Battle of the sexes

Baby steps have been taken to tackle the gender imbalance in private fund management. Firm-level initiatives have emerged, as have industry groups like Level 20 in Europe, which pledges to increase the number of female professionals in the business and highlight factors holding them back.

Women accounted for 5 percent of senior positions in the European private equity industry in 2015, according to Level 20. A cocktail of issues has resulted in the low female headcount in private equity – particularly in the front office. Industry sources say factors include the assumption that women are not suited to investment jobs, the perception of the industry as an “old boys’ club,” and the hangover from when fewer women were pursuing jobs in the sector or its feeder industries.

Tackling these is no small task, and one of the central questions – whether treating women differently will help to recruit and retain them – is difficult to answer.

Sister title Infrastructure Investor recently asked industry participants to argue the toss at the Women in Infrastructure Forum in London. In an Oxford-style debate, the speakers in favor of different treatment argued that a degree of positive discrimination is necessary to redress the balance and ensure more women are given the opportunity to progress. The opposition said the strategy “reinforces shortcomings,” adding there is a danger the “positively discriminated against” could feel victimized.

Both sides said it was important women could tap into the right networks to progress, but couldn’t agree on how to achieve this. Networks that give access to more senior women can inspire and empower junior female staff, one side argued. The other replied that you can’t assume women in power will drive change for other women – men must also be engaged, and they can learn a lot from being so.

Engaging men was a recurring theme, and both sides reached a degree of consensus that creating female-centric policies – whatever they may be – is not the way forward. It should be made clear that flexible working schemes are there for both male and female staff, one panelist gave as an example. Another added only 1 percent of men take parental leave. “To achieve equality, it needs to be made more acceptable for them to do so,” the panelist said.

The reference to equality is significant, because there is a difference between achieving a gender balance – a quantitative target – and achieving equality, a qualitative goal that means opportunities are open to everyone suitably qualified. Firms that are in the process of considering their diversity would be wise to remember this, as the two are not necessarily achievable in tandem.

To date, the pressure to redress the balance has been slight, mainly coming from academic studies showing a link between gender diversity and performance  or from industry initiatives led by trailblazing females.

The most pertinent question, sadly, is why should a male-dominated private fund manager care? Take a look across the upper echelons of the most successful firms in the business and female faces are still a rarity. A lack of gender diversity has not so far been a barrier to success.

The answer could be changing investor sentiment. As one UK-based private equity firm told pfm, LPs are becoming increasingly concerned about diversity, and what firms are doing to ensure they have it. LPs are not yet withholding commitments based on diversity, but heading in that direction. This pressure will be harder to ignore.