Following up from our previous video, this time Gail discusses the best ways to interview and hire senior staff in private equity as well as the issues you may face during the interview process. 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

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

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.
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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 **.

Should you employ some form of psychometric profiling in your recruitment process? I think it’s useful. The first point to be clear about is that the profiles are structured personality questionnaires which map behaviours. They aren’t skills or aptitude tests. They give an indication of characteristics such as attitude to work, ability to get on and empathise with others, levels of self–motivation and ambition, determination and so on.

So you won’t know if someone is good at something – rather how they will tend to behave in a work situation. In that sense there are no right or wrong answers. However, there will be a right or wrong profile for your firm. It is hard to know what this might look like unless you first of all map the behaviour of high performers in your firm. So whether you use a highly trained profiling expert or a quick and dirty online test (and there are lots of these), be sure to make your high performers at the right level in the organisation do it first. And study their results. Getting the level right is important – no point in using your highly entrepreneurial chief executive as the calibration point if the hire is going to be an analyst. So if you have to get everyone to do it for appearances sake make sure you separate the less successful performers from the stars – and you should get some useful feeling for why they aren’t performing so well.

In order to get the best out of the profiles you should be looking for patterns that match the characteristics of the job. For example in recruiting for a private equity role, you will tend to find highly data rational people (remember, it’s behaviours not skills that you are profiling so it doesn’t mean they’re any good at numbers – just that they like playing with them). If you then match this with a behaviour that shows they are a very cautious decision maker, then you may not have an ideal pairing of behaviours for private equity as you need them at some stage to exercise some judgement.    More...