Private equity-backed and family-owned businesses are significantly behind listed companies in gender diversity at board level, with women making up just 13 per cent and 10 per cent of boards respectively at these businesses versus 34 per cent at FTSE 350 companies, says New Street Consulting Group, the leadership and people solutions consultancy.
Large listed companies have been under pressure from group such as the Fawcett Society and Women On Boards to improve gender diversity for many years, while privately-held businesses have received less scrutiny.
In 2016, the Hampton-Alexander Review was set up to ensure FTSE 350 companies reached 33 per cent female board-level representation. This target was reached in December 2020.
New Street Consulting Group says private equity and family-owned businesses are increasingly aware of the benefits listed businesses have received by increasing gender diversity and are seeking more diverse slates of candidates when recruiting at board level.
Doug Baird, Chief Executive at New Street Consulting Group, says: “Many private equity and family-owned businesses are now more conscious that they are behind on female representation at the top level and are no longer comfortable with that position.
“We are seeing a real sea change in how ownership of those businesses views diversity. There is an understanding that a more diverse board is a necessity and not a nice-to-have. PE funds and family owners have seen the positive impact of more diverse boards at listed companies.
“Private companies are now making the same requests for diverse talent slates we saw from listed businesses a decade ago.”
Research from McKinsey found companies in the top-quartile for gender diversity on executive teams were 21 per cent more likely to outperform on profitability. New Street Consulting Group says a mix of backgrounds and experience across a team helps create an environment more conducive to implementing new ideas and avoiding groupthink.
Baird adds: “If private companies follow the trend set by listed businesses, we can expect to see steady progress in improving gender diversity at private businesses over the coming years as gender diversity becomes the status quo.
“More businesses will see the benefits of greater diversity in practice, which will smooth the path for future generations of female leadership.”
