Gender Gap: Women Investment Professionals in German-Speaking Europe
DEIDiversityPortfolio Company LeadershipLeadershipPrivate CapitalDiversity, Equity, and Inclusion AdvisoryExecutive Search
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Daniela Nienstedt
March 15, 2021
6 min read
DEIDiversityPortfolio Company LeadershipLeadershipPrivate CapitalDiversity, Equity, and Inclusion AdvisoryExecutive Search
German companies have made strides toward diversity, but the full benefits will not be reaped until the entire organizations understands its importance.
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Diversity is more than just a social issue; it is also increasingly a business issue. A growing body of research documents the positive effects of diversity on talent strategy, innovation and financial performance. For example, teams with the greatest numbers of women are 25 percent more likely to outperform financially, according to McKinsey & Company’s most recent analysis of more than 1000 large companies around the globe. A 2019 study by the International Finance Corporation that used performance data from more than 700 private equity and venture capital funds found that those with gender-balanced senior investment teams generated investment returns that were as much as 20 percent higher than those with a majority of male or female leaders. The evidence is clear: Industries that fail to cultivate diversity will not be able to hit their full potential.

In German-speaking Europe—Germany, Austria, Switzerland—women are underrepresented in multiple industries. One of the most extreme instances of this gender gap occurs in private equity. To learn more, Russell Reynolds Associates (RRA) analyzed the profiles of more than 1350 private equity professionals at over 100 funds and found that only 8 percent of the German-speaking investment professionals are women. This compares to 13 percent representation among private equity professionals globally, according to recent Preqin data.

Just 8 percent of German-speaking investment professionals are women

For a closer understanding of women’s career paths in private equity, RRA categorized the funds into four buckets according to current fund volume. We found that women are represented at funds of all sizes, although they are distributed unevenly among them. Of the approximately 100 German-speaking female investment professionals, the largest share can be found at large-cap funds (10 percent), while the smallest share is with small-cap funds (6 percent).

Female German-speaking investment professionals are represented at funds of all size, but mostly at large cap 

 Male Female 
Small cap 94% 6% 
Smaller cap 91% 9% 
Larger mid cap 92% 8% 
Large cap 90% 10% 

Fund size: Small Cap: <500m €; Smaller Mid Cap: >=500m €; Larger Mid Cap: >=1.1bn €; Large Cap: >= 3.5bn €

Source: Russell Reynolds Associates, 2021 analysis of more than 1350 German speaking investment professionals

Looking at seniority levels provides additional detail on the career trajectories of female investment professionals. The majority of these women are relatively new in their careers; only 20 percent have reached the managing director level or made partner. This is typical across regions. Even when relatively large numbers of women enter the field, private equity firms struggle to retain them.

As seniority levels increase, the proportion of women declines

Seniority Level% of women investment professionals
Associate33%
Investment Manager / VP21%
Director26%
MD / Partner20%

Source: Russell Reynolds Associates, 2021 analysis of more than 1350 German speaking investment professionals

A more detailed breakdown of the cluster by seniority and fund size shows that the percentage of women in senior positions is comparable across fund sizes when comparing both director and managing director levels to earlier-stage levels. However, the proportion of women at the highest levels in large cap firms is about half of that of small cap ones.

Women at large cap firms are less likely to hold top-level roles than those at smaller firms

 % of Women Investment Professionals by Firm Size
Small CapSmaller Mid CapLarger Mid CapLarge Cap
Associate36%25%38%32%
Investment manager / VP14%30%19%23%
Director18%20%33%31%
MD / Partner32%25%10%14%

Fund size: Small Cap: <500m €; Smaller Mid Cap: >=500m €; Larger Mid Cap: >=1.1bn €; Large Cap: >= 3.5bn €

Source: Russell Reynolds Associates, 2021 analysis of more than 1350 German speaking investment professionals

While most investment funds appreciate the value of diversity, it is clear there is still much work to be done. To date, organizations like “Level 20” have been instrumental in supporting the development of women in private equity through a broad range of mentoring programs, networking gatherings and expert sessions. An increasing number of funds have also introduced measures in order to support professionals who want to have a family and manage their career at the same time.

In our experience, the top ways for PE firms to close the gender gap include:

  1. Start earlier: Recruiting women at the university level is one effective way to raise awareness about private equity career paths
  2. Establish robust mentoring and sponsorship programs: Support women with intentional relationships that enhance their development and success
  3. Rethink benefits: Provide incentives that match needs, such as covering household assistance and additional childcare costs for business trips
  4. Elevate inclusion: Creating a culture that encourages and strengthens the accomplishments of women – as well as all employees – will inherently drive performance

These are all important steps toward gender parity. Monetary and time contributions certainly help, but ultimately real change needs to be embedded in the culture of the funds. It only makes sense: For the business to reap the full benefits of diversity, the entire organization must understand, respect and adopt its importance.

Authors

  • Daniela Nienstedt is a member of Russell Reynolds Associates’ Private Equity practice. She is based in Frankfurt.
  • Nadine Mensdorf is a member of Russell Reynolds Associates’ Private Equity research team. She is based in Frankfurt.