Breaking the Glass Ceiling: The challenges and opportunities for women in private equity CFO roles

Mark Tomley

March 8th, 2023

Breaking the Glass Ceiling: The challenges and opportunities for women in private equity CFO roles

Women still make up a small minority of CFOs in private equity-backed environments – particularly here in the UK. But, with research now proving that gender diversity in the boardroom brings real benefits to the bottom line, the private equity industry needs to act. 

Private equity and private equity-backed businesses are famously male-dominated. Figures aren’t that easy to come by, but female board director representation appears to be at around 13%, and that number is even lower for the CFO position, at around 10% in the UK [1], despite the wealth of talent that exists elsewhere within the finance industry.

There is a growing awareness that this needs to change. Studies have repeatedly shown that female board representation improves company performance, while LPs are increasingly walking away from funds that don’t have diversity, equity and inclusion (DE&I) high up on their agenda. So, for private equity firms, it is rapidly becoming a matter of growth and long-term survival.

Billie O'Connor, the co-founder of NOVA - Your Peer-to-Peer Networking Group, introduced us to Tamsin AshmoreVineta Bajaj, and Carol Handa, all of whom are members of the NOVA network. We also had the pleasure of speaking to experienced private equity executive, Claire Price. We spoke with each of them, and each provided a distinct perspective on their experiences as female CFO in private equity-backed and high-growth businesses in this piece.

Gender diversity = bigger returns

Gender diversity at the board level is no longer a ‘nice to have’. Demographic diversity – including gender – is linked to cognitive diversity, which research has shown leads to less groupthink, and better decision-making and can enable firms to better respond to their stakeholders. Women in general bring a different perspective and approach to the boardroom, not to mention representing half of the population (and the market.)

The value of this cognitive diversity is huge, with numerous studies proving that more women in the boardroom mean a healthier bottom line. A McKinsey study found that gender-diverse companies outperform their non-gender-diverse counterparts by as much as 48%. For private equity, that means potentially leaving significant returns on the table, if they aren’t taking the issue seriously.

Claire Price, CFO of Framestore Company 3, has seen the benefits first-hand, working as part of a highly diverse management team: “There is so much literature out there about the benefits of a diverse board and management team, but you can see it in action,” says Price. “If you compare a room full of alpha males to one that has a bit more balance to it, the conversation is different, the attitudes are different, the levels of respect are different.” 

Tamsin Ashmore, CFO at Ultima Business Solutions has had a similar experience: “You see innovation, and growth by having diversity in the room because it creates a different conversation than when you have six men of the same age and demographic having a conversation.”

Are women better suited to the CFO role in PE-backed businesses?

There is even research to suggest that the behavioural profile of women could make them particularly well suited to the CFO role in a high-growth environment. While it is difficult to generalise, a study carried out using The LCap Group’s #PACE team indicates that female CFOs tend to have greater belief in their ability to control outcomes, be collaborative, and they’ll be more inclined to make fully informed decisions – all of which are hugely valuable in the boardroom.

Furthermore, a poll carried out following our CFO event found that female CFOs relish many aspects of working in a PE-backed environment. For example, it is “fast-paced”, you have the opportunity for “greater influence”, “less box-ticking, more value creation”, have the chance to work with “interesting companies”, and move away from the “drain of listed company shareholder management.” Carol Handa, FD for Bruce’s Doggy Day Care says she feels like she is one of the lucky ones: "Our PE house has been great to work with, they embody the values of our organisation and enable me as the CFO to drive transformation across the business, not just from a Finance perspective, but from the lens of our people, our customers and our shareholders. We work collaboratively together, and I have had the opportunity to build a finance function that both supports our business and our PE house....”

“I would love to stay in PE,” Handa says, “I can see how it can be addictive - working in PE enables you to drive results at pace, and if this motivates you then it's a fantastic environment to operate in and one that enables you to deliver real business value and change that it can take large corporates decades to create. I think if you're prepared to put in the hard work, the learning curve is so astronomical that it's hard not to keep going, I can see myself being in PE for a number of years to come!"

So, why aren’t there more female CFOs?

There is no shortage of women within the finance sector, with roughly the same number of women and men training to be chartered accountants. But the proportion of women drops dramatically at CFO level, and even more so within private equity. So why aren’t women making that next step up?

It is undoubtedly a complex and contentious issue, but the elephant in the room is the fact that women tend to reach CFO level at around the same age that they may want to have children, and many see the private equity culture and demands as incompatible with taking time out for maternity leave or achieving greater work-life balance. This immediately cuts down the female talent pool.

“There's just a fundamental point in society that some women actually would prefer to balance work with spending time with their family, and therefore they actively don't want to take on these high-level roles,” says Vineta Bajaj, Group Chief Financial Officer, Rohlik Group. “So, you've already cut off an element of the population, then you're down to a smaller pond.”

Others argue that because private equity is so male-dominated, this discourages women from taking roles in the sector, and makes it harder to break in due to the lack of female networks and role models. “In listed businesses, there are large networks of women, but you don’t have that in a PE environment,” says Ashmore. “I am the only woman in the room in the majority of the experiences I have had. It can be lonely.”

Another key factor is that private equity firms rarely have internal diversity pipelines, as would be the case in larger firms. CFOs are nearly always brought in from outside, through the same tried and tested channels. Furthermore, there is a tendency to limit shortlists to candidates that already have experience within a PE-backed environment, reducing the opportunity “to get your foot in the door”, as one female CFO told us.

You need to have been in private equity to get a role in private equity,” says Ashmore. “If you've got a completely different experience, it can be difficult for private equity firms to see how this can be valuable for their particular situation and challenge. It really starts with the larger private equity firms on the DE&I journeys which they're on,” continues Ashmore. “From those large firms, it is starting to translate to the mid-range firms, who will start their own diversity initiatives. I believe a vital way of impacting diversity statistics is through growing the female share of wallet. Female investors are more likely to invest in female founders, and females are more likely to hire females.”

Equity of equality

So, how can private equity firms really move the needle on this issue? 

Price believes that, while it takes a combination of support both at home and in the workplace for women to reach and succeed in fast-growth C-suite positions, private equity firms need to work harder to adapt to the needs of female leaders.

“To bring women up into these senior roles, it’s really important to find ways other than just paying lip service to diversity councils, or inclusion, or other buzzwords,” she says. “They have to think about how we make these jobs attractive for women in the first place, by being open to more flexible working.”

Furthermore, board diversity must be driven from the top. Male leaders who make up most investors, CEOs and chairpersons must truly see the value of female leaders and be ready to change how they work to attract them.

Where organisations are successful in hiring female CFOs and diverse leadership teams, there is often a focus on what we call ‘equity of equality,’ where the management team recognises that each person has different circumstances which need to be supported in the best way possible to enable them to perform. So, in the case of some women, that may mean more flexible working practices, although that could equally apply to a man.

As Bajaj puts it: “It's about basic human leadership. You work out what motivates your team.”

The role of head hunters

Executive search firms such as DRAX also have a huge role to play, firstly in educating clients on the benefits of a diverse team, but also on what Price calls the “art of the possible” when it comes to recruiting women. DRAX itself runs female CFO networking events, mentoring workshops, and breakfast forums to highlight the issue, as well as carry out surveys to understand the landscape better.

“There is a role to be played by head hunters,” says Price. “Guiding on the need for patience for a long process and suggesting the flexibility of an interim whilst seeking the ideal female candidate. They can also help clients to understand the benefits of offering some form of flexibility in the role, to help those juggling a family.”

Firms and headhunters also need to become more comfortable with expanding the net of possible candidates. For example, instead of looking for PE experience, can they find a female candidate who comes from a PLC background, but has been involved in delivering high growth, alongside significant change and transformation? Behavioural profiling using tools such as PACE can also be advantageous by removing unconscious bias and encouraging a focus more on potential, attitude, and team complementarity, rather than PE experience.

A competitive edge

Increasing female representation in leadership roles is a complex challenge that isn’t unique to private equity, or the CFO role. Every female leader – or potential leader - is different, with different experiences, perspectives, and challenges, which makes it hard to agree on a universal solution. It will take commitment to change both recruitment processes and ways of working to attract and place more female CFOs.

That means looking outside the usual template and fixed timescales when hiring, as well as being open to more flexible ways of working. There is also a generational issue at play, and with time, societal expectations and stereotypes of women will begin to break down, while the number of female role models at the top of businesses will hopefully increase.

The time for private equity to act is now. Board diversity isn’t just an issue of equal opportunities, it’s an issue of performance. As the sector becomes more competitive and achieving outsized returns becomes harder, the vital role that women can play at the top level will only move further up the agenda.

According to Mark Tomley, Partner and Head of the CFO Practice at Drax Executive, expanding the candidate pool will only bring better prospects for success:

“Although we understand that hiring a proven Group CFO who has a successful track record in private equity mitigates risk for private equity investors and management teams, we have actually found that some of the most successful appointments we have made have not actually had this experience. We have had significant success appointing either Deputy CFOs in private equity-backed businesses and candidates from outside of private equity who have been in growth-focused and change-orientated corporates with similar characteristics to private equity. Clearly, by looking at these different candidate pools there is a far greater opportunity to drive diversity in the search process. 

One thing that stands out to me when considering candidates whatever their experience has been been to truly understand their motivation. If this is not aligned, it rarely is successful however experienced they might be.”

Harriet Forbes-Lange, Director in the Consumer Practice who leads on DRAX’s approach to Diversity and Inclusion, sums up how we drive our diversity agenda using our PACE behavioural tool:

Driving diversity in the boardroom has been a well-documented and heavily researched topic, proven to improve business outcomes, profitability, and value creation. There is a collective responsibility to further improve DE&I in the boardroom within private equity-backed businesses, where diverse candidates have been historically underrepresented.

As an executive search and talent advisory firm, we have an unparalleled opportunity to influence and drive this agenda. At DRAX, our behavioural analytics tool PACE (which highlights the behaviours that predict success in private capital environments) strongly supports and reinforces this agenda, enabling us to champion candidates who exhibit the right behaviours to operate successfully in PE regardless of their prior experience, education, or access to equal opportunities. Particularly relevant to CFO processes is the perceived need for prior PE or exit experience. PACE allows our clients to consider diverse candidates who display the right behaviours to transition successfully into PE but without the proven track record.


[1] Analysis of over 2,000 businesses across the UK, US, France, Canada and Sweden from Leadership Dynamics.io 

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