Slow progress in increasing diversity despite government encouragement.
Concern that focus on gender pay gap could encourage claims
Just 14% of partners at hedge funds, private equity firms and other financial services partnerships are women, according to an analysis of data provided by the FCA to Fox & Partners, the partnership law specialists.
The low percentage of women partners highlights slow progress in increasing diversity at senior levels in financial services partnerships: five years ago, the proportion was 13%.
The relatively small size of many PE and hedge funds means they may be less likely to have a HR function that can do a full search across the market and generate a diverse “slate” of candidates for initial interviews. Smaller organisations are more likely to recruit from their own contacts – making it hard to break an unconscious bias towards male candidates.
The firm says it is not about advocating the promotion of women at the expense of better male candidates, but firms must be alive to the possibility that a lack of equality in financial services businesses could store up legal risks for the future. Firms must ensure opportunities exist for women. In the US a class-action lawsuit was brought earlier this year by women accusing Goldman Sachs of discriminating against them in pay, promotions and performance reviews.
While the UK is some way behind the US in using group litigation for discrimination issues, Fox & Partners says that public scrutiny of workplace inequality is intensifying. This could encourage more women to consider legal action over what they see as less favourable treatment.
Fox & Partners points out that gender equality problems persist despite several initiatives aimed at improving diversity across the board and in financial services in particular.
Increasingly in the US, financial services firms are being asked about their diversity levels by public pension funds and other institutions when vetting potential asset managers, and the trend could migrate to the UK.
Fox & Partners explains that most private equity and hedge funds are too small to be covered by gender pay gap reporting rules introduced this year, while the UK’s pay gap reporting rules do not cover partners.
Dean Fuller, Partner at Fox & Partners, says: “Historically, private equity firms and hedge funds have been male dominated, and there has been little progress made on increasing diversity over the past five years.”
“Raised awareness of workplace discrimination means that firms need to consider what they can do to redress the balance. These figures show that efforts to increase diversity have not gone far enough.”
“It is generally recognized that employers benefit from recruiting from as wide a pool of candidates as possible. But getting access to diverse talent can be difficult for smaller PE firms and hedge funds that recruit mainly through their own networks.”
“While recruiting beyond immediate contacts can be more expensive, having a diverse employee group is likely to be a significant benefit in the long run.”