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.

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...

As we approach the end of the first quarter, we have noticed that M&A advisors are back in action and business is reactivating. Banks are adjusting to the new tax regulations and are dealing with the fact that they lost or let go of many people last year. Now they are recruiting again and are feeling the stress of the shortage of people.

We have seen evidence of this in the significant increase of base salaries, especially for the associate pool. Many banks have readjusted their base salaries to guarantee a minimum fixed income. We were surprised to see increases of 23% to 75% for 1^st year, 2^nd year and 3^rd year associates, respectively.

The bonus range has also increased at this level. Associate bankers are receiving bonuses from 90% up to an unprecedented 230%. Of course the range varies from bank to bank, but the reality is that they are trying to make sure that their associates do not suffer from the new tax regulations and are not only readjusting the base salaries, but also bonuses.

The way bonuses are structured is also changing. We are finding out that some banks are paying partly in cash and partly in long-term stocks at the associate level, which we had previously seen only at more senior levels. The cash component ranged between 65% to 75% and the stocks had a vesting period of 3 to 5 years.

Interestingly, associates acknowledge that they are an asset that is now scarce, especially the good ones. And even though their bonuses were part in stock, they are feeling very pleased about their new compensation levels.   More...