Sourcing For The Best Talents In The Industry
In order to adapt to the nuances of modern private equity recruiting, it’s necessary to first understand how the industry has changed, says Human Resource Head, Carol Ching of PEG Equity Holding.
The world has seen the private equity industry with explosive growth since the 2000’s. Today, private equity accounts for close to USD4 trillion of assets managed around the world and it has become a regional or global game rather than just domestic with the age of globalisation.
Assets under private equity management are not just growing rapidly, but they represent larger and more sophisticated businesses. This type of evolution makes clear that the strategy of private equity firms is changing.
Before, PE firms used to emphasize operational reengineering. They take portfolio companies that needed direction, streamline processes, and turn that business over for a healthy profit. Today’s private equity firm focus however is on talent reengineering, emphasizing getting the right talent in the right seats at the private equity and portfolio levels.
To fill this increased need, firms are even looking to talent acquisition professionals in the public sector who have experience leveraging talent on large scales. According to Steven Liew, PEG Head of Strategy, private equity firms are experts at determining expected rates of return on their investments.
However, putting the right talent in the right place to drive that return hasn’t come as easily. There is a need to make sure that private equity firms evaluate and develop talent and examine ways in which they determine return on talent decisions and investments.
Steven Liew believes that for private equity firms, nothing is more important than the leaders they place into the companies they oversee. Their money is at risk and their reputations are at stake.
At PEG, hiring the right people can bring great returns – and that has made leadership the new bottom line for the firm. The firm has a heavy emphasis on talent management & development, culture and engagement and this helps in everything from talent acquisition and recruitment to engagement and retention strategies.
As it is, with the right talentl only can a private equity firm helps drive the value of its portfolio companies by focusing on, and improving, their organizational and leadership effectiveness. As such, Steven Liew believes that value creation begins and ends with a well-rounded approach to talent management.
As the Human Resource Head and essentially Talent Manager in the firm, Carol Ching believes that getting the best people into the most important roles does not happen by chance. It requires a disciplined look at where the organization really creates value and how top talent contributes.
According to Carol, big data and advanced analytics promise profound competitive hiring advantages, yet few companies master the alchemy of people, tools, data and strategic focus. Private equity leaders know first-hand how human capital can drive returns.
In the current times, leadership is often a chronically overlooked lever of value creation. At PEG, how individual leaders can and work as a team, and the culture they create are an asset that can generate outsized return. There is definitely a critical link between strategy, leadership and value.
For small and midcap private equity players, the challenge of finding talent will increase as they shifts high growth. According to Carol, the role of looking for the right talent is complex and still evolving – combining senior level talent management best practices with leadership assessment, succession planning and culture shaping acumen – all focused on the goal of value creation and improving team dynamics and business performance.
The days of financial engineering as the only value creation lever are over. Increasingly, Steven says that returns are going to be maximized by building management teams most effective at driving the top line, finding operating efficiencies, and transforming culture.
Institutionalizing a set of best practices in securing talent that yields better investment outcomes should be the goal of every deal team and talent management executive and its a rigorous process that PEG management goes through every year.