Mentoring: A Proven Tool For Building A More Dynamic and Diverse Workforce
Created on January 26, 2016
Throughout my career, mentors changed my trajectory. Through them I met successful people who were willing to listen to my ideas—and give their advice on how to turn them into great opportunities.
Every year, my primary resolution has been to “give forward” what they gave to me, and to be a mentor. You might be pleased to know that January is National Mentoring Month—a great reminder to all of us to reach out to someone early in his or her career.
This month reminds us of presidents past, of Dr. Martin Luther King, of service to others and the lasting impact we all have a chance to make in our lifetimes. And while mentoring isn’t the only solution, it is one way to build a team of fund managers and portfolio companies in the alternative investment industry that is strong and robust because of its diversity.
Take a look at this evidence:
Diverse funds out performed non-diverse competitors. Small private equity funds managed by diverse and minority investment professionals in the middle market and U.S. emerging domestic market produced better returns than the U.S. Private Equity benchmarks and Buy-Out subset from 1998-2011 according to KPMG.
Diverse teams out-innovated their peers. Companies with diversity, including inherent and acquired diversity, were 70% likelier to report that the firm captured a new market, according to the Harvard Business Review. A team with a member who shares a client’s ethnicity was 152% likelier than another team to understand that client.
The fastest growing sectors are women- and minority-owned businesses. New census data show that the rate of growth for women-owned employer firms is three times that of men-owned employer firms and the rate of growth for total women-owned businesses is almost four times the rate of men-owned business. Similarly, between 2007-2012, the number of minority-owned businesses increased by 2.2 million, whereas the number of non-minority- owned businesses declined by 1.1 million.
Funds led by women are more likely to invest in women. Venture capital firms with female partners were 2.5 times more likely to invest in companies with women on the management team according to Babson College's Diana Project.
Younger generations recognize the value of diversity. Younger generations of venture capital investors, CFOs and administrators are increasingly more diverse than previous generations (National Venture Capital Association).
It’s up to you and me to build the team. Talented women and minorities are there to be found in less senior positions. Consider reaching out and mentoring them, and you will help improve diversity and competitiveness in 2016. You can:
Reverse the trend for women. Female partners in venture capital firms actually declined in the last 15 years, from 10% in 1999 to just 6% in 2014 according to Babson College.
Use diversity to increase the overall success of investment funds. Just 13% of venture capital partners self-identified as minorities, and of those only 1% African American and less than 1% Latino, according to the National Venture Capital Association .
Use private organizations that have built a pipeline of qualified and diversified talent. This is a cost effective way to counteract a lack of diversity: Toigo Fellows, SEO Alternative Investment Fellows, Gateway to Leadership Interns, Management Leadership for Tomorrow Fellows, and Kauffman Fellows.
I look forward to making new acquaintances in 2016 as I mentor young professionals. My colleagues, new and old, do the same. I hope you’ll join us as a mentor.
Michele Schimpp is the Deputy Associate Administrator for SBA’s Office of Investment and Innovation.
This post originally appeared on the SBA.gov