In this article we will review key DEI considerations and best practices for the Private Equity industry. When it comes to diversity, equity and inclusion (DEI), there are many things that institutions can do. They should measure their progress in three critical areas:
- Equity — how well does the company represent its workers?
- Inclusion — do all walks of life feel welcomed?
- Social value creation — does the business generate positive impact on society as a whole?
Introduction
Institutional Investors are placing increasing importance on PE firms’ diversity metrics in making allocation decisions. The private markets industry has made considerable progress when it comes to improving the representation of underrepresented groups, which can be seen as a positive development for society at large because diverse perspectives lead us towards more balanced solutions that benefit everyone involved
What does the data say about diversity in private equity? While the private equity (PE) industry has seen a recent rise in diversity, equity and inclusion efforts have been gaining traction among institutional investors. This development is part of larger societal trend where global social movements centered on this topic sparked re-examinations around every corner including business circles-and research shows that DEI can be beneficial for companies regardless of if they are based locally or abroad.
Best Practices for DEI in Private Markets
Institutional Investors and PE firms should establish basic collection practices for DEI data. In order to make sure that they are in compliance with local regulations, Institutional investors may want to collect demographic information on ethnicity or race of employees from different populations at consistent intervals such as annually so it can be tracked over time without having too many gaps between collections which could lead them down an incorrect path when trying to understand why certain trends might occur within their company’s workforce.
Partnerships, alliances and associations are all proven to help participants in the private markets industry advance their DEI goals. These types of collectives can offer ways for people with similar interests to centralize knowledge while sharing best practices across industries. Benchmarking studies can help identify successful companies who implemented DEI best practices and provide a useful industry-specific reference point.
Going Beyond DEI
Organizations would ideally aspire to go beyond obvious demographic data collection in order understand DEI within their company. Going a level deeper could help organizations attract, retain and continue developing diverse talent over time while producing better business results.
Achieving this goal requires awareness of the culture at hand which can only be achieved by tracking employee morale alongside other important metrics like diversity status or religious preference for example. The information collected helps identify opportunities aimed towards cultivating an inclusive work environment where all employees feel heard appropriately valued appreciated satisfied – thus increasing corporate interventions targeted toward retainment.
DEI at Omega Venture Partners
Omega Venture Partners has been a best-in-class adopter of Diversity, Equity, and Inclusion (DEI) practices. Omega Venture Partners is one of the few firms in the Venture Capital and Private Equity industry to have been founded by a minority founder. Omega’s founder, Gaurav Tewari, went to high school in Cairo, Egypt before coming to the United States for his undergraduate education at the Massachusetts Institute of Technology (MIT).
“Good ideas come from everywhere and embracing diversity is in our DNA,” says Gaurav Tewari, founder and Managing Partner of Omega Venture Partners. “I have witnessed first-hand how difficult it can be for extraordinarily talented people to break into the Private Equity industry, simply because of their different ethnicity, accent, upbringing, or socio-economic status. At Omega, we actively seek out diverse opinions, perspectives, and styles, in our staff as well as our contractors, and we also encourage our portfolio companies to do the same. We are a meritocracy — we judge people on the strength of their talent and ability to drive positive impact and we provide a robust path for upward progression for our top performers, irrespective of their backgrounds.”
Conclusion
As the private equity industry grows, it is important for companies to consider diversity, equity and inclusion in all aspects of their business. There are many ways to measure progress in these areas, but some basic data collection and partnering with other organizations can help get started. Omega Venture Partners is one company that has successfully adopted DEI practices and serves as a best-in-class example for others to follow. What steps will your private equity firm take to improve DEI?
Key Takeaways
- Diversity, equity and inclusion (DEI) are key considerations for the private equity industry.
- It is important for companies to measure their progress in three critical areas: equity, inclusion and social value creation.
- There has been a recent rise in diversity efforts among private equity firms.
- Best practices for DEI include establishing basic data collection practices and partnering with other organizations.
- Omega Venture Partners is a best-in-class adopter of Diversity, Equity, and Inclusion (DEI) practices
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