Download Greater diversity pays real dividends

Greater diversity pays real dividends
Elise Lufting
Why are women under-represented across the private equity universe and in the financial sector in general? From investors, to advisors to company leaders and
entrepreneurs? Why are there more men named John, David or Mark on FTSE-100 boards than there are women altogether? Let’s look at the facts:
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Only 11% of senior positions in private equity firms are held by women
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Only 12% of senior private equity lawyers are women
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Only 1 out of 9 venture capital investors is a woman and only 1 out of 5 enterprises backed by angel investors are owned by women
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In financial services women hold only 19% of senior level positions, 14% of board seats and 2% of CEO roles while the junior entrance levels are almost equal
(45% women vs 55% men).
This is despite the fact that there is plenty of research evidence showing that a higher percentage of senior
women in companies generate higher returns and companies with more female senior executives generally
outperform other firms. McKinsey published several reports¹ that shows that companies with top-quartile
representation of women in executive committees perform significantly better than companies with no women at
the top.
So what do we do about it? How do we change things? I believe that the power of international networks can
enhance the role of women in the industry. For that reason I attended the Women Private Equity Summit in
London last week. This network connects professional women throughout the investment universe which makes
it possible to cut across regions, organisations and old-boy networks in order to develop new relationships and
do more business.
The event started with an inspiring speech of Caroline Dinenage, Minister of Women and Equalities from the UK Government about how the next generation of female
leaders can be supported. To her it is evident that “Greater diversity pays real dividends” and one of her focus points is to close the “Pay gap”. Globally, women are
paid far less than men in similar jobs, on average 70-80% of men’s wages depending on the geography and sector. The gender pay gap in the financial sector is
higher than in the business economy as a whole. She advocates transparency: companies have to publish payment information. Her boss, also a “David” (Cameron)
implemented a law that forces companies with more than 250 employees to disclose whether they are paying men more than women from next year onwards. And
also important: Women should not forget to also empower other women, like Madeline Albright said: “There is a special place in hell for women who don’t support
other women”.
Next to investment trends and deal flow outlook several questions were debated during panels and round table discussions: How do women achieve success in
business and finance today and what needs to change in the future? How do we tackle gender inequality in society and how do we empower women to join the
workforce? How can an organisation enhance diversity?
Let’s look at the last two questions more closely. A presentation was given by McKinsey about their report published last week: Full gender equality would add
26%, or USD 28 trillion globally, to gross domestic product in 2025. Denying women full participation in the global economy is not only wrong, it is costly. To
reach that impact, gender equality in society needs to be tackled. Both public and private sector play a fundamental role. Equality in the labour market relies on social
change and legal protection of women’s rights. Governments need to adopt a policy framework that guarantees women’s access to decent and safe employment,
and, crucially, addresses the disproportionate burden of unpaid care work that they do in the home. Companies, at their turn, need to adopt policies to advance
gender equality and need to focus on:
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2.
3.
4.
5.
Prioritisation of Diversity on Board level
Tracking of the proportion of women – “If you can’t measure it you can’t manage it”, but also value qualitative aspects
Women specific recruitment, women’s leadership training programs, sponsorships and Women Networks
Unconscious bias training rolling out across the organisation – being aware of personal biases allows to make better and fairer decisions
Large-scale family support (e.g. PE firm KKR has extended its leave time for new parents and added a benefit allowing them to bring a new child and
caregiver on business trips).
I echo the views of the report and the activities proposed but the main question for me is, what can we do as individuals within our company? Last week it was
announced that the Dutch Government provided a Gender facility to FMO for projects with the explicit mandate to promote women in business or for projects
supporting women-owned and run businesses.
I believe that this gives all of us an excellent opportunity to contribute to advancing women’s equality. Next to that I would like to ask you to put the topic about
the importance of diversity and gender equality on the agenda of our investee companies and fund managers. This is relatively easy and impact will be significant.
The World Economic Forum in its Global Gender Gap Report (2014) estimates that it will take until 2095 to achieve global gender parity in the workplace if we
continue the current “pace”. As mentioned during the conference; humans estimated it would take 80 years to set feet on the moon, because of increased effort and
clear vision this was achieved within only 8 years. If we can reach to the moon so quickly, together we should reach women to the stars even faster!
1. Sources: McKinsey report - Unlocking the Full potential of women at work, Why Diversity Matters and Women Matter.