It’s no secret that boosting female representation on the boards of high-growth and PE-backed businesses is a complex challenge. There’s no quick fix, instead many layers of change are needed across business culture, investor attitudes, policies, and processes. One area where we at Drax have more day-to-day input than any other is the leadership hiring process.
How businesses and search consultants attract and assess leaders has an enormous influence on the likelihood of hiring a woman. Researchers from Harvard University found that masculine-coded job adverts are less appealing to women, and studies on anonymising applications have confirmed that inherent bias does indeed exist. Ultimately, looking in the same talent pools, and asking the same questions is only going to end with the same result – more men.
So, what are high-growth and private equity-backed businesses doing to level the playing field? I spoke to some sector leaders to find out.
Understanding the ‘why?’ of gender diversity
We regularly receive requests from clients to run an inclusive search process. But the first question I always ask is: ‘Why?’ With so much discussion around gender diversity, there’s a danger it can be seen as a ‘tick box exercise.’ But treating it as such will only cause disappointment and resentment for the company and any candidates applying.
Instead, companies and investors must define what they want to achieve by increasing gender diversity, to ensure the hiring process fulfils these objectives. Is it because the board doesn’t currently reflect the workforce or customer base? Or because the business is looking to reduce groupthink? These are questions that private equity firm LDC has considered.
“At a time when our portfolio businesses are pursuing ambitious growth plans, be that entering new markets, expanding overseas, or launching new products, diverse perspectives, and experiences are invaluable to ensure we best reflect the needs of our consumers,” says Alex Bexon, ESG Director at LDC.
Bridges Fund Management has also developed a strategic approach, introducing an Inclusive Recruitment Policy to define goals and expectations. It covers the whole hiring process from job descriptions and advertising strategy to evaluating, shortlisting, and interviewing candidates.
“As a result of this policy, we have observed much wider diversity in the pools of candidates we have taken through interview processes – both when running direct recruitment processes and using search firms,” says Tom Mountford, Portfolio Director at Bridges Fund Management.
Appealing to a diverse range of candidates
When communicating leadership roles, companies must rethink how they frame requirements and responsibilities, to avoid alienating women. For example, if a role stipulates private equity-backed experience, we know this could discourage women with a lot of the right competencies but haven’t yet worked on a PE-backed board.
“If there aren’t a lot of women currently on high-growth and PE-backed boards, then it follows that most female candidates won’t have a CV with several previous board positions,” says Beth Houghton, Impact Managing Partner, at Palatine Private Equity.
Instead, firms should think about the ‘must-haves’ of a role, and how requirements could be expressed in terms of skills and competencies, rather than a particular background. Being more specific increases the chance of attracting female candidates who may have developed similar skills elsewhere or have the potential to develop into a role.
Imagery can also inadvertently discourage certain candidates from applying, for example, if senior executives are always pictured as men in company materials. This is something that Speedy Services, the tool hire provider, has addressed as part of its drive to achieve greater diversity across its workforce.
“Our image library had to be completely changed to reflect that we have women and people from different ethnic backgrounds working in a whole breadth of roles across the business. So, we need to ensure the images we use don’t perpetuate the same old stereotypes,” says Dan Evans, Chief Executive at Speedy Services.
Widening the talent pool
Diverse recruitment also means rethinking where and how roles are promoted and networked. Purposely targeting more traditionally ‘female sectors’ such as healthcare, education, or retail, can be effective, as can working with search consultants with a broad network, and a track record of delivering diverse shortlists.
“We push our recruitment partners to achieve more diversity in the shortlist,” says Houghton. “That helps ensure we’re not overlooking anybody.”
Networking and awareness-raising events also help to reach a wider pool of candidates and encourage women to learn more about the skills and competencies required, and how they can step up to these high-growth leadership positions.
“One area where we’re supporting our portfolio companies is in creating more accessible routes into board positions through targeted networking and knowledge sharing, which can be effective in broadening the talent pool,” says Bexon at LDC. “We’re keen to leverage our network by bringing people together and making introductions to help drive progress.”
Assessing for potential
Firms must also be prepared to rethink their criteria for assessing CVs and interviewing candidates, to avoid focusing purely on PE-backed roles, exits, or prior board positions, and instead probing a candidate’s potential in other ways.
“So instead of hiring for someone to hit the ground running, you hire for someone's ability to grow into that role, including first-time CEOs,” says Houghton. “At Palatine, we've got two businesses with first-time CEOs in place, one of whom is a woman.”
Processes should also be put in place to combat unconscious bias during assessment and decision-making, through anonymising CVs or test results. Tom Mountford at Bridges Fund Management advises: “Ensuring a diverse panel of colleagues, across seniority, experience, gender, and ethnicity, is involved in shortlisting and interviewing candidates.”
Behavioural assessments such as PACE are also invaluable for highlighting a candidate’s objective potential to succeed in a high-growth business environment. PACE is purpose-built for the unique leadership demands of venture, private, and growth capital, assessing leaders based on the four competencies most associated with success in this environment – Pragmatism, Agility, Curiosity, and Execution. As well as enabling greater objectivity, the results also help leaders to understand how to enhance their performance in the future.
Supporting step-up candidates
Putting a greater focus on potential means firms must also think holistically about supporting less experienced C-suite members once they’re on board. This could include ensuring there is a supportive chair to take a more hands-on role, or providing business coaching or mentoring to help a new leader rapidly fill any gaps in their experience or competencies.
“If it is a first-time board role, we ask whether we need to put coaching or training around them so that we can help them to transition smoothly,” says Houghton.
Speeding up change
A previous McKinsey study found that at the current pace, it will take 22 years for white women to achieve leadership parity - and more than twice as long for women of colour. Yet, the initiatives of these trailblazing private equity and high-growth firms demonstrate that through being intentional about diversity across the hiring process, positive change isn’t just possible but is becoming a real differentiator in the market. So, let’s all take responsibility for taking the steps needed to make female leadership the norm, rather than the exception in the fastest-growing businesses.
This is the third in a series of articles on gender diversity on private equity-backed boards. In the next instalment, I’ll explore how PE-backed and high-growth companies can create a culture that supports greater gender diversity.
I’m very keen to work with private equity houses to find solutions to the gender diversity challenge, in particular by creating female talent banks by giving women the opportunity to take on shadow roles to build up their experience and competencies. If that is of interest, please don’t hesitate to reach out to discuss further.
