Five Questions with Kristin Mugford, Harvard lecturer, mentor to women in PE

Buyouts talks to Kristin Mugford, who became Bain Capital’s first female managing director at age 32.

Kristin Mugford became Bain Capital’s first female managing director at age 32. She joined the global firm’s private equity business in 1994 and helped start Bain Capital Credit (then Sankaty Advisors) in 1998.

Mugford, coming from a family of sisters, was the coxswain for the men’s crew team at Harvard University. At the time, it was unusual: “It was a super-helpful experience in preparing me for a largely male-dominated industry,” she says.

Today Mugford is a senior lecturer at Harvard Business School, where she started Women in Investing, a student club focused on helping women, on and off campus, break into and succeed in investing.

What kind of progress have you observed in diversity and inclusion since you joined the industry 25 years ago?

I’m disappointed that we have not made more progress in gender diversity. It does feel like the tides are turning. I’m cautiously optimistic. Without question there has been significant change over the last five years. The biggest part of that is women getting hired. Now what happens? Firms are focused on diversity. The more sophisticated firms are focused on having people of diverse backgrounds thrive. The thriving part — the inclusion part — is a lot harder.

The challenge: What do firms have to do to make their organization inclusive? To really be an inclusive organization means taking a good, hard look at all the aspects of your HR system and culture. Promotion criteria and mentorship are examples.

As a mentor to female college students and young professionals, what advice do you give to those thinking about a career in PE?

The one thing that I really stress is the importance of picking the right firm. In the last couple of years, we’ve seen this dramatic shift in firms looking to hire women. It’s really important to ask why. Are they doing it because they believe having a diverse set of professionals will make them a better investor? Or are they doing it because they are getting outside pressure and want to improve their numbers?

Firms have become more verticalized. There’s a healthcare team, a tech team, etc. These are partnerships and different individuals have different perspectives on the importance of diversity. Within any partnership, people are at a different place in this journey. It’s pretty easy to assess why a firm wants to hire you. I think it’s sometimes a little trickier to assess the partner you’re going to be working for because they say the right stuff.

I encourage women to understand the basis of compensation in the partnership. Is the partnership a collaborative, team-oriented partnership or a highly competitive partnership? Most people don’t spend enough time thinking about being a partner.

In the wake of the #metoo movement, what have you observed in the PE community?

There are some bad actors out there, but by and large the industry is nice people trying to do the right thing.

In the research we’ve done talking to women in private equity, they report that many “cringy moments” often take place with the people outside of the firms. Management teams, bankers and lawyers. And I don’t think firms realize when that happens to their women.

The thing I worry about: The natural reaction for well-intentioned men is to pull back in training, and that’s going to make life worse for women. It comes from a good place. It comes from a desire to not screw up. The consequences, I believe, can be significant.

Private equity is an apprenticeship business and informal mentorship is critical to success.

There’s an importance for men to find ways to ask — in an honest and authentic way — what it’s like to be a woman or someone of a different culture or different background. Just to ask the question. With the firms that I’ve seen, it’s most effective when it’s done by the most senior men in the organization.

What kind of pressure are you seeing from LPs on managers to change their cultures?

I would observe that even in the last two years, this has changed dramatically. My perspective is it is [largely] being driven by the questionnaire in the LP community.

Firms are really changing in their desire to hire women and they are increasingly realizing that’s not enough. What they need to do is make sure they’re measuring the percentage of women at all levels — how many associates, principals, MDs and senior people are there?

If I could have one wish for LPs today, it would be to call for diversity within the senior leadership and boards of portfolio companies. My instinct is that a lot of firms today aren’t measuring this.

Beyond the moral issue, from a business perspective, why is diversity so important in PE?

The argument is: having diverse perspectives helps you make better decisions. Diversity goes beyond gender. There are a lot of examples of diversity of thought and diversity of background that help you make better decisions.

The second part is the talent pool. There’s a demand for great talent. When you’re looking just at guys, you’re missing a flood of that talent pool.

This interview was edited for clarity.

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