This September is the 20th anniversary of a speech made by former US Secretary of State, Hilary Clinton. In the speech, Clinton made the famous remark, “Women’s rights are human rights”. Since the speech, focus on gender equality has increased, especially in the workplace. Yet, some industries, like private equity, continue to have problems in attracting women.
Private equity firms have become increasingly aware of the need to get more women involved. But how big is the problem and are new perks for women the answer to the problem?
Women in Private Equity
Preqin’s latest research in March didn’t paint a very rosy picture. The research showed the private equity industry as a whole has a woman in charge of just 11.7% of the leadership positions.
In terms of different sectors within the industry, buyout firms are doing the worst. Only 10.5% of senior positions have a woman in charge, while the proportion is 14% in infrastructure, for example. Furthermore, in small private equity firms the situation tends to be worse. Women make only 9.7% of senior positions in firms with five or fewer such senior employees. In large firms, firms with over 20 high-level management positions, 13.9% of senior positions are held by women.
The more positive news was that the situation is changing. Venture capital firms, for example, managed to increase the share of female senior employees from just 11.2% in 2013 to 14.8% in 2015. In fact, proportion of women in senior positions has increased across sectors.
In addition, the situation is starting to look better in the entry-level positions as well. In Europe, nearly 18% of junior level positions are filled by female candidates. This has increased from 16% in 2014, showing that the industry might be stepping out of the shadows.
Situation in Big Firms
Whilst big private equity firms have managed to keep the share of women in senior positions above 10%, there isn’t much room to celebrate when you look at the boardrooms. According to Bloomberg’s findings this April, 9 out of 10 senior managers in the 10 biggest buyout firms are still men.
Like in the industry as a whole, some firms are making better progress than others. As we reported previously, Apollo has been able to improve female representation on its senior management team by 7.1%. While women represented only 7.5% of its senior management team in 2012, the percentage stood at 14.6% in 2015.
On the other hand, Warburg Pincus has gone the other way. Whilst 3 of its 66 senior management positions belonged to women in 2012, by 2015, there were only two women in its 68 strong team.
But private equity firms would benefit from an increased female representation. George Roberts, the co-founder of KKR, said it well in an interview. “Too many same people means too much same thinking. We found that people were hiring people like themselves. If you want to stifle innovation, if you want to stifle diverse thinking, if you want to stifle creativity, then just keep hiring people like yourself,” Roberts said.
Attracting Women to Private Equity
The gender gap is an established problem in the industry, but the ways to go about the solution vary from firm to firm. Some of the big firms have looked at introducing perks to support women in the industry, especially if these women are mothers or soon-to-be mothers.
For example, KKR announced this week that it would be beefing up its support for families. The firm already provides a paid parental leave to parents, but the total weeks have now been increased from 12 to 16. Furthermore, parents who aren’t the baby’s primary caregiver can also take time off for 10 days instead of the previous five.
But that’s not all. KKR said it would be allowing the baby and the nanny to travel for free together with the parent during the child’s first year. The private equity firm is the first company to offer such a perk to its employees in the US.
On top of this, some firms are even considering the possibility of female-only hiring. Some firms are already using female-only recruitment processes, although not everyone in the industry has welcomed these.
In a recent Wall Street Journal article, Rhonda Ryan, a partner at Altius Associates, said, “You should recruit the best person for the job and it should be apparent to all that that’s what you have done”. More importantly, female-only recruitment process would not be allowed in many countries, as it would be considered discriminatory.
But offering rewards isn’t only about making it easier for women to remain in the industry. The firms are also aware of the competition for the best candidates. Private equity firms in the US are increasingly aware of the lure of other financial institutions, as well as the technology sector. Silicon Valley has been able to attract a lot of bright talent in recent years away from private equity.
KKR’s move, for example, comes just weeks after Netflix announced its plan to allow parents a full year of paid parental leave, with Microsoft and Adobe Systems also extending their parental leave policies. Roberts told Bloomberg, “To be able to attract and keep the highest performers that we can find is what’s going to give us a competitive advantage”.
Other private equity firms have also understood the importance of support. Blackstone Group has extended its maternity leave this year, while Carlyle has tried to ensure 40% of its analyst class for next year will be female.
Women are also beginning to talk about their experiences in the industry more openly. While the majority of women have found the industry hard to operate in, shared experiences can act as a support for women passionate about the industry. Things are also starting to be better as old attitudes are slowly changing.
For the firms to succeed and the industry to break the glass ceiling, women need to feel welcomed. Schemes that support women and strong female role models could help make private equity an industry that excels in gender equality.