Entromy, TalentScape Partners, and BluWave, released the annual report, Private Equity and the Talent Function, analyzing key trends in the talent function in private equity.
“It is crucial in today’s uncertain economic climate for talent leaders to not just move the industry forward, but to create more value for their firms and portfolio companies”
In the era of the Great Resignation and Quiet Quitting, finding and retaining talent is a universal priority for businesses worldwide. With added pressure to deliver value to investors especially in a slow deal market, private equity is increasingly investing in human capital, which according to BluWave, has more than doubled from 17% of private equity projects at the start of 2018 to 45% by the end of 2022.
HR Technology News : HR Tech Interview With Rosa Finelli, Executive Director, L&D At Kaplan
As advisers to leading PE firms and individuals in the talent partner role, the three firms worked collaboratively to gather data on the approaches firms can take to maximize alpha generation while responding, predicting and adapting to the evolving demands of the role as the market shifts in 2023.
The survey of talent partners at PE firms spanning small and mid sized firms ($100-300M AUM) to mega firms ($5B+ AUM), reveals strong consensus on the value being brought by human capital professionals in PE during a volatile market:
Nine out of ten survey respondents agreed with the following:
- Their firm leads or accelerates recruitment and selection of key executives for portfolio companies.
- Their talent group possesses critical business and domain knowledge required to be a credible resource for investment professionals (eg, diversity and inclusion, outsourced HR, compensation, org design, etc).
- Their firm facilitates critical talent discussions and decisions within each portfolio company (eg, terminating an employee, facilitating the deal/management 100-day plan discussions, org structure, etc).
Notwithstanding the progress being made by human capital professionals in PE, the role is nascent and has significant room for growth and development.
Other survey findings included:
- Less than half of talent partners say their firms collect and analyze HR data across the portfolio to assess and predict risks.
- Many do not maintain momentum and discipline around human capital throughout the investment lifecycle – half don’t have post-close playbooks and standardized processes to utilize the talent group’s skills and services from diligence to exit.
- Only 40% say they have an effective dashboard view on the state of talent topics across portfolio companies that they update semi-annually.
HR Technology News : HR Tech Interview With Alison Martin, Founder And Managing Director At Engage Mentoring
“Human capital is the number one trend in private equity,” said Sean Mooney, CEO and founder of BluWave. “It is crucial in today’s uncertain economic climate for talent leaders to not just move the industry forward, but to create more value for their firms and portfolio companies,” Mooney said.
HR Technology News : HR Technology Highlights – HR Tech Daily Round-Up For 27 March 2022
[To share your insights with us, please write to sghosh@martechseries.com]