The challenges of taking parental leave in Private Equity - Part 2
Being braver for Parents
It is well-established that the ‘motherhood penalty’ is more of a barrier than the ‘glass ceiling’ for women’s career progression. Research has shown that having children has a direct impact on the careers of women, particularly those in senior roles, whereas women who do not have children are more likely to progress on a par with their male colleagues both in terms of pay and performance ratings[1]. This trend is front of mind for many professional women and 1 in 4 women in financial services says that maternity leave impedes career progression[2]. Within private equity (“PE”) specifically, 88% of participants in Level 20’s research[3] named specific challenges around having children as a barrier to progression.
In an environment of ever-greater scrutiny from investors and regulators on gender diversity metrics - from the gender pay gap to the number of women sitting on Investment Committees - how the PE industry supports women who become parents has never been more important. Leveraging our in-house research, as well as our knowledge of what practically works ‘on the ground’ for firms, we set out below what firms can do to improve parents’ – and particularly mothers’- experiences of taking parental leave and being a parent in PE.
Our experience working with PE firms has shown a vast range of provision for parents, and attitudes towards supporting parents, from box-ticking exercises to comprehensive and thoughtful solutions. As well as appeasing investors, firms who want to attract, retain and develop their talent pool of women into senior roles need to ensure that they take the issues surrounding parental leave (see Blog Part 1) seriously.
What are the basics?
In a market that is maturing all the time, what is ‘standard’ is slowly creeping up, as firms are realising the value of putting policies, systems and coaching in place to support parents.
Offer Enhanced Maternity Leave AND Enhanced Paternity Leave - if you are not including men in your parental leave equation, you are behind your peers. Not only does this support women, but younger men also want this option.
Parental transition coaching to support working parents (and their managers) as they go on and return from extended leave. Critically, the coaches need to know your industry inside out – the coaching market is vast and ‘flabby’ in places, so do your due diligence on the coaches’ knowledge of, and experience in, PE.
Have good quality, easily-accessible collateral that is designed specifically for parents taking leave in your firm and speaks to their challenges and the firm’s cultural and structural nuances. For example, create guides for US managers for those who are not familiar with the different policy environment in the UK.
Make sure managers and leaders are talking the talk AND walking the walk when it comes to parental leave and beyond – and offer them coaching to support this if necessary. Empower them to filter this awareness through their teams, both through their rhetoric and their actions, to make sure best practices can be absorbed more fully into firm culture. According to Responsible Investor’s Women in Finance Survey (2023), women taking maternity leave reported that too often the culture does not support or promote them, but instead makes assumptions based on outdated and sexist gender norms[4].
Ensure the right facilities are available for women who want to express milk when they return to work – the unhygienic setting of the ladies’ toilets is not the answer. In our research, some maternity returners reported that they had to give up feeding their baby prematurely when their milk dried up because the facilities at work were inadequate, and/or time in their diary for pumping was not respected. Wider research also supports the benefits of making provisions for women to express milk, including reduced maternal absenteeism and improved morale, retention and recruitment[5].
What are top firms offering?
We observe an increasing number of firms ‘leaning into’ supporting parents, to both attract and retain top talent. Whilst the vast majority of those who take parental leave are currently women, we notice that younger men who are becoming parents are looking for choice around spending time with their baby and/or children – whether that is Shared Parental Leave, or working more flexibly long-term to accommodate family demands.
Create connections between parents. In our research, 94% of parents in PE wanted more informal contact with other parents in their firm. Thoughtful and well-managed Parents Networks can achieve this but beware good initiatives that tail off; build in ownership and accountability.
Offer phased returns to those coming back from parental leave that go beyond structural phasing (i.e. using holiday or KIT days). Managers being creative and thoughtful about phasing back into workload and responsibilities goes a long way in supporting returners in creating a sustainable work-life roadmap; conversely, throwing returners into the deep-end after a period of extended leave can be detrimental to their wellbeing, and the firm’s retention statistics.
Offer support with childcare. This does not mean you have to build a creche onsite, but can you offer benefits that provide emergency childcare through a third party? We also observe some market-leading firms offering annual financial contributions to parents of young children to spend on family-related expenses, such as childcare or cleaning – lighten the load where you can.
Everyone work from anywhere on a set day offers employees a set 4 days in the office, with 1 day that everyone can work elsewhere. Having this type of policy means that it is not just parents – or mothers – looking for flexibility who have a day out of the office, which removes some of the stigmas attached to flexible working.
Formalise processes around key roles such as portfolio board seats. Having a known process and an established approach sets the expectations on all sides. It is also important that this is reviewed at intervals, particularly as women approach the end of their parental leave and perhaps wish to reengage with some parts of this role.
Can you be braver?
Build manager accountability and incentives into the parental leave processes. In an environment where time is short and pressure is high, commercial needs always prevail, particularly as they are the primary mechanism for assessing reward criteria. In order to incentivise managers to proactively support and manage those going through parental transitions, can this be built into their performance and reward metrics?
Set-up a mentor or buddy system for parental returners. Even in large international firms, women often find themselves as the first to take maternity leave in their team. This ‘trailblazer’ phenomenon heavily shapes women’s experiences of maternity leave, and it is often a lonely road. Can a mentor or buddy system be created? If your firm is small, can senior team members use their network to create connections across the industry? The time investment needed to create a meaningful support network for returners will reap rewards.
Embed marginal flexibility into your culture. We know that most women returning from leave are not looking for a part-time or fully flexible work arrangement; they have a keen and realistic understanding of the engrained working practices of their industry. However, can your firm embed a culture of marginal flexibility? For new parents, this might look like going home to be with the children for bath and bedtime, then logging back on later. However, if it is only parents (usually mothers) who do this, it becomes a stigmatised way of working that is incorrectly correlated to commitment and ambition. If all employees are encouraged – or obliged- to avail of marginal flexibility (for example leaving early once a week for a social activity or exercise), the burden is lifted. Only a disruptive measure that captures all employees will start to truly begin the work of cultural change and remove the ‘motherhood penalty’ being applied to women.
Review success and reward criteria to see if there are areas that are penalising parents who take a period of extended leave, most often women. For example, if a woman has taken two maternity leaves in 4 years and has not completed a deal from origination to sale in her career, has she done the component parts at different points of time and demonstrated the necessary skills? Or is she locked out of promotion? Also, if your deal carry is wedded only to the deals you have done, how are you levelling the playing field for those who have taken leave? It is well-documented that women’s careers are less likely to follow a typical, linear path than men’s, largely due to caregiver responsibilities, so review how your firm manages alternative career trajectories.
Offer Shared Parental Leave and equal benefits to men. This is partly achieved through policy, but the ‘hard yards’ are achieved when these become practice. Leaders and managers need to be talking about leave provisions for fathers and also taking them. There are too many stories of men working during a 2-week paternity leave, championing themselves as indispensable. At the market-leading end of this offering, both primary AND secondary carers are given 26 weeks off at full pay.
At The Tall Wall, we work with firms to truly understand the ‘status quo’ for parents – in terms of policy and structural provisions, and also lived experiences of those who have taken leave - as well as the firm’s intentions and commercial parameters. From this base, we are able to make recommendations and offer solutions aligned with specific needs. We also know that tracking and evaluating a return on investment is important to firms, as well as being to provide practically useable data for DEI reporting, so we build this into how we engage with firms in supporting parental returners.
Sources
[1] (Lewis and Simpson, 2010; Brown, 2010).
[2] P18 of ‘Change starts with bravery’ https://www.simplifyconsulting.co.uk/wp-content/uploads/2021/07/Gender-Gap-White-Paper.pdf
[3] https://www.level20.org/reaping-the-rewards-of-retention/
[4] https://www.responsible-investor.com/the-parent-trap-motherhood-penalty-costing-women-investment-careers/
[5] (Stumbitz, Lewis and Rouse, 2017, p.510).
This article was written by Kirsty Reynolds, a leading coach in the private equity and financial services sector. If you would like to find out more about how we support parents through the transition of family leave please get in touch.