0% women is not the “right direction”​. — and how to fix it.

“We want more women in leading positions in our portfolio companies […] The work is going in the right direction…” — Nordic Capital

When did 0% women become the “right direction”?

We are talking about high performing private equity firms here. Organizations where teams and individuals are being held accountable for over-delivering and constantly pushing for greater results and return. Where the “up or out culture” is communicated with high regard. How come such firms don’t act faster when they are not delivering on what is “high up on the priority list”? Who is being held accountable? From experience, I do know that there is both will and commitment in many deal teams and despite what it looks like from the outside, much has been done in recent years (which says a lot of where it started…). But it feels like it’s stagnated. This topic can be broken down into a million pieces but here are three general actions to increase boardroom diversity that shouldn’t be a surprise to anyone by now but apparently are very difficult to implement;

Explore new providers to access underrepresented talent pools — Go beyond the closest network where many of the advisors already have close ties to the fund and often even the incumbent directors' group. Choose an Executive search firm or a headhunter based on their track record of diversity hires and broad network, not because they have done so well on all your previous status-quo hires… The usual suspects usually don’t know the unexpected candidates who can add new perspectives, backgrounds, and experiences into the boardroom.

- And leaders please, be secure enough to be challenged by the search firms — that’s what you pay them for! And headhunters — please dare to challenge!!

Objectives, measurable goals, and accountability — In no other area would it be acceptable not to deliver on target. Diversity, equity and & inclusion (DEI) is not an exception and should be an indisputable criterion in portfolio performance assessment. Just as any part of the business, DEI objectives require planning, feedback, and established processes. Therefore, the DEI work of deal teams and sector leaders should be assessed based on concrete DEI metrics tied to data and the result accordingly acknowledged.

Promote a culture that truly stands for equality and inclusiveness — Adding a diversity objectives section to a performance review while business goes on as usual in an exclusive company culture is for obvious reasons, not a solution to long term DEI success. If top management and HR in private equity firms don’t truly support and reward an inclusive culture, the negative ripple effect in portfolio company leadership will be never-ending.

How hard can it be? It’s time we fix this.

This is a comment on the article “Jämställdhet i snigelfart” published in the paper version of Dagens Industri on Dec 10, 2020. Being a leaving employee of EQT, currently heading up a Diversity, Equity and Inclusion consultancy, I must highlight that this comment is not sanctioned by EQT. It only represents my personal view on the private equity industry as such and not the view of any firm mentioned in the original DI article.