PE-backed companies certainly have a significantopportunity to lead in diversity and inclusion。The nature of PE portfolio companies—their ownership structure, focus on near-term action, and smaller size, all of which allow them to be more nimble—could prove a big advantage in accelerating change.
Given the diversity dividends—from increased resilience to enhanced innovation—as well as the risks of inaction, such as reputational damage and an inability to retain top talent, PE firms need to lead the way.
Even in normal times, PE portfolio companies would have powerful reasons to pay more attention to diversity and inclusion. An abundance of research has confirmed that diverse teams increase companies’ resilience and agility. And, as BCG has found,领导团队的多样性增强了公司创新的能力and leads to tangible improvements in their financial performance.
But these are not normal times. The pandemic has disproportionately affected communities of color. Black employees have been laid off at higher rates and rehired at lower rates than their white counterparts, reducing diversity in the workforce—as happened during the Great Recession. In the shift to remote work and learning, women have shouldered more of the burden of caregiving and home responsibilities than men, driving female employees to leave the workforce at higher rates than their male counterparts.
与此同时,致命的spa枪击事件之后tlanta, anti-Asian racism—which has been growing at an alarming rate in recent years—has emerged as an issue that must be urgently addressed.
Over the past year, public announcements from large companies denouncing racism and promising to do better have, for example, been followed by commitments to racial equity of $66 billion. This suggests that when the corporate sector decides to move, it can do so at scale. So the question for PE firm leadership should be: When it comes to diversity, equity, and inclusion, how fast can the sector move the needle?
First, many firms are starting from a lower base. Compared with publicly traded companies, PE-backed firms have fewer programs, initiatives, and activities in place to promote DEI. (See Exhibit 1.) In our research, employees pointed to gaps in gender, race or ethnicity, and LGBTQ programming in areas such as mental health and wellness, flexible working, antidiscrimination initiatives, paid maternity leave, and clear criteria for performance reviews.
In terms of the actions companies have taken to address racial and social equity, we found a 10-percentage-point gap between publicly traded companies and the PE sector, with only 55% of PE-backed firms having recently moved to address these issues.This lack of focus on DEI creates knock-on effects that could dent firms’ bottom line and ability to compete.
在我们的调查中,例如,empl的比例oyees at PE-owned firms who said they had witnessed discrimination was 13 percentage points higher than at public companies. And while 22% of employees at public companies indicated they felt uncomfortable reporting such incidents, this rose to 29% among respondents from PE firms. (See Exhibit 2.)
Breaking this down, the biggest gap between the responses of employees at PE-owned firms and those at publicly traded companies emerged when respondents were asked about barriers to retention. Among gender-diverse respondents, 41% cited this as an obstacle (12 percentage points higher than in public companies) and among LGBTQ respondents, 32% did so (9% percentage points higher than in public companies).
This is a good start. But much more can and should be done within portfolio companies. At the board level, diversity metrics should be measured and tracked. Succession planning of key leadership positions should aim to diversify management teams over time. And finally, PE firms should encourage and enable their portfolio companies to invest in high-priority DEI initiatives that will enable these companies to develop an inclusive culture while outperforming their peers.
Asset owners also have a role to play as limited partners to PE. While they have been public in calling for more action in this area, they have so far failed to hold general partners (GPs) accountable, primarily out of fear of disrupting their access to funds and their ability to co-invest. But again, if GPs do care about their fiduciary responsibility, DEI is an important part of this.
Given clear evidence of the across-the-board advantages to PE firms from DEI initiatives, the question for their leaders is where they should start.
BCG has developed four “no regrets” strategies that, in our research, have consistently been deemed the most effective measures by all diversity groups. These come with little downside but have the potential to generate substantial value:
And while giving women flexible work options may improve retention, if the corporate culture sees working mothers as less ambitious or motivated, it can hamper their opportunities for career advancement.
Moreover, although some might question the rationale for firm-wide initiatives—as opposed to those targeted at diverse employees—these more comprehensive programs have the advantage of creating benefits across the enterprise and not singling out an individual group.
And finally, rather than focusing only on mothers, giving all parents extended leave and flexible work options changes work-life balance expectations for employees of all gender identities and helps create a culture where parental responsibilities are no longer at odds with career ambitions.
In other words, firm-wide initiatives can transform the entire culture of an organization in ways that disproportionately improve the engagement, retention, and promotion rates of diverse employees.
The arguments for the PE sector to step up its action on DEI are compelling. For PE-owned firms, putting in place these strategies can be easier than it is for large corporate entities.
As smaller businesses, they tend to be less weighed down by the layers of bureaucracy and complex organization structures found in many publicly traded companies. Moreover, by prioritizing DEI, PE-owned firms can reap benefits internally, such as greater levels of innovation and an increased ability to attract top talent.