Data has a key role to play in identifying diversity and inclusion priorities and tracking progress across business levels and jurisdictions, say Sanne Group’s Karlien De Bruin, Catherine Law and Stacey Relton.
As published in the latest edition of Private Equity International.
Karlien De Bruin: Gender diversity and inclusion is an important element of ESG strategies, but the goal in the end is to get a diversity of perspectives and opinions in decision-making more broadly, especially at board level. If everybody went to the same school and grew up in the same town, you could not expect to achieve that diversity of thought, which is so valuable. What you need is to bring in people with different backgrounds, genders and cultures, from different jurisdictions, to tap into the best of a global organisation.
When we think about gender diversity and inclusion, it is important to make sure that it is not just occurring at junior levels or in certain parts of the business. You want senior women across the organisation – in product development, client development, service and delivery to clients – so that you can ensure you are delivering a well thought-through service that is in line with client needs.
Before you can incorporate gender diversity and inclusion into an ESG strategy, you need to understand where you are starting from. That requires looking at data in each jurisdiction and at different levels across the business. Where there are gaps in female representation, you need to really work to understand why that is.
At Sanne, we found the number of women drops off somewhat at director level, even though we still compare well against our peer group. So, we did some investigating into the causes of that. We found significant variations across our geographies in terms of the levels of domestic and family support available to women taking on senior roles, and that was impacting how many women were putting themselves forward.
Therefore, in developing our strategy, we had to look at how we could support our staff outside of work to help them take on senior roles in work, in addition to helping them develop the professional capabilities and softer skills they need. It is often a multi-pronged approach that is required, and you can only understand what will work if you do that analysis at the outset.
KDB: Coming from a quantitative background, I am a firm believer in the data. The only way you can know if this is an issue in your business is by looking at the data and, once you formulate your strategy, the only way to see if it is working is by looking at the data again, year on year. If something is not making a difference to the numbers, you need to revisit your thinking and update your approach.
Gender is an easy topic to gather data for, while other diversity metrics, such as race and ethnicity, are more jurisdiction dependent. You need to adjust for regional variations when looking at all of this data – in some parts of the world it is more common for women to be better represented in certain parts of the workforce than others, for example, so you need to contextualise that in the data. However, while it is always important to start with the data, you cannot expect to be able to understand a data point without any cultural context.
Catherine Law: We are a listed company and we track the statistics on gender diversity closely year on year. More than half of our staff at senior level are women, including more than 35 percent of directors, so we have a good level of representation. We also feel that age is an important factor when looking at diversity, and while the majority of our people are in the age group of 30 to 50 years old, 7 percent of our workers are over the age of 50.
There are a lot of initiatives put in place by the global HR team and senior management, and we have clear key performance indicators that we track on gender diversity. Leaders are also accountable for those goals in their performance reviews, so we are not just telling people to be more inclusive but actively tracking our progress.
In terms of what we see working, we have invested a lot in education to make sure it is not just our policies that are fair and equitable but also our culture and approach. We have rolled out diversity and inclusion training across the business, and we also run initiatives such as virtual coffee hangouts and book clubs with a diversity and inclusion focus. We run buddy systems to make sure employees feel connected and included, and we pay a lot of attention to our Diversity and Inclusion Committee and our workforce advisory panels.
A recent example is our work during the latest lockdown in Shanghai, where our HR team has been doing a lot to support staff that have been stuck working from home with young children or families to support. The newly created buddy system is used to reach out to those people and make sure they are in regular contact with other offices, and we have tried to give everyone a voice.
Before you can incorporate gender diversity and inclusion into an ESG strategy, you need to understand where you are starting from.”
We see a lot more private equity firms asking questions about board composition”
GPs have evolved their approach and there is a learned appreciation that more diversity creates more opportunity.”
CL: There has certainly been an improvement. From an industry point of view, I have been in the fund administration business for over 12 years and my observation is, at least in Hong Kong and Asia-Pacific, there has been an increase in gender diversity at senior levels.
That said, I don’t think gender was ever much of an issue in this part of the world, because people are judged purely based on talent. Most women work and there are few barriers to women progressing because it is easy for them to access additional help at home.
However, gender diversity and inclusion features increasingly heavily in the ESG initiatives of private equity firms. At the same time, data collection, measurement and reporting are coming into focus for portfolio companies and listed businesses. There are several regulatory-driven initiatives, as well as business-driven initiatives, and there are a growing number of female leaders setting an example and driving the push to increase diversity at board level and more broadly. We see a lot more private equity firms asking questions about board composition and seeking to create value by influencing progress on those metrics.
Stacey Relton: First, I hope these are not trends but rather shifts in the overall view of the qualities that managers need. Educational background is always going to be important, but we are seeing some genuine shifts in what is considered the typical profile of a manager. A decade ago, a manager fit a very specific profile – typically, a white male of a certain age with a certain type of CV.
There was a market standard, but the industry has evolved. LPs still want to see a certain pedigree and experience, but they are looking a lot more at thesis, investment strategy, objectives and what drives decision-making. There is more objectivity, and we are having genuine conversations about gender diversity, ethnic diversity and LGBTQIA+ inclusion.
We have also seen that women excel when they are able to put their hard and fast achievements and successes up against those of men. They may not hang out at the 19th hole on the golf course, but on a direct, like-for-like comparison, female managers are now proving their capabilities and breaking through some of these barriers.
I truly believe we are also seeing a significant shift in the fundraising environment, so that it is no longer something that happens in the men’s circle. As fundraising has become increasingly challenging, GPs have evolved their approach and there is a learned appreciation that more diversity creates more opportunity.
Years ago, men met up at a bar or over a game of golf and that was how they raised their funds. That is not the case anymore. Now, the best managers are going outside of their traditional circles and expanding their LP bases as the profile of what an LP looks like evolves. As women have started leading investment decisions, we have begun to see more female investors coming into private funds and playing key roles as institutional investors.
On a personal note, I joined Sanne via an acquisition and not so long ago nobody would have approached me about becoming an allocator, but in the last few years that has become quite frequent. We have always known that allocators drive our industry, and with more women showing up as decision- makers at LPs, we can see them driving investment strategies and pushing for change at the investment company level and at the portfolio level.
Female leaders at allocators are likely going to ask a lot more questions about gender diversity and inclusion, and about ESG more broadly. They will also push forward and support more female managers, while empowering other GPs to push forward on these important topics in a way that bodes well for improved gender diversity in private markets for the future.