(Bloomberg) -- Female board and leadership representation at European companies plunges whens private equity firms invest, according to a study by consultancy LCap Group.
The average percentage of women in leadership positions tumbles to 16% by the end of the private equity investment holding period, down from an average 20% before they invest, the study of 1,424 European companies showed.
The drop in female representation was likely due to leadership teams and boards being expanded during the investment period and the majority of new hires being male, LCAP said in the report. The group found that only 8% of new C-suite executives brought in were female. More broadly, one in 50 chairs in the private equity industry are female, according to the group’s research, which found zero examples of female executive chairs.
“Because of unconscious bias, whether it’s affinity bias in which you tend to gravitate toward people who are like you, or just unconscious gender bias, men are more likely to appoint other men to positions than they are to appoint other women, unless there is someone there pointing it out,” Mary Ann Sieghart, founding partner of the Authority Gap Consultancy, said in a telephone interview. “I suspect in private equity there are fewer people to point it out.”
The private equity industry has long been touted as one of the most male-dominated areas of finance. At the current rate, the industry won’t achieve gender parity at the principal and managing-director levels for many decades, according to a 2023 report by McKinsey & Co.
The underrepresentation of female private equity investors has also pervaded investment decisions, according to Judy Wajcman, Professor Emeritus of Sociology at the London School of Economics, resulting in women and female-founded firms struggling to secure funding.
“It’s two sides of the same coin that the partners of the firm that are doing the investing are predominantly male and the teams that they invest in are predominantly male,” said Wajcman in a telephone interview.
The report found that women were also leaving the firms.
“When women feel that they are working in a sexist workplace, they’re more likely to leave,” Sieghart told Bloomberg, adding that many may opt to found their own company. “They don’t have to just accept a big corporate culture which feels hostile.”
Sign up for the Equality newsletter for weekly reporting from Claire Suddath on how gender, race and class are shaping capitalism in America and beyond.
©2024 Bloomberg L.P.