Throughout 2009 we experienced a visible increase in the demand for IR professionals, fund raisers and placement agents.  Our clients were keen to strengthen their IR teams and bring the right people and skills on board to manage the tougher and more demanding investor landscape.

For many GPs the IR team carries a wide range of responsibilities from fund raising to reporting as well as PR and marketing. These wide ranging elements of the role demand an almost endless list of skills; from extensive contacts and networks and great communication skills to high levels of attention to detail and accuracy.   Thorough understanding of the industry and investors demands, ability to write reports to tight deadlines, preparing PPMs and marketing documents, delivering smooth running road-shows and high quality investor meetings … Oh and if they have liaised with PR agencies, can write a great press release and get the managing partner in to see a few Middle East families – well that would be great too! and the list goes on…

But there are really two distinctive functions we see within IR teams and before deciding to recruit, it is important to understand which you really need. Do you need to focus on existing investors? Or do you need to raise new funds?  Or is it both?  Can one person do it all?  Generally the skills required for these two important tasks are different and you may need to decide which is your priority.

To manage existing relations, you need to look for someone with strong communication skills particularly written skills who is also numerate and can understand the investment process. They will spend a lot of time producing and updating reports and presentations.   These candidates generally have excellent project management skills, are detail oriented and accurate.   They may come from client services, marketing or RFP teams within asset managers, financial PR firms, project management teams at a placement agent or other IR teams.    More...

Most firms have experienced this at some point: the candidate looks great on paper, they interviewed well, had all the right skills and seemed to fit in well with the team. But a few months down the line, you realised their heart wasn’t really in it. So they leave, or lose motivation then leave or lose motivation and stay (which can be worse) – leaving you in the lurch for months before you find a replacement.

In this economic climate, search firms and employers need to be especially diligent in finding candidates with the right motivation for joining them. At the moment there are candidates who are more likely to want any job, rather than specifically the job with your firm. 

So how do you find a “Mr or Mrs Right” – how do you hire the right candidate who really wants to work for you (for the right reasons) and will stay with you?

There are a number of ways in which you can screen for the right candidate. 

If you are working with a search firm, it is massively helpful to allow the Consultant working on your role to meet with at least one member of your team. This enables the Consultant to find candidates

·          whose long term career goals or aims are approximately aligned with those of your firm

·          with a close fit in terms of the skills required to do the job

·          and with the desired personality traits which are likely to fit into your company culture. 

When you start interviewing candidates, there are a number of questions you can ask to ascertain whether candidates truly want to join you.

Example question 1: ask the candidate “If you were offered a role with company A, company B or company C, which would you choose and why?” Make sure that one of the companies is similar to yours. If the candidate states that the company they would prefer is the one that is most similar to your firm, then this is a positive sign. If the candidate hasn’t heard of company A, B or C, it’s an indicator that they may not be committed to private equity as a career. 

Example question 2: ask the candidate  “Which other firms have you applied to and which have you interviewed with?”  If they don’t want to disclose the names of the companies, ask them what other types of roles they are considering. If the candidate says that they are also considering a wide range of other roles (such as equity research, teaching, advertising), then dig deeper to understand their motivation behind each choice. They need to have good reasons behind their choice of private equity.

Example question 3: ask the candidate what they know about your firm and why they want to work for you. Ask them who your competitors are. How is your firm different or similar to others?  

A lack of detail when answering such questions can be a giveaway that the candidate has not done much research on your firm and the role, and hence is less interested in it/you. A slight caveat here is that if your firm publishes little or no information about who you are and what you do, and generally keeps a low profile, then a lack of detail in a candidate’s answer can be understood, to a degree. 

Example question 4: ask the candidate where they want to be in five years time.

If the answer is “I want to run my own business”, for example, then dig deeper, they are less likely to stay with your firm, and could potentially be distracted by other projects.

A note about body language: If you ask the candidate why he or she wants to work for your firm, it’s worth noting their body language. Look out for whether their body language is congruent with the words they are saying. For example, if a candidate says in an upbeat tone of voice “I would love to join your firm”, but is leaning back in their chair, slightly slumped, he or she might be tired or have a back problem, but it’s more likely they didn’t really mean it.  Bear in mind that when reading body language the context needs to be considered; just because someone scratches their mouth or touches their face after saying something, doesn’t necessarily mean they are lying – they could just have an itch. Natural introverts may not display enthusiasm in such an animated way when compared to someone more outgoing. Take the context into account. 

Look out for gestures that are incongruent with what the candidate says. Specialist interrogators use a technique called “baselining” whereby they observe someone’s natural behaviour (ie ‘natural’ clusters of gestures displayed by a person in certain situations) and look for deviations from this.  Whilst we don’t recommend you go this far, you might, for example, observe how they react and the level of enthusiasm they display when talking about their personal interests and compare this with their reaction to questions about their motivation to work for you. Trust your intuition or gut instinct about whether a candidate truly wants to join your firm for the right reasons. You will unconsciously pick up signals when a candidate is being honest about his or her motivation and if they are right for your firm.

I’ve been reading a book called Know What You Don’t Know by Michael A Roberto and it made me think about some particularly good parallels in the recruitment process.  Firstly, trusting your instincts.  On the negative side it is often tiny signals that can set small alarm bells ringing.  But it is often hard to pinpoint what the signal was - that ‘couldn’t quite put my finger on it’ thought.   Rarely are those thoughts unfounded – and to keep things simple it is easy enough just to drop someone from the recruitment process because they don’t ‘seem’ right.  But clarity and understanding is preferable to an unidentified gut feeling.  And, on the positive side, going with a candidate because they felt right, when you weren’t sure why they seemed to be a good fit also needs some explanation.

I was trying to think about how to get better at analysing those subjective reactions to candidates when Michael Roberto gave a useful steer – break down what you know into

·          the facts

·          what you’re unclear about and

·          your assumptions. 

When you have a list of the areas you are unclear about – then you can think about how to get clarity.  When you have really focused on your assumptions, you can then do something to test them.   Just the discipline of thinking through what you think you know and what you actually know is a great step towards determining what those little niggles in the back of your mind are. 

This is particularly important in this market where there are a number of candidates who are under pressure to find a new role.  And while we haven’t seen many people lying, not telling the full story by omission is more commonplace.

The most common area for being unclear about the facts and making assumptions is not just why people left their last role, but when.  We’ve been caught out in a few cases ourselves for example

·          where CVs haven’t been updated for the end date on the current job

·          where the full story revealed long periods of gardening leave on CVs rather than actual work

·          where candidates are in discussions to leave their current role but do not reveal it.

What can we all do?   We can ask some basic questions.

·          Who are you currently working for?

·          When did you begin your employment with them?

·          Is your employment ongoing or does it have a termination date?

·          Why do you want to leave?

·          If you have already left, what are the circumstances surrounding your departure?

·          When is / was your last day in the office?

·          What are the terms of your notice or gardening leave?

·          Are you subject to a non-compete restriction and if so until when?

·          Who can we talk to in your previous firm to reference you?

There is no need for people to tell us these things unless we ask. So let’s focus on getting our facts clear and leaving our assumptions behind. It is a tough market and we all need to get the recruitment right if we are to be successful in the future.

Verbal references can be extremely helpful, particularly if you follow Six Simple Steps.  But first, please ask the candidate’s permission – it can cause a lot of problems if you ‘phone a friend’ who doesn’t know the candidate is considering a new role.  Recruiters can sometimes work around this to get some outline views, but the best source of information will be the current or a recent line manager. A recent line manager is a good way of getting a real feel for the candidate in the workplace without them revealing that they are thinking of leaving. And if you can do this before the final round you can check out any negative comments with other referees and with the candidate and you have a slightly easier get out if the references are not as good as you had hoped.  Post offer referencing can then focus on fact checking and not opinion.

The Six Simple Steps
1.  Timing – take informal verbal references before the last round of interviews
2.  Ask the candidate’s permission to speak to a current or recent line manager 
3.  Describe the job the candidate will be doing for you and the skills needed to be successful
4.  Seek the referee’s opinion on the candidate’s abilities for that job
5.  Discuss the candidate’s strengths
6.  Explore the areas where the candidate would benefit from further development or training

And the reference provides so much more than comfort on whether to make an offer of employment. It can also provide some great pointers on how to manage the new recruit in order to get the best out of them. For example, I recently took a reference on a junior candidate where the referee said the candidate had sound opinions but was sometimes reticent to voice them. Their new manager will now have this in mind and can work to build the candidate’s confidence.

But what about when the reference isn’t as glowing as it might be?   And this is where the timing of the reference taking can really help.  You and the referee are in a potentially tricky position if you have already offered the candidate and they have already resigned or told their current company they are leaving.   Do you tell them you are rescinding the offer because you received a poor reference?  If this is something factual, for example they have misled you about their employment or academic achievements, then your reasons are easy to justify. But if a referee has given an opinion that you don’t like the sound of, what are your options?  The candidate will want to know what was said and by whom, particularly if they have already resigned from their role. Do you tell them?  Do you withdraw the offer with no reason?  You can’t do this if you have already offered the role to them subject to references.  You are about to have some uncomfortable conversations, and we haven’t even started talking about the legal problems related to the giving and taking of references.

Everything is easier if you get the references before offer stage. First of all, you are less time pressured, if you receive some poor comments then you can take more references and check these out – triangulate them with others. You can focus on the areas of concern in your later stage meetings and use probing questions to enable you to make your own judgement on the issue. And if you decide to say no, you are still in your interview rounds so are under no pressure to reveal the details surrounding your decision.

So they maybe Six Simple Steps – but getting the first one right is the key to success.