Building a diverse Board and leadership team is a critical imperative for private equity / investment firms and their portfolio companies in Australia and New Zealand. A diverse leadership team brings together varied perspectives, experiences, and backgrounds, enhancing decision-making, driving innovation and building high performance cultures.
As a frequent partner to Private Equity and Venture Capitalists across Australia and New Zealand, Tribe Leadership Executive Search meets portfolio companies at varying stages of their ownership cycle, across a range of sectors. Often, as organisations get larger and increasingly complex, a more sophisticated governance and Board structure is required to help the business achieve its commercial or ‘for purpose’ objectives.
As Nigel Bingham, Managing Partner from Pencarrow Private Equity, highlighted "It isn’t a debate to look at through the narrow lense of gender, but is a much broader conversation, incorporating culture, background and experience."
We spoke to several CEOs, HR, People & Capability leaders and Private Equity investment firms on some of the practical strategies to help you build diverse leadership teams, and the benefits you are likely to see in your organization as a result.
- Have a long-term commitment to the journey – Change doesn’t happen overnight, but it is imperative to have a leadership team that is self-aware about the level of diversity within the existing team, is committed to addressing this challenge, and has a willingness to educate themselves.
- Don’t Compromise on Quality – A number of Investment Directors highlighted the importance of selecting individuals based on merit and not out of tokenism, but because it was in the best interests of the company. ‘When hiring and assessing talent, it doesn’t mean you need to compromise on quality; any individual coming into an organization should genuinely excite and bring a different perspective or background to the leadership group.’
- Mitigate Unconscious Bias - Unconscious bias can hinder diversity efforts. Implement training programs to raise awareness about biases and ensure that hiring decisions are made based on merit and potential. Encourage a culture of inclusion where all employees feel valued and heard. When recruiting, Bingham highlighted a good starting point: The question should be ‘what is the complementary set of skills and experiences I am trying to get around the Board, and which candidates have these skills / experiences to draw from?
- Mentor & Develop: The Private Equity environment, and certain sectors in particular, have a legacy problem with diversity of background and culture. To foster diversity, one recommendation made was to mentor existing individuals in your talent pool, investing in those with leadership potential to work on their development areas and expose them to new areas of the business.
- Widen your Candidate Pool: It is increasingly important to broaden the talent pool beyond traditional networks. Look at individuals from related sectors where there is synergy to the portfolio company in terms of scale, complexity or the business issues you need them to solve. Reach out to organisations and industry groups that support underrepresented talent, partnering with firms that actively promote opportunities to diverse candidates to attract a wider range of applicants
- Drive Inclusive Leadership Practices: Inclusive leadership is essential to create an environment where diverse voices are encouraged and respected. The tone should be set by the Board, with current leaders trained in inclusive leadership practices, such as active listening, open communication, and empowering team members to contribute their unique perspectives.
- Measure and Track Diversity Metrics: Establish clear diversity metrics and regularly track progress. Measure the representation of diverse talent at all levels of the organisation, including leadership positions. Use data to identify areas for improvement and adjust diversity strategies accordingly.
There were many common threads our discussions, but there is a real opportunity for private equity firms in Australia and New Zealand to unlock significant potential by building diverse leadership teams. Embracing diversity not only aligns with societal values but also leads to improved decision-making, enhanced innovation, and a more inclusive work culture. This will create a more dynamic leadership team that drives success and excellence.