February 18, 2022
The Talent Uprising: What “The Great Resignation” and Other Talent Trends Mean for PE Firms
It has never been harder to attract top talent to private equity and PE portfolio companies. We’re seeing a huge reluctance to leave jobs for anything less than top brands, and successfully recruiting out the absolute all-stars is requiring more than just outsized economics. So, what can PE firms do?
1. Start the process early. It bears repeating that the war for talent has never been more fierce, so you need to move extremely fast when you see someone who fits. As a result, our clients are spending more time at the outset before launching searches to get all the stakeholders in agreement; candidates can smell misalignment. This means you need to iron out the business strategy, the case for the role and the compensation parameters early on. At the senior-most hiring levels, it has been commonplace to have more ambiguity when chasing big name executives and difference makers. But owners and investors can no longer afford this lack of clarity and the best in the business are spending more time linking how value will be created by each role on the team, and what that means they need from each position. Doing the upfront work and getting an early jump on aligning stakeholders can actually save you considerable time in the end.
2. Don’t eliminate candidates too soon. Talent is scarce and hard to attract in this era of “The Great Resignation.” Suddenly, the evolution of the employee-first mindset is not just about the broader workforce, but also about the senior executive. If you meet a good candidate, but aren’t quite sure they are the solution, keep them engaged. It is painful to run a full process only to find one of your earlier candidates (or top employees) was the best solution out there after all. In this market, chances are they will no longer be available if you didn’t keep them in the process and take them seriously throughout. The “work-anytime-from-anywhere-with-any-device” mindset is becoming pervasive, as is the notion of creating your own “corporate ladder” versus climbing someone else’s. So, in a world where everyone can become a leader, why would we expect our more senior hires and top talent to wait around for an appointment? For more on these workforce dynamics, check out the many observations made by my Kincentric colleagues on what we are calling the Talent Uprising.
3. Rethink your ideal candidate. Massive wealth creation and compensation expectations during these last few years, combined with the strong need and desire for more diverse teams have changed the profile for in-demand talent. Next-gen and step-up candidates from lower in an organization, who may be less proven but are highly capable and motivated, become more appealing. This increases the need for better assessments that examine not just experience, but also individuals’ capability, character and potential.
4. Involve senior-most hiring sponsors from the start. Top talent needs to see and feel the commitment to their recruitment to believe in the value of the opportunity. Without this, they have plenty of other options where they know they will be important. Too often sponsors seek out the most efficient process and delegate responsibilities. If it’s a priority hire — and a priority candidate — the process and stakeholders need to reflect this.
5. Be more transparent. Candidates need more information before they resign, relocate, or take something new. They need to really understand the situation and how it fits their needs before they can pull the trigger. Culture is one variable that matters more than ever. For instance, employers need to demonstrate their culture through the search process itself; a winning recruitment process will give candidates genuine visibility into the culture, and not just the elements that are attractive, but also showcasing where and how the culture needs to change, and how the candidate might play a role in further shaping its direction. The context matters, and top talent want a more democratized learning and teaching environment, where they can understand the outputs and be a lead collaborator in creating it. This is also true for top internal talent, as we increasingly find that senior leaders will be more apt to stay if they are critical to the evolution of culture and feel connected to where the business is and where it’s going. As a result, private equity sponsors need to invest in workforce engagement that goes beyond the life of their own ownership as the longer-term focus on employees and culture will drive discretionary energy and more near-term commitment.
6. Consider geographic flexibility. This is tricky. There continues to be ample debate around the future of work. Regardless of your point of view, a more flexible approach (like the hybrid model) seems to be gaining popularity and candidates appear to be using this to their advantage, i.e., not engaging without it, since they feel they can find the flexibility elsewhere. In this environment, few opportunities seem too risky to take, as the workforce adjusts to more agile professionals, more transformational resume experiences and more customized career plans. At the same time, leaders are being more discerning, particularly if one can find the necessary upside where they are today, or in alternative environments that don’t require perceived unnecessary life changes. Ironically, a transparent process that involves the candidates in real discussion about culture, about the jobs to be done and about the path to value creation may just find the winning candidates suggesting full relocation for themselves because the process has shown them the importance of it. Relocation didn’t happen to them, it happened with them and because of them.
7. Think about retention now. Retention isn’t just a problem in junior roles. It can be harder at the senior level too, so creating a community is critical. Without one, talent goes to the highest bidder and loyalty goes by the wayside. We’ve seen success when board directors, deal partners, CEOs and operating partners establish a “buddy system” of sorts. This can take many different forms depending on the organization and context. But one thing is universally the same: Leading in this environment has been hard and different. Even the most successful leaders need to vent and share, just as much as the struggling ones. Leaders want support. They are looking to their board, their management teams and their sponsors for community, more so than ever before. You have the power to create this community for yourself and for those around you.
In an increasingly competitive talent environment, PE firms that follow these seven steps can better position themselves to leverage the Talent Uprising and use it to their advantage.