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...
Tags: appraisal methods, selection processes, private equity, people due diligence, psychometric profiling, venture capital, recruitment
career development in private equity | private equity recruitment | team building
Did you know that women represent half of all professionals entering finance, but by VP level the proportion has dropped substantially? Is this the same for private equity? The answer is yes – but from a lower entry base so the problem is magnified. We’ve done some counting and whilst approximately 25% of junior private equity professionals are female* this proportion reduces to 10% by investment director and above. You might ask - does it matter? Well it should.
There are sound economic arguments for maintaining a good diverse mix within your team. But the issue here is not so much accepting that diversity matters, which I think most people do, but focusing on the lack of upward movement or fall out that happens before the senior levels are reached. Arguably you are losing some of your well trained skill base before you can really capitalise on all that input you gave in those early years. And it is not all to do with leaving to have children. It’s a bit more complicated than that. There are real issues of women leaving to have families and then not being able to get back on the ladder. There also seem to be issues related to promotion and progression within the firm.
And the issues lie on both sides – the employer and the employee.
For the private equity employer that wants to retain and promote its female staff the sorts of issues that it may need to tackle include:
· Those difficult to eradicate unconscious biases and under the surface issues where unspoken and unconscious prejudices still exist. For example an unconscious bias that might inhibit the promotion of women is how work is allocated to them. Do you put your female team members on the most visible, promising investments? Or is there an unconscious bias that pushes them towards less high profile projects that might need a lot of attention but are not so well recognised when it comes to considering who makes it up the greasy pole
· In order to recruit more women and retain them in the business you may have to positively discriminate – but a positive discrimination culture is not easy to achieve. It means saying things like it is ok for the main child carer in a family (usually the woman) not to participate in so much travel but that this opt out is not acceptable for other team members with children
· It requires real recognition of the struggle to juggle home and work and the support that is needed from the employer to do that without falling into the trap of unconscious bias or discrimination More...
Tags: attracting talent, business development, private equity, venture capital, recruitment, work life balance
career development in private equity | private equity recruitment | remuneration | staff retention | team building
At the beginning of the year, with all the uncertainty in the market, analysts and associates from banking became more and more interested in making a quick move into private equity. They fell into two groups: the ones that were genuinely interested in private equity, and the ones that saw private equity as an escape route from the crisis within their banks.
During this turmoil, the banking teams experienced a decrease in work activity, which combined with several rounds of redundancies made candidates more and more uncertain about their future and prompted them to become more open minded about their career options.
Salaries and bonuses were also uncertain. The market was predicting that it might be one of the lowest paid years in a long time. So in the first half, with limited work to do and with more time on their hands, candidates found themselves with the motivation and availability to interview for a new role.
As a result, banks saw a further outflow of people that had chosen to leave their teams as well as the earlier redundancies, and coinciding with an increasing feeling that the market was picking up again, the summer marked a clear shift in attitude.
Investment banking teams decided to give special attention to retaining staff. Analysts and associates were given salary increases, with special attention being given to the middle levels, and workload increased. As a result they were getting increased exposure to transactions again and with limited numbers on the team, having to work very hard. The candidates that remain in each of the teams have become the “survivors” giving them confidence in their position within the bank.
So suddenly, the motivation and availability to interview for a new role changed. Mid-year bonuses were not as low as expected and there is the expectation that year end bonuses given to associates will not be as low as they thought. The teams have more work and candidates are getting more exposure and more challenges.
What does this mean for your analyst and associate recruitment programme? You may need to adapt to the new scale of salaries, recognizing that for many of the candidates, base salaries have increased by up to 20%. Secondly, be willing to give a high level of involvement and exposure and make sure that this is communicated within the recruitment process. And lastly, move quickly. Once you find a star candidate, there is always the risk of losing them to the competition or to internal promotion.
Contact me if you would like to know more about the compensation increases we’re seeing and other remuneration benchmarks. maria.nieto@perecruit.com
Tags: attracting talent, private equity, venture capital, bonuses, recruitment, remuneration, selection processes, talent management
career development in private equity | private equity recruitment | remuneration | team building
Don’t be put off using case studies by the amount of work needed to prepare them – there is an easy way. We have several clients putting together assessment centre timetables for final interview rounds with candidates. Most of these include a case study and this has become an increasingly common tool for analyst and associate recruitment. We would recommend it for the final few candidates and everyone we work with is in universal agreement that these are a great tool in identifying the person that they would like to hire.
The case studies are telling in that they are the closest you will get to simulating life in the office.
· You get a feel for how the candidate approaches problems – are they an organised thinker with a framework for reviewing large amounts of information or take a more casual approach
· Do they think about the practical, commercial issues surrounding the business under review or take a high level generalist view
· Can they quickly identify the issues critical to business success or do they miss the key points
· Have they got an understanding of the basic principles of private equity or do they talk to you like an adviser selling you a deal
They also allow you to hold a conversation which would be pretty much like the ones you would have in the office on a daily basis
· Can they support their opinions or do they change their minds with every bit of new information
· Do they listen to what you have to say or are they dogmatic in their own view
· Are they clear and concise or woolly and long-winded in their comments
· Are they good humoured, relaxed and easy to talk with or is the whole conversation a bit of a trial
By the end you’ll know who you want in your team.
And if you’ve been put off from using case studies because of the work involved in preparing them, then you’ll be pleased to hear of a new trend in case study material which conveniently reflects an evolution in the associate or analyst’s job and makes your life a lot easier in putting a case study together.
Gone are the days of removing all names or signing NDAs to protect anonymity. The new trend in case study material is to identify a business you know well – usually from your portfolio - and get the candidates to review the business from the material they can find on the internet. The questions you might ask might include their view on the company’s position in its market and what its future strategy might be. If you want them to value it then you may have to give them some extra financial information.
We have devised many case studies and can give you some good ideas on the material you might use and the questions you might ask to ensure that this is an effective tool in your hiring decision without being a drain on your time to produce and implement.
Tags: appraisal methods, assessment days, competency based interviewing, recruitment, selection processes, skills testing, private equity, venture capital
career development in private equity | private equity recruitment
Is the key to recruiting the best candidates a question of keeping up momentum and managing expectations? We’re often asked for advice on the best ways to run the recruitment process as many of our clients don’t recruit that often. We’ll take most of the strain on their behalf so all that many of our clients have to worry about is turning up at the right time for the interview, and remembering to take the candidate’s cv along with them.
However, once a star candidate has been identified, the recruiter needs to understand that they are not the only one doing the ‘buying’ and they will need to ‘sell’ the fund. There’s no doubt that there’s a huge amount of talent looking for work now and it’s a great time to be hiring. The difficulty funds are still finding is that the strongest candidates are often the people that everyone wants to employ. It’s not uncommon that the person a fund wants to make an offer to will be lining up two or three other offers at the same time. Arguably, the best way of maximising the chances of landing the strongest candidate is to keep up the momentum during the interview process and to manage expectations along the way. Whilst it sounds obvious, it’s surprising how many funds let time drift for weeks at a time without arranging further interviews or making an offer.
Recruitment is understandably often pushed down the fund’s list of priorities. However, by setting a timeline for the recruitment process and making sure that the candidate is clear about the process along the way, then the candidate will remain enthused about the opportunity and start to feel like part of the team. The strongest candidates will take into account how clear the messages coming out of the fund are, and how the fund organises itself in respect of the interviews. Interviews that are continually cancelled, rushed, or lack focus rarely create a good impression. First mover advantage is also important when making an offer as candidates will start to imagine themselves in the role and have a warm disposition to who gets there first. If a fund makes an offer first then it can also keep in contact with the candidate whilst they consider their options and make them feel wanted.
Expectation management is also important because it means a fund avoids spending time interviewing people who are unlikely to accept a position. This will mean making the role and responsibility of the position clear, and being upfront about the likely package. There’s nothing quite like dampening the enthusiasm of a preferred candidate by offering 10% less than they were expecting. Managing the candidate’s expectations will ensure that the chances of securing their services is maximised. Candidates also bear responsibility here. They too must be open with you and advise you of where they are with others. It never ceases to amaze me when they announce at the 11th hour that they have another offer on the table. It’s a bad strategy by the candidate because it puts the fund on the back foot and doesn’t give the fund the opportunity to be creative about the role or package. We therefore encourage our clients to question the candidate about where they are with other interviews, and we too do our best to ensure both parties are kept up to date.
It’s all part of your employer brand. Letting the process drift and offering below expectations is not a successful recruitment strategy. Maintaining momentum and managing expectations along the way will considerably enhance your chances of landing a star.
Tags: attracting talent, assessment days, employer brand, private equity, recruitment, remuneration, selection processes, venture capital
career development in private equity | communication | managing change | private equity recruitment | remuneration | team building
I was with a client a few days ago when an almost unheard of phrase was uttered ‘I wonder if we should let go of our weakest performers on a regular basis?’.
Private equity, as an industry, hasn’t really addressed the issue of poor performance in a consistent way. Yes, there are some exceptions, but I’m confident they’re in the minority. There’s a lot standing in the way of facing up to this: it isn’t easy to do, it isn’t pleasant to do and anyway if you ignore it long enough or make it uncomfortable enough for those you ‘suspect’ are the weakest – well maybe they’ll leave of their own accord.
I know, why not downgrade their bonus and they’ll get the message and it’ll sort itself out.
Well, get real! It won’t sort itself out. And what is worse, one of the biggest costs of not tackling poor performance is that it’s not the poor performers that will leave – it’s your star performers.
Going right back to my previous note on candidate appeal – the best people will be attracted by organisations staffed by stars. Good people thrive on the stimulation of working with other high performers. And conversely they’re likely to leave businesses where weaker performance is tolerated.
Everyone’s heard of the GE philosophy of ranking all their people and firing the bottom 10%. It may sound tough but high achievers applaud it.
The three lessons for private equity here are
• Objective performance measures need to be determined and applied consistently • A regular timetable of appraisal, promotion and termination needs to be put in place and adhered to • A culture that expects and values this needs to be created.
My experience of private equity bloodletting is that it is usually a knee jerk reaction in response to an external stimulus of some sort: a poor investment, economic circumstances, internal disagreement or at carry allocation time when dividing the pot between fewer people seems attractive to the managers. If you want to take the first step towards a more effective system then you need to be able to rank your people objectively, not just by gut feel. So start off by determining the qualities that you want to see and working out how you can measure them.
There are many HR outsourcing services you can use to help you in this. We can put you in touch with a few if you need a steer. You’ll probably find that your gut feel produced the same rankings as your objective system – but you now have a base from which you can build a sustainable model of refreshing your team from below and retaining and attracting high achievers at the top. Further success for your business will surely follow.
Tags: attracting talent, appraisal methods, employer brand, objective setting, performance measures, private equity, venture capital
career development in private equity | managing change | staff retention
The PER Blog contains my observations on the world of private equity and its people. Every day I meet and speak with people from across private equity giving me a broad view of the challenges and issues that they face in managing their businesses and their careers. And it allows me to understand and help resolve some of the human issues that affect the sector.
I hope you enjoy the PER Blog and that you’re able to take away one or two tips for getting the best out of yourself and the people around you. Let me know what you think, I look forward to your comments and feedback.
Gail McManus
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