Management

Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

In trying to clean up its own act, Uber Technologies Inc. -- the ride-hailing startup whose boys-run-amok corporate culture forced an internal probe over sexual misconduct and gender discrimination -- has inadvertently shown a light on another male-dominated corner of the corporate world: private equity.

For this, we can thank David Bonderman, the 74-year-old TPG Capital co-founder also known as "Bondo," who was a member of Uber's board. That changed after Tuesday, when at an all-hands meeting to address changes at Uber he made a quip to fellow director Arianna Huffington as she discussed the addition of another woman (Wan Ling Martello) to the board. In case you missed it, the exchange went like this:

Huffington: There’s a lot of data that shows when there’s one woman on the board, it’s much more likely that there will be a second woman on the board.

Bonderman: Actually what it shows is it's much likely to be more talking.

His tone-deaf crack rightly sparked outrage, spurring a swift apology both to Huffington and to Uber's employees for what Bonderman described as a "careless, inappropriate and inexcusable" remark. He also resigned from the board effective Wednesday.

Bonderman's indelicate comment made me wonder just how diverse the top tier is at his own firm and the answer may not come as a big shock: TPG has no women on its board and none on its management committee, which is tasked with key decision-making. Its most senior female staffer is Chief Compliance Officer Joann Harris. But TPG isn't alone. For most of the biggest private equity firms, male-heavy management is the norm. 

In fact, the six U.S. publicly traded private equity firms and their large rivals now all trail Uber, which just doubled its female representation to two of eight, or 25 percent -- a figure Huffington described as "still not enough, but progress." 

Back Seat
Large private equity firms trail Uber in terms of female board representation
Source: Bloomberg, company reports and S&P Global Market Intelligence, a division of S&P Global

It's not just boards. Only one out of every 10 senior executives at any private equity firm across the globe was female as of March last year, according to the most recent data available from Prequin:

Map It Out
Asia-based private equity firms have more female senior employees as a proportion of total staff. North American firms should play catch-up.
Source: Preqin
*2017 data not yet available

It was even worse at buyout firms:

Some Are Better Than Others
The proportion of senior female employees at buyout firms has shrunk to a measly 7.3 percent
Source: Preqin
*2017 data not yet available

Private equity can do better and should have every reason to want to do so. Strong female leadership can spur better returns, improved decision-making and fewer governance-related controversies, according to MSCI. And for the publicly traded firms that continue to believe their stock is undervalued by shareholders, there's another incentive: Institutions are paying more attention to the gender split of the boards in which they invest.

It's true that the majority of firms are controlled by founding shareholders and their various stakeholders, including pension fund investors who haven't been up in arms (yet) about their lack of gender diversity. But that doesn't mean they should get comfortable being laggards. Instead, they should lead by example.

Over time and as a group, private equity firms have been, are, and will be investors in hundreds of thousands of companies. Tweaking the compositions atop their organizations can set the tone for far-reaching change, and there's no better time to start than now.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Gillian Tan in New York at gtan129@bloomberg.net

To contact the editor responsible for this story:
Beth Williams at bewilliams@bloomberg.net