Published August 1, 2022
With record-high interest rates, the increasing cost of capital, and volatility globally and in the markets, portfolio companies are feeling the stretch. And it’s not getting better any time soon. In fact, 56 percent of market watchers, responding to a July 2022 LCD survey, agreed that the worst of the volatility is still ahead.
As a result of these challenges, there’s more pressure on portfolio companies to operate at their highest level. Operational leadership, from supply chain and IT to HR and sales leadership, is expected to perform at its best to get ahead and avoid poor performance.
Much of this pressure trickles down into leadership hiring. Consider the data shared by Hunt Scanlon in their Private Equity report on the most cited reasons for deal success. The caliber of the management team and their skills cannot be underestimated.
Yet, finding skilled leaders during a time when unemployment is low and good skills are hard to come by, is just one more added challenge. So how do you spot great talent at a time when performance is non-negotiable but good talent is sparse?
The ability to assess talent during interviews and while working together, through the lens of the following three factors, will be key to your effective private equity executive hiring. Here’s what to look for…
An Entrepreneurial Mindset
A “roll up your sleeves” mindset is what’s needed for leaders in this environment. When interviewing candidates, do you get a sense of whether they can operate with this mentality? Does it seem as though they’ll bring a can-do approach to every task and project they take? As second in command to the C-Suite, this soft skillset is non-negotiable—and will help your business flourish in an otherwise frustrating market.
We are not operating in an optimal financial environment, which is why agile thinking is more important now than ever before. Organizational leaders need to maintain cost reduction awareness at each decision and have continuous awareness around process improvements and efficiencies.
Flexibility and Analysis
Great leaders today are able to make concept adjustments on the fly. More importantly, they’re able to communicate change while rallying the team and deploying resources and budgets with continuous analysis of cost versus benefit.
Good Talent is Hard to Find—But It Is Out There
The outlook is not ideal for portfolio companies right now, but that doesn’t mean you can’t grow in this market. It just means you need to find the right leadership and that process looks different now than it did twelve, six, or even three months ago. Remember that you’re hiring for a person—not a role. Remember that we all, at one point, lacked all the skills and experience and yet still achieved results.
In this current hiring market, it’s all about betting on the person and skilling up after hiring. Candidates with an entrepreneurial spirit, the ability to shift on a dime, and an analytical mind are going to excel in this environment and those are the ones you want on your team.
If you’d like more guidance on what to look for or want to have an open conversation about your talent and hiring needs, please reach out to Comhar Partners. Our Private Equity practice group understands that a Private Equity leader must be equipped with a strong set of interdisciplinary skills and we’re here to help.