Jensen Partners’ Newsletter: Promising Signs in the Push for Gender Parity

Promising Signs in the Push for Gender Parity

Over the last two years, almost every conversation I’ve had regarding Diversity, Equity, and Inclusion (DEI) has included questions on when we can expect to see real signs of progress. Observers and industry participants alike are hungry for any proof points that suggest recent DEI pledges and initiatives are more than just lip service. Now, for the first time since the murder of George Floyd sparked a national awakening on systematic disenfranchisement across our society, I am proud to report that in some areas, we are starting to see signs of DEI progress take root in the alternative investment industry, especially on gender representation.?

No, it’s not a sea change. And no, it doesn’t extend to every area of representation. But the increased hiring and promotion of women across alternatives have become too pronounced to overlook any longer.?

During a recent?webinar, I spoke about an "attitude shift" in how alternative investment firms are making commitments to hire more women and other diverse candidates. These commitments (which we’ve documented in past newsletters) are a real sign of how much the industry has changed as diversity reached the top of the agenda for decision-makers.

From an empirical perspective, Jensen Partners’ hiring data continues to show evidence of DEI progress across the industry. On gender representation, we tracked a nearly 50% increase in women hired in 2021 versus the same period in 2020. While this is still a bit less than half of all moves (2,645 moves in 2021 vs. 1,749 moves in 2020), we are encouraged by the steady increase in the gender ratio across the industry (see chart above).?

We also want to take a moment to celebrate the 520 women that received promotions over the last two years (300 in 2021, 220 in 2020)! This is a remarkable achievement for an industry that has a historical reputation as being male-centric and an important milestone for the hundreds of women that are now carving out careers in the alternative investment space. Multi-Asset firms (173 promotions), Private Equity firms (136 promotions), and Hedge Funds (59 promotions) are among those leading the way, but virtually every type of alts firm has made progress in both hiring and promoting women.?

Many of these hires and promotions are increasingly concentrated at the senior level (42.7% of all female moves in 2021 vs. 37.8% in 2020), which we view as a positive sign that women are rising to the highest ranks at these organizations. This is particularly true of Private Equity firms, Hedge Funds and Multi-Asset firms, which again were responsible for the bulk of senior-level moves.?

We are also seeing a growing number of executive search mandates for women. For example, we recently had a $15 billion infrastructure investment firm hire Jensen Partners to help them increase the representation of women on the investment/distribution team by +30% by 2023, with the eventual goal of achieving a 50/50 split between men and women.?

Although we are seeing signs of progress, no one should be planning any victory parties yet. Reaching gender parity across hiring, compensation and seniority is still a distant goal in the alternatives industry and broader economy. When we look at ethnic representation or the intersection of ethnicity and gender, evident signs of progress are harder to come by. However, as we close out Women's History Month, we believe it is important to recognize the progress made to date and take this opportunity to highlight additional ways alternative investment firms can continue to make progress toward truly diverse workforces.?

• Set hiring targets or quotas with clear deadlines: Hiring targets are an excellent way for firms to hold themselves accountable while conveying to employees and industry peers that they are taking diversity seriously. These targets can either be absolute (e.g., hire 20 more women) or relative (e.g., increase the representation of women by 20%) with specific and achievable deadlines. Readers may recall that?in November 2021, Jensen Partners announced our pledge?that all future human capital searches would begin with a diverse candidate pool comprised of at least 51% of candidates emanating from underrepresented backgrounds.?If we can do it, so can any investment firm.
• Define what diversity means to the firm:?Diversity, equity and inclusion (DEI) is often used as a catch-all to show a firm's commitment to its current and future employees. But DEI can take on different meanings for different people and organizations. An investment firm based in a country with a strong commitment to gender equality may have an easier time finding talented women to fill open roles than a firm where women represent a small percentage of the overall workforce. For Jensen Partners, we define "diversity" as someone from an underrepresented background, which in the case of the alternative investment industry includes but is not limited to women or people of color. We have extensive data on the gender and racial diversity of the industry, which clearly shows how certain demographic groups are in the minority. But every firm should come to its own definition and feel comfortable using that as justification for any DEI initiatives.
• Create mentorship programs for diverse talent:?It can be intimidating for anyone to start a job where few of their peers look or sound like them. This is especially true of the alternative investment industry, which tends to be dominated by Caucasian males at almost every level of the organization. That's why firms should be more proactive in creating mentorship programs that help entry-level, or mid-level professionals feel safe in their work environment and empowered to take risks and develop new skills. Larger Private Equity firms have created mentorship programs and employee resource groups that have streamlined and accelerated the success of females in the organizations. At Jensen Partners, we're also seeing many junior-level candidates request information on any mentorship or training programs when completing?their?due diligence of a prospective employer.
• Pay diverse employees a fair wage:?You can't have equity without pay equity. For alts firms, this means offering women and other diverse employees the same salary and benefits as men of similar skills and experience. There is significant progress on this front, with many firms making serious efforts to reduce the pay gap between men and women, including offering more women access to a potentially lucrative slice of any carried interest earned from investments. From the Jensen Partners perspective, eight of every ten distribution candidates that we've placed in the last 18 months were allocated carrying as part of their compensation. To hold themselves more accountable, alts firms should carefully track and disclose anonymized data on how people are paid at different levels of the organization.

We believe that gender parity and equitable representation are achievable in the alternative investment industry, and we remain committed to helping our clients make meaningful progress toward those goals.

Sincerely, Sasha Jensen

News Corner

Here is a selection of recent articles and research studies capturing the focus on increasing the representation of women and other underrepresented groups across the alternative investment industry.

Business Insider:?Equity and diversity in the workplace is a priority for sustainable finance, and the companies it serves

ESG Today:?Carlyle Establishes CEO Network to Advance DEI Initiatives across its portfolio

FundFire:?Investors, Managers with $2.5T in AUM Sign CFA Diversity Code

FundFire:?Allocators Turn to Alts Managers to Move 'Needle' on Diversity

FundFire:?Goal Setting is Critical in DEI Efforts: Bridgewater Exec (VIDEO)

Middle Market Growth:?Portfolio Company CEOs Are Focused on DEI, but Lack a Clear Path Forward

New Private Markets:?ILPA: Investors want your DEI data, good, bad or ugly?Preqin:?Women in Alternatives 2022