My locker room rally cry for women in private equity

Theresa Whitmarsh
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During the financial turbulence of 2009, a quaint sports movie called The Blind Side revealed an unlikely partnership between a poverty-stricken black youth and a privileged white woman in the American south. It was a simple tale about high school football and socio-economic division. But the real impact of the story involved the risks of cultural blind sides and the benefits of breaking through them.

Of course, it didn’t hurt that Sandra Bullock won an Academy Award for the leading role.

In the private equity segment of our industry, we are facing our own intractable blind side – an extreme lack of gender diversity. It’s a weakness that stretches beyond social issues and diversity benchmarks. It’s becoming a fundamental business competitiveness issue.

One of the world’s most male-dominated professions

Today’s research supports the value of gender diversity in the investment decision-making process. We know men and women tend to process information differently, assess risk differently and often take different approaches to problem solving. A January 2015 report from the World Economic Forum highlights recent research from McKinsey & Company that describes a link between greater gender diversity and superior financial performance. So why, with such compelling research, are there so few women in private equity?

The problem starts with the feeder pool. Asset management is one of the most male-dominated professions globally. Women represent only about 10% of senior leadership positions in the long-only institutional equity business and about 16% in investment banking. In the narrower private equity community, women’s representation among leadership falls to a mere 6%. If you exclude legal, investor relations, operations and human resources functions, roles more likely to be held by women, the number plunges to 3%.

Even when the asset management industry hires women, it has a dismal record of retaining and promoting them. In institutional asset management, female representation tumbles from about 50% for support staff roles to about 16-24% for analyst/trading roles, and to 8% for senior management roles.


Professional Roles in Institutional Management

Support Staff


Marketing/Client Service






Portfolio Managers


Directors of Research




Senior Management



Within private equity, many women self-select out of the partner track because the work environment at most firms simply doesn’t accommodate the often different communication and negotiating styles of women.

Is that the only way to play the game?

One founder of a leading private equity firm told me he finds women are great analysts but don’t have an affinity to deal making at the highest levels because it is “a zero-sum game, a blood sport”. I appreciated the founder’s honesty, and applaud the women who don’t want to play by those rules. But seriously – is that the only way to play the game? I don’t think so.

So why does gender diversity matter when it comes to private equity? Doesn’t performance ultimately determine success, regardless of whether it’s Mr. or Ms. Multiple closing the deals? In reality, success is never a one-dimensional, financial exercise. Markets are not purely quantitative environments; they are living, breathing, social environments where stakeholders have power (and capital) to make or break anyone’s balance sheet.

As millennials gain clout in the workforce, they are seeking meaningful work, a work-life balance, mobility and flexibility in work schedules. If general partners (GPs) run partnerships with a circa 1950s culture, they will continue to find that talented women graduating from top MBA programs will shun private equity. In a recent CNN Money article, Wall Street investment banks are characterized as losing top talent to tech firms that offer better advancement, better compensation and more flexible work schedules.

Gender balance in private equity also matters because this industry seeds the leadership of the broader economy. Private equity funds the early- and mid-stage companies that often become the flagships of tomorrow’s economy.

Case in point: one iconic Silicon Valley venture firm has funded companies that today represent a collective market cap of $1.2 trillion and comprise about 22% of the NASDAQ index. If we exclude women from leadership in the early stages, it’s tougher to achieve gender balance once growth occurs.

Private equity’s “pink elephant”

The irony here is that the private equity industry is known for tackling serious business problems. GPs try to identify leaders who can solve these problems, and limited partners (LPs) benefit from the risks and rewards of that process. It’s an industry known for confronting endemic risks and devising nuanced solutions. But we have not addressed the lack gender diversity within our own ranks, and it’s just a matter of time until our stakeholders cry foul.

Kip McDaniel, editor of Chief Investment Officer, calls it “the pink elephant in the room.” He notes that other industries are making progress – a third of American doctors are now women, a quarter of science/tech/engineering roles are held by women, and a fifth of law firm partners are women. Asset management, especially private equity, is lagging.

My locker room rally cry

So here’s my locker room rally cry… This is a problem with a solution. We’ll need to tease out the thorny barriers of culture and industry traditions. We’ll need to borrow the steely determination of Leigh Anne Tuohy, the woman whose story was portrayed in The Blind Side.

Change is already brewing. Among our industry’s top visionaries I have heard new conversations in which gender diversity is discussed as a serious business challenge. At conferences, general partners and limited partners are starting to trade notes on whether gender diversity belongs on the agenda. Performance is being recognized as a byproduct of the talent pools we create, not just the portfolios we construct.

One of my personal business sponsors was the late Joe Dear, who headed the staff at Washington State Investment Board before he bravely encouraged me to become his successor. He was well known for building close working relationships through the art of the “small touch” – unexpected gestures of direct support and appreciation. He scribbled out hand-written notes to thank staffers for difficult tasks, and he had an uncanny knack for remembering their names. It worked.

The private equity industry is starting to tackle the issue of gender diversity with a “small touch” of interest and concern among key leaders. We owe it to ourselves to continue this dialogue, and to seek out the best possible talent and insights regardless of how the chromosomes are arranged.

None of us will win an Academy Award for our work, but some of us will find that awakening to this blind side in our industry will increase the odds of a professional win.

Author: Theresa Whitmarsh is Executive Director at the Washington State Investment Board and a member of the World Economic Forum’s Global Agenda Council on Future of Investing. She has written this article as part of the “Women in Private Equity” initiative of the World Economic Forum, and ahead of the Global Gender Gap Report launch on November 19, 2015

Image: A woman walks inside the new Intesa Sanpaolo skyscraper, designed by Italian architect Renzo Piano, in Turin April 10, 2015. REUTERS/Giorgio Perrottino

[1] Where the Boys Are – Gender, Risk Taking and Authority in Institutional Equity Management, Journal of Investment Management, Margaret Stumpp, July 2014

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