Measurement is imperative to driving improvements, but there is no one way of defining or tracking success. Some firms are focused on the direction of travel, while others have set targets. McKinsey suggests that publicly stating your ambitions can have a material impact on your ability to deliver.
Partners Group, for example, plans to have 25 women at the managing director or partner level by 2025. Any progress made towards that goal is reported in the firm’s corporate sustainability report. The firm also has targets of at least 40-60 percent diverse hires for its investment and financial analyst programs at a junior level. “That is primarily gender diversity, but also takes racial and socio-economic diversity into account,” says Partners Group’s Esther Peiner.
Nuveen Real Estate’s global chief operating officer Reisa Bryan points to retention as a critical issue: “We are very deliberate about looking at promotions, attrition and retention rates, which are really important to us as we continue to improve our diversity representation around the globe,” she says.
Ardian, meanwhile, has developed an Inclusion and Diversity Charter that sets concrete and measurable objectives to be reached by 2022. “We actively monitor and seek to improve several diversity KPIs, such as promotions, employee retention and salary gaps,” says Jérémie Delecourt, chief operating officer at the firm.
“This data collection, coupled with interviews with portfolio companies, allows us to better understand the dynamics behind inclusion and diversity initiatives.”
Kartesia has reinforced its DE&I KPIs with an evaluation of employee satisfaction, which gauges group culture, communication habits, team building and strategic decisions. Northleaf conducts quarterly employee satisfaction surveys and regular employee engagement surveys, which provide anonymous feedback.
Last year, the firm launched its first diversity census and inclusion survey to measure levels of diversity and inclusion within the firm and better understand the needs of employees. “We will continue to conduct these on a biennial basis to track our progress over time and improve our ability to measure the effectiveness of our DE&I efforts,” says the firm’s Lauren Harris.
Carlyle, meanwhile, has extended its DE&I targets to incorporate the businesses it backs. The firm has set a goal of having 30 percent diverse directors on the boards of its private equity-controlled companies that have been majority owned by Carlyle for at least two years. Since 2019, each fund and function at the firm has had its own diversity and inclusion plan to drive action and accountability.
Clearly, the measurement of success is different for each firm, depending on its motivations and ambitions. But as diversity, equity and inclusion become increasingly prominent themes, more standardized metrics and forms of reporting are likely to emerge.
Advisory firm Meketa Investment Group, for example, has devised an annual DE&I questionnaire for the entire industry, which looks not only at current diversity statistics but at policies and practices. “We feel that organizations that take D&I seriously are better performing,” says Meketa managing principal and co-CEO Steve McCourt. “It is indicative of a positive culture. It is therefore incredibly important to the investors we work with that we understand and evaluate the D&I characteristics of managers in the marketplace.”