TPG, Advent Take Big Steps to Open the Hiring Funnel in Private Equity.Indd

February 2, 2021 • buyoutsinsider.com

TPG, Advent take big steps to open the hiring funnel in private equity Bulge-bracket private equity ﬁ rms are using a variety of strategies to attract diverse talent and promote a more inclusive workforce both within and outside of their ﬁ rms. By Sarah Pringle

Where does a PE fi rm start in its quest to increase diversity? One strategy is to go beyond the typical investment bank- and consultant-driven funnel in which PE fi rms have historically found their talent by grooming younger talent. Take TPG. For TPG Capital, the fi rm’s fl agship private equity fund, it fi lled only 50 percent of its associate classes in 2018 and 2019 through the typical recruiting pipeline (such as I-banks). The other half was left open in 2019 and 2020, respectively, to recruit outside of the typical funnel. “We feel very strongly that in order to create a diverse pipeline longer-term, you Anna Edwin, TPG John Maldonado, Advent International have to start early,” says Anna Edwin, the “We and other fi rms need to break the percent of the fi rm’s last two associate classes global head of talent development at TPG. paradigm,” says Maldonado, whose fi rm are either women or racially or ethnically “When you’re investing early on, you may not launched an internship program a few years diverse. see for that particular cycle the immediate ago, partnering with organizations including “My personal goal is: when we look back effects. But it’s a longer-term game.” BLK Capital Management and SEO. By in another three to fi ve years, that we are able “The [traditional] funnel is not really moving higher up in the funnel, the executive to actually start to hire some of the students diverse – gender, race or otherwise,” John is hopeful that “someday in the future, the that we’ve been able to mentor and work Maldonado of Advent International adds. vast preponderance of our hires are people with, even though they were at the undergrad “The funnel is skewed toward white males.” that we’ve already gotten to know – with a level and not necessarily what a fi rm would PE fi rms, partly due to their size, higher percentage of underrepresented think of as their immediate pipeline,” Edwin historically have not had intense in-house minorities.” says. training programs like those of, say, TPG’s recruiting efforts – supported by Maldonado acknowledges that interns JPMorgan or Goldman Sachs. But more fi rms partnerships with Girls who Invest, Access in their program may not ultimately choose like TPG and Advent are stepping up with Distributed, SEO, MLT and Toigo, among private equity as their career path after greater investment into efforts to widen their others – have proven effective at the entry graduating college. “We don’t know if this recruitment funnels. level in recent years. Approximately 50 will work,” he says. “The yield is still yet to be

© PEI Media Ltd. All rights reserved. Content on this site may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of PEI Media or in the case of third party content, the owner of that content. You may not alter or remove any trademark, copyright or other notice from copies of the content. You may download material from this site (one machine readable copy and one print copy per page) for your personal, non- commercial use only. seen, but we’ve got to try something, and senior-level roles), there is a global one of the boards of directors of companies it this feels like something not everyone else is mandate requiring that in the final rounds controls in its Americas PE business. doing.” for a new hire, at least one candidate is an Likewise, TPG portfolio companies since In other unique recruitment initiatives, individual from an underrepresented group, 2017 have added more than 100 women KKR in 2019 partnered with Harlem Capital Maldonado says. to their boards after launching a dedicated Partners, a venture capitalist whose mission At the partner level, 25 percent of effort to increase gender diversity across is to “change the face of entrepreneurship” Advent’s current workforce fall into an the companies it backs. The firm has since by investing primarily in disruptive underrepresented group. It goes a long way, expanded the effort to include race, ethnicity startups founded by women and diverse Maldonado says, “if [candidates] can look into and sexual orientation – and through its entrepreneurs. Under the partnership, the organization and can see someone else referral network has built a database with HCP refers underrepresented investment like them that has succeeded.” more than 1,500 diverse director candidates. professional candidates and former interns In other unique initiatives, Bain Capital KKR’s efforts have also been reflected in its to KKR for consideration in its internship and signed on with Management Leadership capital markets activities including debt and full-time hiring programs. for Tomorrow’s MLT Black Equity at Work equity offerings. The firm regularly makes it Harlem garnered the attention of TPG, certification system – which enables a point to bring minority-owned brokerage too, which in 2019 made a strategic, minority employers to take a systematic, results- firms in as co-managers on the transactions, investment in the firm, and became a limited oriented approach in achieving black spreading economic opportunity, a partner in HCP Fund 1. representation at every level, as well as spokesperson says. KKR has also closely partnered with compensation equity, an anti-racist and Some firms believe private equity also Howard University, one of the most inclusive work environment, racially- has a responsibility to be publicly outspoken prestigious, historically black colleges, just business practices and racial justice about its values. to identify strong, diverse talent. Its other contributions. “I think sometimes what happens in partnerships include SEO, Toigo, Girls Who financial services in general is people shy Invest, 30% Club and 30% Coalition, among PE’s role in diversity outside the firm away from making political statements, and others. While some private equity groups take the what we’ve done is we’ve put our values on view that they aren’t in the place to talk the table because they matter to us,” Edwin More than stats to portfolio companies about diversity, says. “We want people to know that this is a As the industry faces increasing pressure to Maldonado says, “our view is, we can’t wait; place where we don’t tolerate ignorance. We build a more diverse workforce, the stats for we gotta try.” don’t tolerate being unkind to others.” most firms are going to look better every Advent in late 2020 launched the Advent At TPG, that goes beyond typical year. But the work doesn’t stop there, Edwin Leadership Academy in collaboration with employee policies like parental leave. “Our says. Harvard Business School. employees don’t have to question where we “If you just do it on the recruiting front to This program will offer high-performing stand on an issue because they can read it, be impressive on the stats and are not really executives from across Advent’s North they can see it, they can feel it. And hopefully making sure that the people you’ve brought American portfolio the chance to participate that’s going to make us a more attractive into your firm want to be there and are having in a tailored program designed and taught option to people.” fantastic careers, you’re kind of missing by faculty members from the world’s most TPG also believes they have responsibility the point. Because you’re never going to prestigious business school. The inaugural to their broader ecosystem in addition to actually change the voices or diversify those program will be open to women, people its most immediate stakeholders, Edwin perspectives at that senior level unless you’re of color and individuals who identify as explains. “I’ve been proud of our continued actually caring about people and getting LGBTQ+, Advent says. and sustainable progress when it comes to them to commit to your firm for the long- KKR has also emphasized diversity in the diversity, equity and inclusion, but we are term,” Edwin says. boards of directors of its portfolio companies, very aware that there is still a lot of work to be Besides a growing emphasis around as well as in how those companies operate. done,” she says. initiatives that encourage retention, firms The firm in 2018 set a goal of having at Update: This report has been updated are instituting mandates to enforce better least two directors with diverse backgrounds to include additional detail on TPG’s board recruiting practices. At Advent, when on the board of every company they control. diversity efforts and partnership with Harlem. recruiting is done laterally (for mid- or To date, KKR has met this goal on every single