By Preeti Singh
Private-equity giant Blackstone Group Inc. is making a wider push to increase diversity in portfolio companies and their boards of directors with two new initiatives.
The first focuses on board-level representation, with a mandate that a third of board seats at newly acquired U.S. and European companies are filled by diverse candidates within a year after Blackstone's acquisition of a controlling interest. New York-based Blackstone defines diversity based on race, gender and sexual orientation, where known.
The diverse directors would include those from company management, from within Blackstone's ranks and among independent directors, according to Joseph Baratta, Blackstone's senior managing director and global head of private equity. Mr. Baratta is also a member of the firm's management committee and has long championed diversity. Earlier this year, Blackstone said it would aim to diversify its own hiring by expanding the number of colleges from which it recruits.
"We wanted to be very specific and intentional," Mr. Baratta said of the new mandate, adding that the one-third representation goal "was something we thought was realistic to accomplish now and over time we'd like to drive it higher."
According to Mr. Baratta, Blackstone makes 25 to 30 control investments annually across its private markets businesses, and in recent years has focused on adding women to portfolio company boards: Women filled half of the independent director seats it controlled at portfolio companies last year.
"The new mandate would help cast the net to expand ethnic diversity," Mr. Baratta said. The firm was already working with executive search firms and forums that focus on diversity to identify board candidates, he said. Blackstone began the effort on a less formal basis several years ago.
The second initiative focuses on portfolio company staff all the way down to entry-level jobs.
As part of the initiatives, Blackstone hired an experienced executive, Marcus Felder, to spearhead strategic hiring initiatives as a vice president in portfolio operations. Previously Mr. Felder worked at the Posse Foundation, leading efforts focused on military veterans, and has more than 15 years of experience developing and executing strategies and programs to create access and opportunity for diverse groups of people.
Among his initial duties, Mr. Felder will lead the pilot program, called Career Pathways, to help expand traditional entry-level applicant pools for portfolio companies.
Chosen for their large staffs, three Blackstone portfolio companies will participate in the Career Pathways program, partnering with two nonprofit organizations, Year Up and COOP Careers. Both provide job training and recruiting from underserved communities, and Mr. Baratta serves on the Year Up board.
The companies are Alight Solutions LLC, a benefits administration provider in Illinois, Great Wolf Resorts Inc., an operator of indoor water parks based in Wisconsin, and BME Group Holdings BV, a European building materials company.
Year Up trains young people who have been derailed from a regular career path. The group works with almost 5,000 people each year on functional skills in areas like software coding and finance and accounting, and in soft skills such as working within a corporate setting.
COOP Careers recruits recent graduates from low-income backgrounds who come out of urban public colleges and universities to help them learn technical skills through apprentice-like programs and to build contacts within the digital marketing and data analytics industries.
At Year Up, Mr. Baratta said an opportunity gap exists for high-quality student participants.
"These people are not in the ecosystems and patterns of regular recruitment processes," Mr. Baratta said. "The new program is an attempt to change those patterns to access different pools of very high-quality talent that brings diverse backgrounds, diverse opinions and will really make these companies better."
Ultimately, Mr. Felder's efforts and the pilot program are expected to help portfolio companies recruit diverse candidates, Mr. Baratta said. The efforts at inclusion will help drive results at the companies, he said.
"This is meant to be like an organic development that becomes part of their standard operating procedure over time and where they appreciate that it benefits their businesses to have a diverse pool of employees," Mr. Baratta said.
Write to Preeti Singh at email@example.com
(END) Dow Jones Newswires