- Chrissie Pariso pushes GPs on diversity
- Family leave is important for recruitment, retention of women
- Some firms have never had to think about leave policies
Chrissie Pariso, senior portfolio manager in private equity at Exelon Corp, surprises GPs she meets when she asks about their family-leave policies.
“When I ask, a lot of GPs are caught off guard, very surprised. A lot of times they don’t know,” said Pariso, who invests Exelon pension money in private equity. Some have never had to think about the issue because they’ve never employed a woman.
Pariso asks as part of a broader discussion with GPs about how they think about diversity in terms of gender and ethnicity. Exelon, she said, is dedicated to diversity and inclusion. The mindset “flows from the senior levels of the organization throughout the organization and the focus … touches on how Exelon hires, how [the company] chooses vendors, how we invest,” Pariso said.
Pariso has been compiling a database of GPs’ leave policies. She hopes her research will help shed light on this issue, which she and others consider a significant factor in attracting and retaining more women into PE. A family-leave policy “is an easy way to create a culture to attract and retain more women,” she said.
Pariso, one of the only LPs asking about leave policies, is inquiring at a time when GPs are working on bringing more women into the industry and retaining them as they move up the ranks.
Alternative-assets-data provider Preqin found that the percentage of women holding senior roles at PE firms has dropped for two years in a row. As of March 2016, just 7.3 percent of senior positions at buyout firms were held by women, down from 7.5 percent in 2015 and 9 percent in 2014.
For PE overall — including buyouts, venture capital, real estate and infrastructure — the percentage of women in senior positions increased. Women held (at the time) 12.6 percent of senior PE posts, up from 11.7 percent in 2015, Buyouts has reported.
The big decision
For many professional women, having a baby comes with a critical decision: return to work or stay home with the child.
In the U.S., this decision is made tougher because of family-leave policies. Under the 1993 Family and Medical Leave Act, a private business with 50 or more employees must offer 12 weeks of unpaid job-protected leave with continuation of health-insurance coverage under the same terms as if the employee had not taken leave, according to the U.S. Department of Labor.
In private equity, where the number of employees usually falls below this threshold, family-leave policies range from generous to nonexistent.
EY’s 2017 global PE survey shows 68 percent of PE firms that responded offer some sort of paid parental leave and 48 percent offer flexible working schedules. The survey, done in conjunction with Private Equity International, included responses from 103 private equity chief financial officers.
Katie, who works at an investment firm and asked to use only her first name, said she was in the later stages of her pregnancy before her firm developed a maternity-leave policy. Having fewer than 50 employees, the firm didn’t have to offer her anything, but it agreed to a percentage of her salary for six weeks (after she used up her vacation).
The firm also couldn’t guarantee Katie would have the same job when she came back, she said. But she and her managers kept working on coming up with a fair policy and eventually settled on 12 weeks family leave with 10 weeks paid.
“I applaud my employer for hearing out my concerns and supporting me in my time away from the office,” Katie said. “What I have learned, and I guess I always knew, is that you have to be an advocate for yourself. Finding others who are in similar situations, or who have policies that you think are fair, is a really supportive way to approach the topic. It also helps tremendously that I work for people who in the end really do care.”
This is the sort of conversation many firms are forced to have as more women join the ranks and want to find ways to continue their careers and have families.
“Women are the catalyst to the changes happening in the private equity community with regards to family time, and being able to have families and have distinguished careers in private equity,” said Suzanne Yoon, managing partner and founder of Kinzie Capital Partners.
Technology has helped working parents maintain careers and spend time with family, Yoon said. “Technology has really helped us be more engaged. I can be at a soccer game and check my emails if I have to. That’s really changing the entire dynamic of work and family,” Yoon said.
More robust leave policies will “retain more women in the field. That’s part of the issue we’ve had; women leave once they have children,” she said.
Some firms have taken notice. Kohlberg Kravis Roberts offers 16 weeks paid leave for the primary caregiver (father or mother). It’s important for such policies to focus not only on the mother so the child-care effort does not fall only on her, Pariso said.
KKR also pays for nannies and infants to travel with parents when they go on business trips during the child’s first year of life.
The firm offers employees adoption-reimbursement benefits, lactation support and resources for nursing mothers, including paying for breast-milk shipping during business travel and unlimited benefits for fertility treatments. KKR also provides transition programs for executives who go on leave to help ease that process, said Kristi Huller, spokeswoman with the firm.
Hamilton Lane offers 12 weeks of paid leave, new-parent time off, backup child and elder care, new mother-support programs, domestic-partner benefits and flex scheduling/telecommuting and professional part-time schedules.
Making it work
“When I first started asking about this, the looks I got from the GPs were kind of hilarious,” Pariso said. “A lot of times the response I got was, ‘I don’t know what we have. … Do we even have one?’”
Many times, GPs don’t have family-leave policies because they’ve never employed a woman. A good way to start attracting female talent might be having family leave policies in place, she said.
GPs should “think forward to have a policy as a way to attract women to show you’re building an inclusive environment and you’re supportive of family life,” she said.
The Private Equity Women’s Initiative, sponsored by the National Association of Investment Companies and the American Investment Council, put together a list of best practices to increase recruitment and retention of women at PE firms.
Best practices around gender-related policies included adoption of family-leave policies for men and women, including transition and reentry plans. The guidelines also include establishing policies to plan family leave and reentry timing, as well as pre-leave work minimization, engagement and communication expectations while on leave and post-leave return and reassignment.
Pariso has talked to the Institutional Limited Partners Association about adding a question about family-leave policies to the group’s due-diligence questionnaire template. LPs can use the template when they assess whether to commit to a new manager. ILPA is considering adding the question, a source close to ILPA said.
Pariso has been through three maternity-leave policies in her career, good and bad, and figured out the more generous policies instilled a greater sense of loyalty. “This is such a big issue in terms of diversity at private equity firms,” Pariso said.
She said LPs have a responsibility to ask their managers about this and diversity in general. One way to get GPs to change is to get their investors to apply some pressure.
Pariso has shared her work with other LPs. The hope is that more LPs will catch on and start asking this simple question. In this way, they can help their managers move further along the path of inclusion that will make the industry more attractive to women.
“Having a diverse team provides better conversations around the table [and] may bring better investment opportunities,” she said. “In the end, diversity will play a role in producing better outcomes and in that way will help drive change.”
Action Item: Read Private Equity Women’s Initiative’s best practices: http://bit.ly/2lD8X4n
Photo of Chrissie Pariso courtesy of Exelon