The challenges of taking parental leave in Private Equity – Part 1

In their most recent report (2022), Level 20 highlighted that across Europe, only 20% of investment professionals are women, with the figure falling to just 10% at the senior level. Whilst recruiting junior women into the industry has improved (34%), retention remains a challenge that all firms are grappling with.

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This challenge is even greater when you look at roles that women hold within firms. McKinsey highlight that great strides have been made in recent years to address the lack of gender diversity in the private equity industry. However, the road is long. And, like many high-performance environments, one of the biggest pain points is that many women become mothers at the peak of their career. It has been said that more women will run into the maternal wall before they hit the glass ceiling (Allbright).

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Many women who take time out for parental leave in the private equity industry have their children once they have already established themselves professionally and, typically, are beginning to reach for more senior roles and take on more responsibility. This ‘early-senior’ rung on the career ladder is also when – regardless of parental leave – the number of women at these levels begin to decline. Women returning to work after parental leave are, therefore, dealing with the logistical, emotional and professional challenges of returning to work after time out, as well as the systemic challenges around gender bias in the workplace.

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Against this backdrop, how PE firms manage women’s careers around their parental transitions – and the ongoing challenges presented by working motherhood- is likely to have an outsized impact on their ability to retain (and attract) women. In a qualitative study looking at the retention of women in private equity, 88% of those interviewed named specific challenges around having children as a barrier to progression (Level 20, Reaping the rewards of retention).

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In her doctoral research exploring maternity transitions in the private equity industry, Kirsty Reynolds – an executive and parental transition coach at TTW – has identified four key challenges that women experience:

As already highlighted, for many women in PE, parental leave coincides with an important stage in their career. They have often already established themselves professionally and have moved from executing for others, to having responsibility for managing relationships, deals and portfolio board seats. As one client described, being more senior for parental leave is a double-edged sword; autonomy and the ability to manage workstreams on one side, and constant responsibility and an inability to truly ‘down tools’, on the other.

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Amongst many of our clients, maintaining their career trajectory is one of the first points of concern brought to coaching. However, it is rarely the focus of managers or firms when they consider their parental leave management processes. Women often find themselves in a position of having to proactively manage – dare I say, defend? – their career internally. Well-intended managers encourage women to switch off and delay any career-related conversations or concerns until they return, but this is a missed opportunity for important dialogue.

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For example, many women have described feeling the need to ‘advertise’ the fact that they plan to return, to counter a feeling of ingrained cultural scepticism about the possibility of doing this successfully. There is also a strong occurrence of women feeling they need to be explicitly talking about their desires for promotion, or being involved with certain opportunities, or taking on new responsibilities when they come back in order to demonstrate their commitment; in other words, there is a tendency to want to overdeliver and commit 110% when returning.

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When it comes to managing external perception, women in investing roles are concerned about how to manage their deal pipeline and advisor relationships. ‘Being out of the market’ is understandably as daunting a prospect for women as it is for funds themselves. In the case of women with portfolio board seats or responsibilities, there is also often a question about how to ensure that these responsibilities are maintained after being out.

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The impact of parental leave on a woman’s career trajectory in PE is usually front of mind, so it should also be ‘front of process’, when it comes to parental leave management.

A recurring theme with coachees in the private equity industry is the importance of the line manager in ensuring a smooth transition back to work. The quality of the relationship with a line manager dictates the quality of the conversations that occur around the parental transition phases. Many investment executives, due to team structures, do not necessarily have a clear line manager, or this person is a senior partner or head of a team, with whom they have a more distant or transactional relationship. This can affect the feeling of support women have when they are leaving and returning from parental leave.

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Those who have had positive line manager experiences report regular, open dialogue before their leave about their preferences and desires, and a well-structured, closely managed period of return. Managers who take the initiative and lead the way with these conversations positively impact returners experiences. However, these examples are few and far between. Many report that their boundaries are not respected, with some being asked to do ad hoc work when on leave or – at the other end of the spectrum – that they fall ‘off the radar’ and feel forgotten or sidelined around the leave process.

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Anecdotally, many line managers are able to have the right conversations before leave begins; they do a good job of making sure handovers are managed appropriately and that business can continue as usual without their involvement. However, the return process is, more often than not, ‘flimsy’, with a ‘BAU’ approach from day one back at the desk.

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Of course, this may reflect the preferences of some women, but the problem is that many managers do not scope this out properly with the returner. They either do not think about the myriad of implications of returning to work, or they make assumptions based on their own experience or perceived knowledge of the situation, rather than a conversation.

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Line managers are often trying to do the right thing but are ill-equipped to have supportive conversations or manage the return-to-work sensitively and proactively.

The infamous ‘juggle’ or quest for ‘work-life balance’ is as much a conversation in the PE industry as it is in any high-performance, presenteeism environment. For those who are used to working intensely and being driven by achievement and success, having a child can trigger significant shifts in priorities, focus and even identity. This is not to say that professional ambitions or drive change, but rather that the path to achieve this is invariably altered. For high achievers in PE, the logistics around elements such as childcare are usually well-planned and executed on. Where challenges tend to present themselves are around returning to work with a ‘working mother’ identity, and the shifts that often requires – anything from changing working rhythms, to changes in levels of self-confidence.

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We know that there are very few senior women in private equity, notably in investment teams, and fewer still who are also mothers. Many of our coachees report that they are the first to take parental leave in their team, or in their region. Research indicates that this ‘trailblazer’ phenomenon significantly impacts women’s experiences, as they lack role models and have to forge their own path in structuring the work-life blend that works for them. This awareness of what individuals need in order to thrive in their new position is not always obvious.

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We notice that returning to work with a different set of parameters after parental leave can provide a unique opportunity for many to assess and understand their values and priorities more clearly. However, this level of awareness can be hard-won and may follow a period of struggling to adapt to the new rhythms of life and work, as a professional and as a mother.

A common challenge we encounter when coaching women going on parental leave in the private equity industry is that they set themselves a very high bar. Those that work in PE are typically very motivated and used to delivering continuously to a high standard; unsurprisingly, this rarely changes when women return from leave. In fact, research suggests that as early as pregnancy, and certainly after returning from leave, women are more likely to adopt strategies to hide any struggles they are having. This also extends to those who have fertility challenges and have had to explore alternative routes to motherhood. They feel guilty about not working as intensely, or worried their performance is slipping, and this drives a desire to outperform to demonstrate their commitment to their role.

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If things do not go as anticipated when returning to work, such as losing a board seat or being overlooked for a deal that they should have been involved in, we notice that women are often quick to blame themselves; for example, they suggest they should have been more proactive, or it might not have happened if they had taken a shorter leave. Research indicates that the PE industry sends the message that you should be able to handle anything and everything, in its culture of success, which disproportionately impacts those who have other care responsibilities in their lives.

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Although such feedback is rarely given directly by others, the pressures that women describe are often embedded in the culture of their firm and the industry. We observe that, subconsciously, many have internalised these standards and values and judge themselves against them. Amongst those who do decide to leave after parental leave, a values shift is one of the most common reasons we observe; some no longer want to fit into the mould that the industry provides.

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The challenges that women face when going on parental leave in the private equity reflect many of the challenges faced by other high-performance environments. However, the culture of the industry is unique, as is the pace and nature of the workflow, which requires a nuanced approach to managing leave.

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It is also important to keep in mind that increasing numbers of men are also being offered family leave within the PE industry. We have observed that some of the challenges we discuss above also relate to men, but that there are different systemic challenges. For example, there is often a prevailing culture that other types of family leave are optional or less valuable, meaning that those who take it can be perceived as being less career-focused. Also, there are often less support systems in place for men taking family leave, including less financial support than maternity leave.

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In Part 2 of this article, we look at what firms can do to improve the experience of family leave in their firm, particularly around enhancing retention of women, and also what individuals can do to positively impact their experience of leave and the decisions they make about their career at this pivotal time of their lives.