In our latest video Gail McManus talks about the processes and assessment methods that work best when interviewing and hiring junior staff in private equity. If you would like to watch the video and you are reading this through RSS feed or e-mail, please click this link.

Gail McManus - PER

When you take on a new recruit, whilst on-the-job training is useful and is undoubtedly the best way to learn, it is also helpful to have some mutually agreed objectives that focus on strong performance.

Many studies show that if you pay more of the right kind of attention to employees, they work harder and smarter. Retention rates go up, your team is happier and more effective.

So, how do you set objectives for your new recruit? Following these nine rules will give you an edge.

1. Tell your new employee what your expectations are. For junior-level recruits, make sure you tell them your expectations in terms of dress code, working hours, lunchtime and breaks, use of the internet, when and if they can use social networking sites, take and make personal calls and so on. And with regard to their role make clear your expectations for delivery during the probation period. For instance how they should split their time between the different activities e.g. origination, screening, execution. Set some KPIs for example with origination, how many companies should they approach, number of meetings fixed and so on.

2. Learn from the best. Vince Lombardi, the legendary coach for American football team the Green Bay Packers, believed in giving every player a clean slate at the start of every game. This meant that “star” players did not rest on their laurels and felt compelled to continuously prove themselves in each game. You should have the same attitude towards new employees - they may have been a star performer in their last job at Goldman, for example, but you should expect them to continuously prove themselves in their new role.

3. Keep it simple. Keep the objectives simple and refer to them regularly. Objectives should be reviewed at least quarterly and performance levels checked at least monthly. Avoid overly complicated matrices as they are likely to bore employees and make them averse to the objective-setting process. Print out the objectives and put them up in a place where the new recruit will see them on a daily basis. Make sure all objectives are measurable and timed.

4. Push the boundaries. Learn from Henry Ford. The objectives, to an extent, should be mutually agreed between the new recruit and their manager, but should also push the new recruit significantly out of their comfort zone. Henry Ford used this approach of setting challenging objectives and achieved massive improvements in productivity on his factory shop floors. More...

The first half of 2010 has been a good one across the Nordic region. Already this month it has been announced that two new funds have been raised – by HitecVision and Polaris – in both instances the largest funds these firms have raised. Investor interest in private equity in the Nordics has held up well, with both funds attracting new LPs from a more international investor base across Europe and the US. This follows on the heels of the successful fundraising efforts of a number of Nordic funds in 2009, a time when most international funds found fundraising much harder going.

We’ve seen these successes reflected in the recruitment in the region over the first half of this year with a strong pick-up after a relatively quiet 2009. A number of funds started to recruit towards the end of Q1 and are continuing in Q2, often recruiting for multiple hires.

This reflects trends in the UK and elsewhere. Much of the hiring is for associates as funds bring new talent into the firm, having perhaps not recruited in 2009 or even in 2008. There is concern that a talent gap may result if the investment managers of the future are not identified now.

Another key trend for this year is the demand for Finns, Danes and Norwegians. We’re regularly asked by clients, those of Swedish origin in particular, to help diversify their language base with the recruitment of star candidates with native fluency in Danish, Norwegian and Finnish. Our experience confirms their impression that strong Swedish candidates are easier to identify and there are some super candidates in the investment banks and consultancies. But their Nordic brethren from their neighbouring countries are harder to find. There are simply fewer of them, especially in the investment banks.More...

We are approaching the end of the first half of the year and are pleased to see that many firms are hiring again with renewed confidence.  This appears to be at all levels with experience being valued by many. Only time will tell whether the European banking crisis will drag us back into a down cycle. In the first quarter we would have said that we did not expect such a quick recovery, but from February to May we were mandated at a record level with a 100 new searches for roles with 60 private equity firms.

We think that part of the reason why recruitment is so active is to play catch up after much reduced hiring for a year or more.   The first and second quarters of 2009 were at a standstill and hiring for the second half of 2009 was mostly for replacements or specialists but no one was adding headcount.   Now we see teams looking to add experienced private equity investors from Associate to Partner to their teams.

We recently launched our crystal ball quiz where you have the chance to make some predictions about 2010 and donate to the PEF - a super cause.  Well, I’m going to make my own prediction for the private equity recruitment market for the rest of this year.  The war for talent is truly underway.  Private equity experience is now the most sought after skill set even for junior hires.

When we first started this blog I spent a lot of time thinking about spotting and keeping star performers.  Then the world changed and it didn’t seem so urgent.   I would never have thought it would change back so quickly. I cannot stress enough how important it is at the moment to look at your star juniors and understand what motivates and drives them in order to retain them in your business.  Why?   Well we have seen not just a significant uplift in the volume of recruitment but also uplift in the requirement for experience.  The 2007/8 hiring days of ‘find us an extra pair of hands to do the modelling’ are gone.   An increasing emphasis in the majority of mandates is for private equity experience. And at the junior level this means someone who has not only got the skills but has also had the edges taken off, learned the ropes, seen some action.  Investment banking boot camp is no longer enough.  Now investment banking boot camp followed by private equity boot camp is going to be the popular request.

  
So if you run an analyst programme where you expect your juniors to leave you after a couple of years – then send them my way as we’ll have no trouble finding them a home.  But if you’ve got some stars in there and want to keep them then really think about how to do that.
More...

What do you think 2010 will bring?

Put your money where your mouth is and predict the outcome of some of the year’s leading economic and private equity indicators whilst supporting the Private Equity Foundation PEF **.