Friday Letter Breaking the silence

In a new research paper, Nori Gerardo Lietz throws the spotlight on the staggeringly low number of women in senior investment and finance roles at private equity real estate firms. The hope is that going public with the issue will change the industry for the better.

Let’s start with the obvious: when it comes to private equity real estate, it’s a man’s world. While women have a place in the industry, it’s rarely in the decision-maker’s seat. That’s a shame, because studies have shown that companies with more women in senior roles tend to have better corporate performance.

What’s less apparent is that this gender disparity has more or less been tacitly accepted in the industry for years, and the issue hasn’t been addressed head-on – until now. Nori Gerardo Lietz, one of the most respected and outspoken women in private equity real estate, has compiled a new white paper that shows – in cold, hard numbers – the vast underrepresentation of women in investment and finance roles in the private markets.

The report, “Cloistered in the Pink Ghetto: Women in Private Equity, Real Estate and Venture Capital,” examined the staffing make-up of 283 investment firms, including 82 in real estate. As it turns out, women at real estate firms fared the worst, making up just 4 percent of senior investment professionals, compared to 5 percent in private equity and 9 percent at venture capital firms.

Lietz, founder of California-based investment advisory firm Areté Capital, told PERE that the research she conducted helped to confirm what she already had observed anecdotally about women’s roles at investment firms. She also felt she had a personal obligation to write the report because, “as someone who teaches at Harvard Business School, in the face of these abysmal numbers, how can I in good conscience encourage my qualified female students to pursue careers at these firms?”

Actually, business schools are part of the problem, allowing these firms to recruit on campus without calling their employment practices into question and also for failing to better prepare female students for working at these companies. Lietz also pointed a finger at investors, who have turned a blind eye to the gender disparity at these companies. General partners, however, are held the most accountable for setting up the hiring, retention and promotion practices that have shut out women from senior investment roles.

The women themselves also are partly responsible for their advancement at these firms. If they are to be successful, they must be willing to put in the time and travel required of investment positions, Lietz explained. Most importantly, they need to be realistic about their expectations and understand that the climate and culture at these firms isn’t going to change overnight.

Lietz wisely has avoided oversimplifying the gender disparity issue in her paper by not placing all of the blame on GPs. Just as multiple parties have contributed to the current underrepresentation of women in the private markets, those same parties all need to be part of the solution and make efforts to change.

PERE would like to applaud Lietz for pulling together the research for the report – a monumental and challenging task, especially considering the hush-hush nature of the private equity real estate industry. As one investor who read the report told PERE, “the first step is achieving transparency in the make-up of the staff at private equity firms and who participates in the carry of the firm. This is very difficult information to get from an underwriting perspective, let alone for diversity purposes.”

When it comes to creating change at these firms, raising awareness is the first step; getting others to speak up –and speak out – is the next one.