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Portfolio Company CEOs Are Focused on DEI, but Lack a Clear Path Forward DAN HAWKINS
Founder & CEO, Summit Leadership Partners
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rivate equity firms have typically lagged when hiring and retaining a diverse talent pool, particularly in senior-ranking positions, but that is changing as leaders within the private equity space are making diversity, equity and inclusion a focus area. Private equity companies are performance-driven environments that would benefit from the improved financial returns associated with a more diverse workforce. Yet, despite the desire to increase DEI, many corporate leaders are struggling with implementing and executing DEI initiatives. A recent survey by Summit Leadership Partners found that most portfolio company CEOs—95%—said DEI is a focus area for their company over the next one to two years. However, roughly 2 in 5 CEOs admitted they lack a formal strategy for DEI efforts. One-quarter of respondents reported that although they have a formal strategy, they have not moved forward with objectives yet. These responses reveal a significant gap in talent diversity efforts, indicating management teams lack the tools they need to increase diversity. Overall, 83% of portfolio company CEOs do not feel their company is on the right path for meeting their talent goals, according to the survey. Specific to DEI, CEOs reported challenges in several areas. Just over half said they are experiencing difficulties finding and retaining top diversified talent. Additionally, 38% said management teams lack the support and capabilities to lead DEI, and 37% reported that diverse talent is not historically represented in their industry. Interestingly, 36% of respondents said they have contrasting views with the private equity board on how to increase DEI. DEI concerns can vary by industry. For example, 50% of healthcare companies consider management team support/capabilities a challenge in carrying out DEI efforts compared to 30% of manufacturing companies and 28% of tech companies. Manufacturing companies consider the return on investment of DEI initiatives as a more significant challenge in carrying out DEI efforts than healthcare companies. Despite the reported challenges, companies are investing in several strategies over the next one to two years to improve their DEI efforts. Most portfolio company CEOs who took part in the survey—91%—said they are changing
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