June 21, 2021 – Today, New York City-based Jensen Partners, a woman-owned executive search and corporate advisory firm for the alternative investment management industry, will launch DiversityMetrics, a software platform to combine self-reported diversity data and human capital management technology specifically designed for asset managers seeking to quantify, measure, report and improve workforce diversity and inclusion – both within their own organization and across their portfolios. The DiversityMetrics platform features a high-tech, high-touch approach that combines customizable data visualization tools with verified demographic data on more than 25,000 investment and distribution professionals, including 8,000 who identify as having a diverse background, working at more than 600 global, alternative investment firms.
“We know that the alternative investment industry has a diversity problem, and each new data point and anecdote provides added evidence that we can use to identify where the gaps are and make specific recommendations for progress on diversity, equity and inclusion (DEI),” said founder and CEO Sasha Jensen. “The power of the DiversityMetrics platform is that it allows alternative asset managers to quantify and qualify the intersectionality of race, class and gender across their workforce, and then use that data to make data-driven decisions about best practices and ensures that the slate of candidates in any given human capital engagement are richly diverse.” It is a product long overdue for the financial sector, which has had its share of diversity hiring problems for years.
The DiversityMetrics platform can be used to benchmark large financial firms against top competitors, enabling a step-by-step roadmap that includes realistic goals and specific areas of improvement on DE&I. Other applications include determining the promotion rate of men vs. women, calculating the rate of people of color in senior positions, and identifying hiring trends based on candidate gender and ethnicity.
“I can’t think of a more useful diversity hiring metrics tool,” said Scott A. Scanlon, CEO of Greenwich-based research and advisory firm Hunt Scanlon Media. “The application of DiversityMetrics across the alternative investment management space will have an immediate impact. In time, we envision use of this software along a much wider spectrum of the financial services sector, where diversity hiring has not always been at the top of the agenda. At a time when culture is now king, this data-driven approach to diversity hiring could not have come a moment sooner,” he said.
“Asset managers have repeatedly made commitments to improve workforce diversity and inclusion, yet there still has not been meaningful progress,” said Ms. Jensen. “Our platform changes that dynamic by bringing increased transparency and accountability to hiring decisions and talent management. Our vision for DiversityMetrics is to take the mystery out of DE&I, helping transform financial firms to make them more inclusive and diverse at every level of the organization.”
As founder and CEO of Jensen Partners, Sasha Jensen leads a team of senior recruitment specialists and data scientists dedicated exclusively to the sourcing, recruitment and placement of capital raising and investment professionals for leading alternative investment firms. As a former investigative journalist, Ms. Jensen firmly believes that data substantiates an immediate call to action. As a woman-owned business, Jensen Partners was founded in 2012 on the principle that diversity is a critical and immediate need in the alternative investment space.
The methodology behind DiversityMetrics relies on both quantitative and qualitative information to generate a holistic picture of how each alternative investment firm stacks up against key diversity objectives. Jensen Partners’ team of 12 data scientists continually build on nearly a decade worth of data as they compile the latest anonymized intersectional demographic data. “This is a stunning achievement for a boutique recruiting firm to have pulled this off,” said Mr. Scanlon.
“DiversityMetrics quantitative data inputs include self-reported and third-party data on the racial and gender diversity of each investment and distribution professional,” said Ms. Jensen.
Qualitative data inputs include anonymized survey data and employee assessments. Both qualitative and quantitative datasets are used to calculate the JP Diversity Index – Jensen Partners’ objective empirical rating system which assigns a score to asset managers to determine where they are in their DE&I journey based on intersectional factors such as rate of seniority of women and people of color, rate of retention, promotion rate, and the structure of the DE&I team. “This proprietary scoring system allows investment firms to benchmark themselves against their peers and is a useful tool for making data-driven decisions on how to improve DE&I efforts,” said Mr. Scanlon.
Using DiversityMetrics, Jensen Partners recently analyzed the diversity of distribution and investment professionals at the 20 largest credit firms and found that just one in four credit professionals identify as women, and only one in five identify as a person of color. Digging deeper, only 1.2 percent of all front-office credit professionals identify as black and only 1.9 percent identify as Hispanic/Latinx. Additionally, less than a third of black and Hispanic/Latinx professionals held senior positions at their respective firms.
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Similarly, DiversityMetrics found that of the 2,665 distribution professionals employed at the top 45 private equity firms (representing a combined AUM of over $5 trillion), only 2.5 percent identified as black and only 2.8 percent identified as Hispanic/Latinx. In comparison, Caucasians accounted for 75 percent of total distribution professionals at the top 45 private equity firms. “This has long been a major issue at private equity concerns,” said Mr. Scanlon. “Once this platform settles in and produces hiring results, our hope is that PE firms and their portfolios will see unique value here.”
Making Diversity a Core Business Objective
For years, many alternative investment firms have been making claims about their commitments to improving workforce diversity and treating workers more equally. Yet, despite the significant effort and resources devoted to the goal of greater workforce diversity, the data consistently shows little progress has been made, according a recent report by Jensen Partners. “While many hoped the public outcry over systemic racism and police brutality would mark an inflection point for diversity and inclusion across the industry, early empirical data does not reflect such a trend,” concluded the study. “To understand why progress has been limited, it is important to recognize why so many well-intentioned diversity initiatives have failed to achieve the desired results.”
What Jensen Partners has learned as the firm helps the largest alternative asset managers around the world hire and retain talent is that when it comes to DE&I, good intentions are not enough. Like so many other business objectives, successful DE&I efforts require proper design, implementation, maintenance, measurement and refinement. Each effort requires data – quantitative and qualitative information that can be used to highlight challenges and identify opportunities.
“In this way, data is one of the best ways to put checks and balances on a firm’s DE&I approach,” said Mr. Scanlon. “That is why Jensen Partners mapped the full organizational hierarchy of all the top managers and platforms across the alternatives industry to develop its DiversityMetrics platform.”
According to Jensen Partners, while a growing number of investment firms have embraced a data-driven approach to DE&I, they are an exception – not the norm. “By and large, the industry’s approach to DE&I has been fraught by a key irony: managers intrinsically embrace data, and for good reason,” said Ms. Jensen. “But when it comes to simple human capital management data and diversity analytics, even the front runners in DE&I are not applying the same systematic, data-driven approach that they have applied to most other business objectives.”
Looking broadly across asset management, progress toward greater DE&I has been extremely limited. The most recent U.S. Government Accountability Office (GAO) report revealed that U.S.-registered asset managers oversee more than $70 trillion in assets, yet less than one percent of those assets are managed by minority or women-owned firms.
Similarly, Pensions & Investments recently reported that at the senior leadership level, 83.7 percent of asset management executives are white, and 74.6 percent are male. Looking more narrowly at the alternative investment universe — which encompasses private equity firms, private credit firms, real estate investment firms, real asset investors, infrastructure equity and credit managers, hedge funds, and private fund placement groups — progress on DE&I has been even more stagnate.
Clearly there is work to be done to achieve more diversity in this sector. “But if the alternative asset industry is truly dedicated to becoming more diverse, equitable and inclusive, the time is now,” said Ms. Jensen. “Investors are increasingly viewing diversity and inclusion as a ‘must have,’ not just a ‘nice to have.’ At the same time, a growing body of empirical research suggests that across industries and business objectives, diverse organizations tend to perform better than non-diverse ones,” she said.
“The alternative asset management industry has arrived at the point where good intentions are no longer good enough,” said Ms. Jensen. “The tools for progress exist and the market is sending clear signals that those who get it right will benefit.”
Sourcing Investment and Capital Raising Professionals
Jensen Partners is a global advisory, corporate development, and executive search firm that leverages its relationships in the investor and alternative asset management community to source and recruit capital-raising candidates. The firm takes a data-driven approach, combining quantitative and qualitative insights to source and place the ideal human capital. In addition to executive search, Jensen Partners offers LP/GP referencing, proprietary 360-degree investor referencing methodology, and compensation benchmarking and analysis.
Jensen Partners leverages its investor relationships as well as its proprietary big data recruitment and competitor intelligence market mapping model to source and place capital raising professionals. This model is based on the firm’s global database of more than 22,000 global alternative capital raisers, which includes professionals from private equity firms, private credit firms, real estate investment firms, real asset investors, infrastructure investors and hedge funds.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media