Outreach programmes unlock diverse talent pools

While these initiatives can provide young people with an entry point into private markets, they must be thoughtfully run to be effective.

With a growing focus on diversity, equity and inclusion, firms are working to broaden their talent pools and break away from homogeneous structures. Yet there seems to be a long road ahead, particularly when it comes to socioeconomic diversity. 

Research published by the Harvard Business Review in 2021 found that US workers from disadvantaged socioeconomic backgrounds are 32 percent less likely to become managers. Similarly, a survey by the City of London Corporation and the Bridge Group found that almost nine in 10 senior roles in financial services in the UK are held by people from higher socioeconomic backgrounds, based on parental occupation.

“Firms are very acutely aware that they cannot be recruiting from the same source,” says Chang Tan, chief programme officer at Sponsors for Educational Opportunity London, a charity that prepares talented students from underrepresented backgrounds for career success. Tan adds that, while firms are receiving an abundance of applications, the real struggle is the lack of diversity among those applicants. 

Outreach programmes play a crucial role in connecting underrepresented young talent with private markets firms. Numerous initiatives aim to bridge this gap and facilitate beneficial connections between individuals and firms. Wol Kolade, managing partner at Livingbridge and co-founder of the 10,000 Black Interns programme, says these networks “support underrepresented groups to have access and exposure to industries that they might not otherwise have”. The 10,000 Black Interns initiative is dedicated to transforming the horizons of young Black talent through paid internships, training and mentorships across several sectors.

Young Women into Finance, a registered non-profit founded by infrastructure and energy transition-focused executive search firm One Search, provides mentoring opportunities for individuals who are less socioeconomically advantaged from the moment they finish their GCSEs (academic qualifications taken by secondary school students in the UK). One Search founder and chief executive Dan McCarthy explains that as part of the programme, by the time these young women graduate from university, “they can build a complex financial model from scratch, and they have had two full summer internships”.

As DE&I becomes a priority for private funds and their investors, firms need to consider how they resource and approach diverse recruitment. McCarthy says that despite many firms expressing their dedication to diversifying the industry, when presented with programmes, they are often hesitant. “When you [deliver] a programme like YWIF, which is literally tailored to them, they say, ‘sorry, we can’t find the budget’.”

Some firms “want diversity to suddenly fit into their world, the world of the tier-one private equity firm”, adds McCarthy, who believes organisations need to understand that these programmes are investments, and the aim should not just be about appearing more diverse to LPs.

Support is crucial

According to a Global Parity Alliance study, successful DE&I initiatives require a nuanced understanding of root causes, a meaningful definition of success, accountable and engaged business leaders, context-specific solutions and rigorous tracking for course correction.

To ensure outreach programme placements are effective for both the individual and the private markets firms involved, there are some key factors to consider. One of the most crucial is preparation. Kolade says: “It is important for the team [that the individual is] coming into to have a set programme that will give the candidate the exposure to understand as many facets of the business as possible.” Stressing that many candidates have not had previous exposure to an office environment or the private markets industry, Kolade explains that firms need to “take the time [and] give thorough introductions to allow the candidate to feel comfortable”.

Individuals involved in these programmes might need further industry-specific training ahead of starting their careers. Tan says the training that forms part of outreach programmes, like those provided by SEO London, are extremely important to “ensure that whoever’s going into this highly competitive industry is primed to succeed”. 

Firms need to focus on the candidates’ “potential, passion and curiosity rather than their degree discipline or experience”, says Tanya Tracey, chief executive at GAIN – Girls Are Investors, a charity set up to improve gender diversity in investment management. The most successful placements “have a supportive and inclusive environment that fosters learning and development, alongside mentorship and feedback”, says Tracey. 

A long-term plan

Asset managers aiming to make progress on diversity should also consider the long-term benefits of programmes. Referring to the YWIF programme, Tidimalo Padi, ESG and diversity lead at One Search, says: “If you think about what skills you are going to need in two, three years’ time, you can bring in these young women with an internship, grow them over a period of time, and hopefully have a really strong retention strategy to keep them in the business over the long term.” 

From an ESG perspective, besides focusing on improving their portfolio companies’ strategies, Padi says firms should be looking internally, “as research has shown that firms who prioritise hiring individuals from different genders, ethnic and social backgrounds score higher in the ‘social’ area of ESG”.

Participating in these programmes also creates a legacy network that encourages further diversification of the industry. SEO London, which already runs multiple initiatives in the financial sector, launched an Alternative Investments Programme in early 2021 with the help of an alumna at Goldman Sachs. The programme now works with more than 20 private markets firms, including Blackstone, Carlyle and KKR.