Our Perspective on Driving Investment Returns Through Talent Management

By Anita Pouplard, John McCrea, Kathleen Dunton, Michael Semark

In a recent report published by Hunt Scanlon Media titled 2020 Global Private Equity Talent Leadership Report, Boyden’s PE/VC team was asked to provide timely insights on the state of the current private equity market, as well as what’s around the corner in 2021. Below are excerpts from the full report provided by Anita Pouplard, Global Practice Group Leader, Kathleen Dunton, EMEA Leader, John McCrea, Americas Leader and Michael Semark, APAC leader, on how talent management should be at the core of recovery strategies for PE firms.

How should current CEOs be strategizing to best perform post pandemic?

Pouplard & Dunton: The coronavirus pandemic has been a catalyst for change in several dimensions: economic, societal, personal, and corporate. Companies are facing new challenges for which they were not prepared, the economic impact of COVID-19 has pushed the need to reimagine, reshape and reinvent the future while at the same time keeping the right momentum for maximizing the exit multiples. While driving a company in such uncertainties, Private Equity funds not only expect CEOs to adapt to new circumstances, but also take decisive actions to put the company on the best possible track.  

What trends in talent management strategies are you seeing?

McCrea: We are seeing several PE companies actively pursue pipeline strategies – some more formalized than others. Some PE firms are working with us to compile a bench of subject matter experts (SMEs) to be able to plug into their portfolio companies as needed, help in the evaluation of potential investments, and sometimes move into interim, fractional, or full time roles with the company. Other PE firms work with us on an ad hoc basis to identify a pipeline of potential candidates in advance of making any given investment to be prepared to move quickly with a key leadership transition, as well as assure the firm of the viability of the deal.  Being involved early — before a formal search is required — allows us to build pipelines in anticipation of the need, act more quickly when the need arises, and take advantage of opportunistic situations where the ideal talent is available now, but might be off the market when a formal search might be initiated.

Semark: For executive recruiters, establishing and maintaining active talent pipelines is crucial. Leadership and critical functional executive talent is perhaps the single most important element in manifesting the success of an investment. PE requires executives who have superior judgement around the key drivers in a business. PE needs speedy access to executives with these skills and mindset. Success or failure of an investment is often determined by rapid execution in the first 100 days post acquisition. Having the right people in place can make a huge difference here. Building and having an effective pipeline enable PE firms to act quickly to fulfil these needs — even on an interim basis.

How will CHROs and CEOs impact value creation for PE firms post pandemic?

Pouplard & Dunton: Until very recently, the CHROs function in PE portfolio companies was often either missing or seen as a less important part of the business and not represented in the management committee. Over the past few years however there has been an increased recognition of the importance of this role and its contribution to success both within

PE organizations themselves, as well as in the portfolio companies. COVID-19 has made it very apparent that having a strong HR function is critical to not only retaining and developing talent, but now more than ever in order to maintain good communication, develop and ensure alignment between company values and employee beliefs as well as ensure employee safety.

This said, the collaboration and trust between both the CEO and CHRO to guarantee a best class management team will be the backbone of a successful organization. A cohesive unit at the top will lead to a stabile organization overall and in a context of the war on talent where everyone is fighting for the same profiles, top performers will not only stay, but potential new employees will be more inclined to join an entrepreneurial opportunity and go the extra mile. The value created with this managerial approach would have a great impact on business performance and employee satisfaction. The costs and amount of lost time and speed related to replacing a top performer can be substantial.

The full 2020 Global Private Equity Talent Leadership Report will be available in January of 2021.

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