Jensen Partners’ Sasha Jensen on attracting diverse talent

How are private debt firms currently thinking about DE&I when recruiting?

AAs recently as Q3 2021, in our quarterly newsletter, we were asking, ‘Why are private credit firms failing to measure up on diversity?’ Yet that dynamic is changing. For years, private debt has lagged almost every other alternative asset class in nearly every measure of DE&I.

However, starting in Q1 2022, we have seen a material improvement in diversity across private debt. Over the last few years, managers have realised that DE&I has become an imperative for firms seeking to be competitive, whether in the market for talent or the market for institutional capital.

What steps can private debt managers take to attract more diverse talent?

Setting hiring targets with clear deadlines is the most impactful DE&I action managers can take. Hiring targets force accountability and convey commitment to employees and industry peers. These targets can either be absolute (for example: hire 20 more women) or relative (increase the representation of women by 20 percent) with specific and achievable deadlines.

In fact, we feel so strongly about hiring targets that we made our own last year, pledging that all future human capital searches would begin with a diverse candidate pool comprised of at least 51 percent of candidates emanating from underrepresented backgrounds. If an executive search firm can do it, so can any investment firm.

Are there any challenges to improving gender diversity in the industry from a recruitment perspective?

The biggest gender diversity challenge for private debt firms is female representation in senior investment roles. Based on data from Jensen DiversityMetrics™, marketing and fundraising roles at private debt firms have maintained female representation in the 40 percent to 50 percent range for several years. However, at the top 50 private debt firms (by AUM) only 7 percent of investment committee members were female. Even worse, Jensen Partners did not identify any female investment committee members who identified as Black, Hispanic, Middle Eastern or South Asian.

How can those challenges be overcome?

To overcome DE&I challenges, private debt firms need dedicated, always-on, diverse candidate pipelines. To help private debt firms achieve this goal, we built the Jensen DiversityMetrics Pipeline Tracker™, which enables on-demand pipelines of thousands of self-identified diverse candidates.

Once a pipeline of diverse talent is established, the most effective approach is to focus on senior level talent, with the idea that senior hires will build out their teams with diverse talent at every level. This has proven to be more effective than mentorship or recruitment programmes, which can often take a long time to bear fruit.

Though all of these strategies take time, we fundamentally believe that gender parity and equitable representation are achievable in the private debt industry, and we remain committed to helping our clients make meaningful progress toward those goals.