panel discussion at the 2015 European Summit for Women’s Private Equity Network (WPEN) during which some of the most influential women in the industry came together to discuss what firms can do to encourage more women to take up careers in private equity. As some of you might know, significantly increasing the number of female investment professionals remains my greatest personal ambition at Kea. Disappointingly, recent data indicates that women comprise a mere 16% of all private equity professionals worldwide with only 6.5% at partner level, and our analysis at Kea shows that female representation in the UK lags even further behind international averages.

While private equity leadership generally acknowledges the relationship between higher levels of female employment and improved business outcomes, few firms have in place any formal processes to attract and retain female recruits or to facilitate their promotion to more senior roles. The WPEN panel of four women addressed a number of topics ranging from work/life balance to unconscious bias during which they outlined some useful insights for young women navigating careers in private equity and the obstacles to improving diversity.

Considering alternative sources of talent

One contributing factor to private equity’s gender imbalance is a selection process which prioritises candidates with finance backgrounds, often to the exclusion of those with different but also valuable experience. Though it is becoming more common to recruit from consultancies to bolster investment teams in specific sectors and geographies, the buyside tends to favour traditional candidate pools from investment banks. With the majority of young women opting out of finance at the start of their careers, only 10% of eligible buyside applicants are women.

As initiatives to encourage more girls into finance and other STEM careers gather momentum, hopefully buyside’s pipeline for the next generation of female recruits is already growing. In the meantime, the number of women in private equity will not increase unless the industry is willing to look beyond traditional sources of talent and engage women before they slip off the buyside career track. A number of private equity firms are already making positive strides by implementing work placements for younger candidates or training programmes for new hires with alternative experience.

Mentorship vs Sponsorship

For young female investors seeking career progression, the panel discussed the importance of building a network of mentors to serve as a crucial source of motivation and advice. While mentors can provide encouragement and confidence for women adjusting to difficult careers in finance, I would emphasise that sponsors in the workplace, rather than mentors, are more likely to unlock doors. Sponsors with a vested interest in their protégés advocate for them on issues that directly impact their career progression, from placements on the most interesting projects to promotions and pay rises.

Finding a sponsor can be daunting for young women, who are less likely than their male counterparts to bond with the boss over a beer at the pub or a round at golf. However, women should not forget that delivering outstanding performance is the best way to attract notice from potential sponsors. The boss is more likely to back the dependable employee, male or female, who consistently makes him or her look good and delivers.

Work/life balance and flexible working

Work/life balance is perhaps one of the most discussed issues when it comes to promoting women in the workplace, and no easy task for women in private equity. While the panel agreed that more should be done to facilitate clearer expectations around parental leave and flexible working, such as enabling parents to occasionally work from home, they stressed that anyone taking up a career in private equity must really love the work.

Careers in private equity are challenging with promotions closely linked to performance. As such, extended career breaks are rarely a viable option for those who want to progress, which means parents must often delegate parenting duties to a nanny or a willing partner, or sacrifice sleep to work late on days they leave early to spend time with children.   Ultimately, there is no simple formula for balancing family life with a difficult career, but each woman must find a system that works well for her, and build a strong support network of family, friends and even childcare professionals if she wants to succeed on the job.

Engaging men in the debate

To conclude, the issue of gender imbalance in private equity is complex. Buyside firms increasingly request a higher proportion of women on shortlists, but identifying a quality source of eligible female candidates in existing talent channels has proven tricky. While the industry can draw inspiration from the broader agenda to promote diversity in the workplace, private equity remains unique in its uncompromising requirement for candidates with elite skillsets and a deep commitment to the job.

Perhaps most importantly, I was struck by the absence of men in the room to discuss an issue where they have a considerable role to play. While women have done much to advance the debate on gender imbalance, we often fail to include the other 84% of investment professionals in the conversation. Expanding the dialogue to include all of private equity’s key decision makers will be vital to continuing a more meaningful dialogue and driving change at an organisational level.