There is a wealth of evidence today to prove that diversity of all kinds, including gender, leads to better decision-making and more successful outcomes in business environments.
In private equity (PE), several studies have observed a link between diversity and superior financial results. For example, a large-scale study by HEC Paris1 found that buyout teams with at least one woman outperformed all-male teams across three widely accepted private equity deal performance indicators, including internal rate of return (IRR).
There has also been recognition that while the industry has made strides in advancing diversity, there is still much to be done. In fact, the proportion of women in PE funds in North America, Europe and Asia has increased for the past three years, according to recent research by Preqin. However, as of February 2022, they accounted for just 20.5 percent of total PE employees in those regions. Similarly, only 8.2 percent of board members are female. This underrepresentation is also reflected in the leadership of invested companies.
With a career spanning more than two decades in private equity-backed environments, Jessika van Veen, a former CEO and currently Managing Director with Alvarez & Marsal's Private Equity Performance Improvement team and co-head of The Benelux, saw first-hand the evolution of diversity within the industry. Specifically, with more women and diverse backgrounds represented at PE firms and portfolio companies in recent years.
“Clients are increasingly asking us to have certain ratios of diversity when we go on projects – so not only are they pushing this within their own organisational agendas but also on the work we, as consultants, do. So, when I look at 25 years ago when I began my career, things are definitely moving,” Jessika said.
However, Jessika adds that, to drive this further, organisations should look at other facets of diversity. Areas including ethnicity, nationality, socio-economic backgrounds and age – in addition to female representation are all worthy of attention.
‘Gender is only a piece of the diversity puzzle’
“Diversity is about having diverse skills and capacities to help companies deal with their challenges, which are also multiple and complex. The best teams are those that bring perspectives from people with different characteristics, people who don’t think alike and who want to dig deeper and challenge themselves,” Jessika says. “Gender representation is important but it’s just a piece of the puzzle – we need to talk about inclusiveness.”
Sopheavy Chan, Senior Associate with A&M's Private Equity Performance Improvement team in Paris, says an open corporate culture that allows employees to bring their whole self to work is crucial in promoting this holistic approach to diversity.
Sopheavy, who started her career at A&M four years ago after earning her business degree at ESSEC Business School, adds: “A workplace where people can speak up and share their own perspectives of life will not only bring more value to the table and improve business outcomes, but also help employees - women and men – thrive in their careers.”
In a recent conversation, Sopheavy and Jessika discussed their personal perspectives in relation to diversity and the challenges organisations still face in creating a more inclusive workforce. Read the highlights of the interview below.
Question: How has diversity evolved throughout your career in PE and consulting?
Jessika: In portfolio companies, as well as within our PE clients, we’re seeing more diverse senior counterparts. It makes me very happy - being one of the supporters of diversity - to see that things are really moving. Also, as a mother of two daughters and a son, it gives you perspective on where your kids will go when they start their professional lives, that maybe they will not struggle with the things we struggled with 20 years ago, which is great.
Sopheavy: We can see more and more in our work, when we work hand-in-hand with our clients, that they have more diverse backgrounds – and not only gender, but different profiles, work experiences, and so on. Maybe 20 years ago the picture was not so bright for women and for me, I entered the work world four years ago and I feel that women are encouraged to engage in a career in private equity because more is being done to fight the stereotypes around finance and the PE world.
Q: How do you see diversity driving better outcomes for clients, be it PE or portfolio companies?
J: I strongly believe that a team that’s best fit for the business objective should be put in place. And that’s typically a more diverse team because the challenges for companies are multiple and complex. In that way, I think what makes companies achieve better results is not having more women or more men in a team; it’s about having diverse skills and capacities that come with different characteristics of each team member. Alike people in an alike team won’t deliver the same results as people who are digging deep and challenging themselves. So overall, I think diverse teams are better for financial results, no matter what.
Q: How can organisations support people to criticise and challenge others, and add their diverse experience and expertise to the table?
J: I think it requires companies to think, not about diversity, but about being inclusive. It’s about respecting people’s characters, what people think, how they look like, their personalities and accepting people as they are.
S: Within A&M, there are a lot of measures in place to make it easier for women to navigate. It’s an environment that lets people speak for what they believe in. I feel there’s a genuine concern about helping things to improve, for example, with systems like a biweekly barometer in place that allows people to speak up when there is a problem. I already experienced a moment where I had to raise my hand and say: “it’s not working,” and people were there to listen and we found solutions to improve things.
J: Because we offer a very broad range of services within A&M and have a lot of people with operator backgrounds, which is not typical in consulting, there’s a big diversity pool that we can tap into. Our professionals have been former CEOs, operational executives, IT specialists, next to having been working in PE environments or as consultants. This in itself ensures a broad range of diversity being present in our company– they are not people who all fit on that same mould based on their backgrounds.
S: I think it’s very beneficial to work with other cultures. Our pan-European presence means that, in a French project for example, we work in a team with colleagues from Munich, the U.K., Spain or the Netherlands. It’s all about ensuring the right people are on the case, whatever their background is, regardless of the language they speak. This is also very refreshing from a professional development perspective.
Q: What could be done to drive diversity more systemically and at all levels of organisations?
J: Making sure we have more people at the entry point is very important. We at A&M are striving to recruit a more diverse workforce, and this has been done on multiple fronts. For example through our interviewing process where we attempt to ensure one or two of the people met by a candidate are female. We also train our consultants to harness the power of LinkedIn to connect with and be visible to diverse talent groups. Another thing we’ve done recently was looking at all our job adverts to check for any words that could suggest bias toward a certain gender or a particular background, and eliminating or adjusting those.
S: In general when we talk about gender equality measures, we need to include men as well in those measures. For example, when we talk about parental leave, let’s talk about making paternity leave longer, too, so men can take that time off and give women the opportunity to come back to work and resume their careers. We need to be more inclusive when thinking about these initiatives going forward.
J: Finding the sponsorship needed to accelerate your career is also critical. Surrounding yourself with people who you trust, people that are supportive of you and that will give you honest feedback, will help people, regardless of their background, blossom and develop within any workplace.
EMEA Inclusive Diversity Office
A&M calls inclusive diversity our sixth core value. We strive to understand the importance of a diverse workplace in gender and talent and continuously act accordingly to improve our environment. The EMEA Inclusive Diversity Office is a crucial part of our efforts as it promotes inclusive diversity to the highest level in an effort to attract and retain the best possible employees, workplace, and clients to support A&M’s growth.
[1] https://www.hec.edu/en/knowledge/instants/why-private-equity-firms-should-include-more-women