The state of diversity in global private markets: 2023

McKinsey's 2023 report on diversity in global private markets finds that the industry, which manages $11.7 trillion in assets up from $8.0 trillion the previous year, continued to show encouraging but uneven progress despite a slowdown in fundraising and deal making in 2022 driven by rising interest rates. The report notes that diversity on investment committees has ticked up and that reporting of diversity metrics to institutional investors continues to grow. However, McKinsey concludes that given current progress it will be several decades before the private equity industry achieves gender parity at the principal and managing-director levels.

On gender, women held 48 percent of entry-level roles across private equity at the end of 2022, but only 20 percent of managing-director roles. The gap is widest in investing roles, where women hold 33 percent of entry-level positions and 15 percent of managing-director positions, compared with 44 percent and 21 percent respectively in operating roles. Women's share of C-suite roles rose 3.5 percentage points to 17 percent during 2022. Promotion data show men in investing roles are about 50 percent more likely to be promoted than women, with the largest disparity at the principal level. McKinsey cites limited sponsorship and mentorship for women at the vice president level as a possible contributor, citing a North American PE fund's head of talent who described a "sticky floor" for ethnic minorities and women at middle levels.

Regional and firm-level differences are significant. Leading firms had women in 38 percent of investing roles compared with the 25 percent global average, while lagging firms had no women at the managing-director investing level and 17 percent women in investing roles overall, with female attrition 1.7 times the global average at 27 percent. McKinsey says Europe would need more than six decades to reach senior-level gender parity, the Americas lag furthest at middle and junior investing levels, and Asia-Pacific has made the most recent progress at middle and senior levels, though its associate-level representation declined slightly.

In the United States and Canada, ethnic and racial minorities make up 20 percent of managing-director investing professionals, versus 30 percent of the Canadian population and 41 percent of the US population. Minorities held 18 percent of investment committee seats in 2022. McKinsey attributes some of this gain to firms being required to disclose C-suite and investment-committee diversity data in investor due diligence; a chief HR officer of a North American midsize PE firm described such disclosure as standard in due diligence questionnaires. White professionals held 70 percent of investing roles and 80 percent of managing-director roles, and were more than 2.3 times as likely as other groups to be promoted to managing director.