Written by Eliza Baker

Acertitude recently hosted a summit at the PEI Operating Partners Forum Europe, centred around sharing thoughts and best practices on the topic of diversity and inclusion of private equity boards. Specifically, looking at how portfolio company board diversity has evolved in more recent years, what remains to be built out, and sharing practical examples around the different approaches GPs are taking to pipeline diverse board talent.

Private equity firms are increasingly introducing targets around board diversity, which is unsurprising given the supporting data evidencing board diversity being directly linked to board effectiveness, with more diverse boards outperforming boards that lack diversity. Where GPs are in terms of formalising targets for board diversity varies significantly depending on fund size, industry focus, regional focus, and VCP (e.g., turnaround vs. growth). What is evident, however, is that the topic is increasingly front of mind.

Data published by the EDCI (ESG Data Convergence Initiative) shows that private markets lag significantly behind public markets when it comes to gender diversity on boards, with 57 percent of private companies having one woman on the board as of last year, compared to 87 percent of public companies. Interestingly, gender diversity across the broader C-suite (excluding executive board members, i.e. the CEO and CFO) in private companies outperforms public counterparts, at 22 percent versus 17 percent.


As part of the discussion, we explored practical approaches to driving diversity across leadership appointments, with some GPs adopting objective reviews of the hiring process to avoid inherent or unconscious bias and champion inclusion. Looking at the FTSE 150, the proportion of board seats held by women has reached 40 percent (up from 28 percent five years ago), however, this is heavily skewed towards non-executive rather than executive board members (CEO and CFO). Gender balance in the FTSE 150 among non-executives is near parity at 46 percent female, but only 16 percent of executive directors, namely CEOs and CFOs, are women.


This raises a number of important considerations and observations. Firstly, whether public companies are achieving greater gender diversity through appointing more non-executive directors to balance out the board, resulting in much larger boards in contrast to the typically lean boards in private markets. If so, do these additional board roles have a defined brief around the board table? Linked to this, and given NEDs are often either former CEOs or CFOs, are we seeing a trend in high-performing female executives leaving executive careers earlier than their male counterparts to pursue a non-executive career? If the latter is true, it is unsurprising that gender balance amongst executive directors (CEO and CFO) is significantly lower than non-executives, and indeed lower than across the broader C-suite.

Key takeaways

A clear brief

One of the key takeaways from our recent discussion around enabling businesses to both create opportunity for, and attract, a more diverse candidate slate to the board table, was the importance of ensuring clarity of the brief an individual is being appointed to the board to meet. One approach is starting with the VCP and mapping out the ideal skillset the board should bring as a collective to complement this, identifying any gaps that could represent an opportunity to bring both valuable expertise and greater diversity to the board.

First-time board members

Another consideration is that diverse board members are typically more recent to a non-executive role (or new to one) and, on average, younger. In order to attract less tenured and experienced board members, it’s therefore important for an individual to be able to see where they can add value to the board table and be a real contributor, coupled with effective onboarding and shareholder support. A clear remit also avoids diverse board candidates being inundated with board requests they are a less natural fit for and prevents them from feeling like ‘a number on a board’, or a ‘tick-boxing appointment’.

The T-shaped role

We discussed the T-shaped nature of a non-executive board role, providing an opportunity to elevate diverse candidates to the board who may be sitting a level below in the broader leadership team. The vertical of the ‘T’ represents the specific skillset or experience an individual is being appointed to add value around, with the horizontal representative of the broader input that individual will bring to the board table as they develop into the board seat. On the latter point, the consensus was that the responsibility of ensuring clarity of mandate, as well as the necessary space for input and broader development, lies with the key stakeholders of the board, both fund directors and chair.

Onboarding and mentorship

The chair can play a critical role here as to how the board operates together as a whole, so much so that some GPs have started to make the development of emerging board talent a formal part of the chair’s remit. In instances where GPs work closely with a select handful of chairs who sit across multiple portfolio companies, there is opportunity to formalise a shadowing or mentorship scheme, where a chair is partnered with a first-time non-executive to help acclimate them to both the role and expectations of the GP, enabling a more effective onboarding, and the opportunity for greater value add to the board from the outset of their appointment.

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