A recent article by McKinsey & Co. discusses the obligation of the private equity sector to work toward more diverse, equitable and inclusive workplaces. McKinsey points to its own research findings that companies with more diverse leadership are more likely to perform better than industry average on margin growth. While the article highlights the unique position of private equity – representing about 4,700 firms that own more than 18,800 companies in North America – to change the status quo, the following action steps are relevant to any private sector industry.
Publicly commit
Make DE&I efforts official by creating an internal council or task force, “with a C-level chair to signal that this matters,” says McKinsey. That group can establish metrics, set goals and track progress.
Assess targets through a diversity lens
Companies can weave DE&I into various facets of business, from recruiting talent to acquiring another company. Making space for DE&I when setting targets or conducting investment-committee reviews allows for better risk assessment and a better understanding of DE&I as a natural value-creation opportunity.
Prioritize performance
Leadership should review diversity performance, both internally and at partner meetings. Companies could even base portions of leadership compensation on the progress made against DE&I metrics.
Clear away structural racism
Corporate DE&I efforts can only be sustained with a strong foundation. Companies should review and analyze current benefits and policies to identify those that inherently serve to disadvantage or alienate minority groups. Rewriting racist or discriminatory policies is crucial.
