Family leave in private equity: Where do we go from here?

Ruby Dark

May 6, 2024

A new report published by Level 20 reveals that private equity firms across Europe are focused on supporting parents throughout their careers. But there are still significant gaps between the parental leave available to men and women. So what can we do to improve?

It’s no secret that the private equity industry has a gender diversity problem. Few women enter the industry, and even fewer stay long enough to advance to senior positions. A 2021 report from BVCA revealed that women make up 38% of the private equity and venture capital workforce, yet hold just 15% of senior roles.

So what’s holding women back? One theory is the lack of parental support available. Private equity is a fast-paced world. Employees avoid taking extended periods of leave in case they lose out on deals or fall out of the loop. Without extensive employer support, working parents may feel that balancing their careers with their families simply isn’t possible. Women still bear the brunt of childcare responsibilities, so they’re pushed out of the industry before they can reach the top.

But no one should face barriers in their career due to their family life. To support working parents, strong family policies are essential. A recent report by Level 20 dives deep into the state of family leave policies across 100 private equity firms in Europe and the UK. Despite an increased focus on fair family support, they reveal that women and men still experience uneven access to parental leave. So what can we do to improve things?

Family Leave in Private Equity

It’s welcome news that private equity firms are focusing more than ever on supporting working parents. In the past, women tended to leave private equity after taking maternity leave, especially in high-pressure deals-related roles. But today the picture is different. 82% of women returning to deal roles stay at their firm after maternity leave.

This suggests that for the vast majority of women, taking time out for child care isn’t a detriment to their careers. When women stay in the industry for longer, this benefits diversity in the whole ecosystem.

Women investors are up to twice as likely to invest in female founding teams, who currently receive less than 2% of overall funding in the UK.

Family leave provisions

Across the firms included in the report, full-paid maternity leave averages at 26 weeks. For paternity leave, the average was only 4 weeks, showing a huge gender gap in access to family leave. But the average time off taken by parents exceeds this. Women take on average 2 more months’ leave and men take 1 more.

The fact that parents are taking unpaid leave on top of their allocation shows that people feel more confident in taking extra time off. Again, this suggests that ideas around parental leave are changing. Traditionally, employees have believed that any extended time off work will harm their careers. Today, parents want to take advantage of family leave without seeing their careers suffer, and employers should support them in doing so.

How equal are family leave policies?

Cultural ideas around childcare are shifting. Men and women want to play a more equal role in raising children. But has the attitude of leaders in private equity kept up with these changes? The Level 20 report suggests that policies are lagging behind our expectations.

Only 33% of firms offer equal maternity and paternity leave. And it’s much more common for European firms to offer equal parental leave than in the UK. There’s a huge gap in expectations for childcare, with women still expected to take on the lion’s share of duties.

Although 80% of firms offer enhanced maternity leave, this figure drops to 74% for enhanced paternity leave. And even when men do have access to enhanced parental leave, this doesn’t mean they take it up. Only 36% of men took up some of their entitlement to enhanced parental leave.

There’s a range of factors that play into this. On average, men in private equity don’t have access to as much family leave as women. They also face uneven expectations and beliefs around family leave. Studies show that both men and women believe that taking time off for child care could be detrimental to men’s careers.

But if private equity wants to do something serious about the gender gap in the industry, it’s increasingly important to equalise family leave provisions. To retain employees long-term, firms need to modernise their family leave provisions with equitable policies.

What other family support is available?

Despite the renewed focus on offering family leave, it seems that this has come at the expense of additional family policies.

  • 44% of firms offer return-to-work planning
  • 40% offer keep-in-touch days
  • 22% offer parental coaching or mentoring
  • 58% have written policies on Shared Parental Leave (SPL)

SPL is one of the most powerful ways to empower parents to balance childcare responsibilities and create equity in career development. We wrote an extensive guide on promoting Shared Parental Leave. One of the easiest and most effective ways to encourage parents to take SPL is to simply promote the policy internally — advice that private equity should follow.

Level 20 found that it’s more common for firms to offer informal, ad hoc support when employees request it. But this means that employees might not be aware of what’s available. A lack of transparency around family policies leads to inconsistency. Not everyone will feel comfortable speaking up and asking for help, especially if they don’t know what support is available.

How transparent are policies?

Level 20 revealed that 89% of firms have a maternity policy and 85% have a paternity policy. This is good news — transparent, codified policies help employees to know what support is available.

But firms are less willing to promote these policies externally. In fact, 86% of firms’ family leave policies aren’t visible externally. This means that parents looking for work in private equity may be put off due to a perceived lack of parental support.

The visibility of family policies is increasingly important to women. Especially if there is a lack of role models of successful women who have taken advantage of family leave in their firms. Employees may be reluctant to go against the grain and take full advantage of family leave if firms aren’t transparent about expectations.

How to improve family support in private equity

The key to equitable family support lies in behavioural design. We can’t change minds without changing the environment. Gendered expectations play a huge role in holding back working parents. Men don’t take family leave due to perceived resistance — they believe their careers will suffer and their employers won’t be supportive. Women are expected to take on most of the childcare responsibilities simply because they are women. These beliefs have a powerful influence on our behaviour.

To make things more equal, firms need to shift expectations with structured policies. Parental leave should be more equitable, transparent, and set as the default option. By normalising the take-up of parental leave and embedding supportive policies, private equity can set the standard that no one will need to choose between family life or their careers.

Equalise policies

Firms like Kindred Capital are leading the way when it comes to equitable, forward-thinking parental leave policies. The early-stage VC firm offers an 18-month parental leave programme (including 4 months of full pay) for all expectant parents, with everyone treated equally regardless of gender.

Their policy encompasses flexibility. At any point in the 18 months after having children, parents can return on a reduced schedule at full pay. The firm is committed to supporting parents by gradually ramping up their responsibilities when they come back to work. This keeps more senior women in the business and provides a supportive environment for new parents.

This is a prime example of how firms can go above and beyond to ensure parents get the support they need to advance in their careers. Return-to-work programmes are crucial for retaining parents. Firms should help parents on leave maintain an overview of the pipeline so they can stay in the loop and hit the ground running when they return.

Make policies more structured

Many private equity firms still rely on informal setups, with employees having to request additional support. This leaves employees in the dark about family support expectations.

For equitable access, policies must be accessible and transparent. Family support should be boasted about in job ads, discussed during onboarding, and covered extensively and openly in the employee handbook. Private equity has a long way to go to reach this transparency. 75% of firms do not provide details of family leave policies to applicants unless they request it.

But when this information is readily available, it contributes to a feeling of inclusion. Employees will see that the firm takes family leave seriously and is committed to supporting its people. It also impacts consistency. When all employees understand their entitlement, everyone can access the same support.

Highlight role models

To improve the uptake of family leave, firms should draw attention to senior role models who take parental leave. When employees see that the precedent is set from the top, it shifts the standard and normalises leave for everyone.

If senior men in the firm aren’t taking leave when they become parents, it signifies that they feel pressure to stay. This also impacts perceptions for women — if men aren’t taking time out because they fear it will harm their careers, then leave is also less acceptable for women.

But role models can shift expectations. When senior men and women in private equity firms take advantage of family leave, it creates a more fair and inclusive environment for all parents. Firms should encourage senior leaders to share their experiences taking advantage of family support policies. This will show employees that prioritising their family life won’t prevent them from climbing the career ladder.

There are many barriers to equitable family support. Some structural, such as a lack of policies or transparency, and some cultural, such as gendered expectations around care responsibilities. But everybody benefits when all parents feel supported to take time off.

Research suggests that children who spend time with their fathers in addition to their mothers grow up to be more intelligent, do better at school and in their careers, and have better mental and physical health. And studies have found that fathers who are more involved in childcare are also happier and healthier.

The Level 20 report has shown that private equity has come a long way in supporting working parents in the industry, but more can be done. By tweaking their set-up with clever behavioural design, private equity firms can improve gender diversity in the industry and support parents to reach the heights of their careers.

Backing it up

BVCA & Level 20. (2023). Diversity and Inclusion 2023 Report.

Kaufman, G. (2018). Barriers to equality: why British fathers do not use parental leave. Community, Work & Family, 21(3), 310-325.

Level 20. (2024). Family Leave in private equity, A review of policy, practice and impact.

Likki, T. & Hacohen, R. (2018). The benefits of rebalancing childcare. The Behavioural Insights Team Blog

Twamley, K., & Schober, P. (2019). Shared parental leave: Exploring variations in attitudes, eligibility, knowledge and take-up intentions of expectant mothers in London. Journal of Social Policy, 48(2), 387-407.

West, C., & Sundaramurthy, G. (2020). Women VCs invest in up to 2x more female founders. Kauffman Fellows25.