Leverage Point
Leadership and Organisational Culture
How are actors embedding intersectional gender lens investing within their own organisations, whether they’re at the top or not? What is needed to build an enabling and inclusive internal culture?
GenderSmart View
Integrating and mainstreaming gender lens investing (and JEDI investing more broadly) within institutions is about more than just diversity in leadership roles.
It is about having people in those roles who are committed to inclusivity and cultivating a broader culture of power-sharing. Bringing more women and diverse people into senior teams is a start but increasingly we are seeing attention paid to where people sit within the power structure of the organisation. Shifting organisational set-up and culture also impacts investment process, strategy and decision making.
As we have seen elsewhere, however, gender is being deprioritised as a factor of diversity. A recent PWC survey into board director searches found that racial/ethnic diversity was the single most important candidate attribute for 25% of respondents, followed by industry expertise (20%) and operational expertise (14%). Gender diversity was much lower (12%), perhaps because of an enhanced focus on increasing female directors over the past few years. But all of these factors need to be considered simultaneously for a truly successful culture.
Sana Kapadia
Head of Content
Accountability is a pivotal step on the journey towards transforming organisational culture
Investors are beginning to understand the importance of disclosure and accountability when it comes to diversity and inclusion within their own organisations. Without robust data and transparent targets, stakeholders lack the credibility to question investees, intermediaries, and consultants regarding their inclusion policies.
“I don’t think I’d feel comfortable asking [questions about asset managers’ policies and procedures and diverse representation] if we weren’t disclosing.”
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“A lot of people talk about it: they want to consider gender and equity, but they’re not doing it in their own organisations. If you start from your own operations and go outward, then you can actually speak to this with more integrity.”
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“One of the things that we’ve seen is a shift from treating this as an issue that is relevant for investing companies only to a bit more self-reflection and investors considering how it’s relevant to them as employers and as companies”
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“What begins to really change is when you put metrics and targets… having a leader who is holding yourself and your entity to account in ways that you will be public about. The best GPs are those who are holding their carried interest in alignment with their impact. Even if the investor is not telling them what the impact should be there, there is an expectation that if they claim to be an impact manager the manager’s financial remuneration should be aligned with the impact they create”
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Difficulty getting buy-in, at all levels
Culture shift has to start at the top and this means bringing in more across-the-board diversity in decision-making roles. But the journey doesn’t end at convincing the board or C-suite. Getting buy-in across a company – not just at the higher levels of management – requires education and culture change, and that can present a challenge when implementing gender strategies in a portfolio. Even if formal language suggests institutional buy-in, lasting change also comes down to changing the “informal” culture.
“The real challenge is not convincing the chief executive. It’s convincing middle management. And that’s where the challenge really comes in. Because what we’re talking about here is genuine culture, not the slogan that’s branded on the company report, but the genuine underlying culture of the organisation. And that’s a lot more difficult to shift.”
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“On the board, I have the CEO and two others who strongly sponsor me, but it’s also how to connect that to the layer beneath and then it becomes messy and complicated and everyone has his own agenda and priorities. So how do you make sure that you are really included in the [firm-]wide KPI framework, and that you are top of mind in the strategic choices that have to be made? I’m still trying to figure that out for myself.”
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“Our DFI clients tend to have targets for gender lens investing which can be very useful and effective. But even when there are these targets, very little money is allocated within these institutions to build the internal knowledge of gender lens investing - to further develop the pipeline and to help implement a stronger gender lens. And this too needs to come from the top leadership - not just target allocations but sufficient resources to build capacity.”
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Recognition of power dynamics and cultural norms
The power dynamics at play within organisational structures can be a hindrance to building a truly inclusive and equitable culture. This in turn has an impact on investment processes and behaviour.
These dynamics are particularly pronounced in family offices and exacerbated by local cultural norms. In one anecdote, a woman entrepreneur recruited a board of directors to get her ready for investment. She met their demands for expensive tech as part of the onboarding but didn’t get a single response when she needed to make a critical decision that might have helped scale her business. In this way, women founders are blocked from advancing and growing their companies at the pace and with the ease of their male counterparts.
“The data says that women control almost half the world’s wealth and they will control the majority of the world’s wealth, which is exciting, but if you flip that around to actually ask how many women are leading decisions from a place of inclusion and comfort and authenticity, I think it’s much lower. So you have women who are the beneficiaries of the assets but they’re not necessarily feeling included to make decisions in a way that is authentic to them.”
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“We’ve been working with a cohort of companies, and what I saw through this process was a new kind of awareness around cultural bias. A [male founder] said to us, ‘I didn’t realise the jokes going on in our coffee room…how wrong they were and how they were really impacting women and how silent women were [as a result.]’ And [once they] could see the power dynamics between men [and women, they also saw that there were] more men in executive positions than women, and the impact that was having, and then how that influenced company policy.”
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“The power dynamics are very cultural- and context-specific; women rising in many of these countries is a real threat…. The more traditional and conservative the country and the religion, the harder it is for women to advance, succeed, get anywhere with what they’re trying to do.”
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“The largest institutions are managed by male only teams or very often male teams, bringing in a woman just to give her a title and say, oh, yeah, we have a degree of diversity, but they don’t give her the responsibilities, the power, the carry, the shares and the general partnership that follow. So it’s a kind of pinkwashing. It’s very difficult to know the difference between partners in a fund in terms of their shareholder level, and their assets, their access to carry. And many limited partners don’t care so they are not asking the questions.”
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Inclusion beyond the C-Suite
While increasing the number of women at board level is a valuable target, it also tends to only boost representation amongst a small number of mostly white, socioeconomically privileged women. With that in mind, board-level gender diversity can’t be the sole focus for companies committed to true inclusivity. From closing the gender pay gap amongst low-paid women to promoting flexible working practices, there are a number of ways to change behaviour and create a truly inclusive corporate culture.
“We hear all the time that if you’ve got women on the board, that there is a trickle down effect. But I would like the focus also to reach people a bit lower down the line. What about women carers or women with caring responsibility? Or paid maternity leave, or contributions to child care facilities, or groups set up for men and women to discuss work-life balance, and more flexible working practices. That’s not quotas, it’s a way of thinking about perceptions and changing behaviour in the workplace, which could have a really positive effect.”
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“I would love for gender to not be correlated with the most senior people in organisations, I still find 30% of women on boards being equated as good performance in diversity and inclusion quite frustrating. Focusing much more on things like the contingent workforce and low paid women would be really great.”
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“It’s nice to put women on boards and get, you know, 50% women employees, but if they don’t have the actual power or influence they should have, then it’s kind of useless. ”