The Evolving Role of HR in PE
Louis Montgomery Jr. & Phil Menzel | April 7, 2022
The last several years have been extremely lucrative for the private equity sector, which has raised investment capital at record levels. In response to this exponential growth, there has been accelerated demand for strategic HR leaders.
JM Search recently partnered with Hunt Scanlon to host a highly attended webinar about the evolving role of HR in PE. Led by JM Search partners Louis Montgomery Jr. and Phil Menzel, the webinar spotlighted two key perspectives from experts in the space. First, from the lens of private equity firm Talent leaders, Helen Hua of Insight Partners and Michelle Nasir of Arsenal Capital Partners shared their insights; and secondly, from the perspective of Heads of HR in PE operating companies, Adrienne Wheeler of Elliott Aviation/Summit Park and Lyndsay Lord of DECA Dental/Blackstone.
Here were some of the key takeaways:
Moving from Tactical to Strategic
Within private equity, the HR role has traditionally been viewed as being very tactical, with strategy falling mostly on the CEO. However, the growing trend—accelerated by the pandemic and current events—has been a more strategic focus within the HR function and a more sophisticated approach to HR in general. Human capital is being prioritized, and as a result, the CHRO has become a close partner and trusted business partners to the CEO and board.
Increasing Demand for Data
Data is the common language across the executive team, and HR is no exception. In fact, it’s becoming increasingly difficult for HR leaders who don’t have adequate data skills to meet expectations. Now is the time for HR professionals to build their fluency in the data space, particularly as information acquisition and management looks very different for a portfolio company than in corporate HR—there are often fewer off-the-shelf resources, which means HR leaders must take greater responsibility for the data itself, managing it in a way that allows leaders and stakeholders to make more data-driven decisions.
Driving Retention and Culture
The market for talent is currently very competitive, bringing the topic of retention into the spotlight. Although compensation will always be a key factor, especially with wage inflation top-of-mind, HR leaders are increasingly cognizant of the role of culture, employee engagement, and social-global interconnectedness. In the fast-paced, high-pressure field of private equity, these factors are critical for retention and almost always must be built from the ground up within a portfolio company. Purpose, values, diversity, equity, and inclusion are just a few of the areas CHROs in the PE space must be proactive about.
Adjusting from Corporate to Portfolio
With the growing demand for HR talent in PE, many professionals are making the move from corporate HR roles to portfolio companies. It is not a pure lateral move. Many times, it includes the career opportunity to lead the entire HR function reporting to the CEO. It requires a significant adjustment to an extremely fast-paced environment where an HR leader is the human capital trailblazer. Everything must be built from scratch and anyone in this role must be willing and able to wear many hats. It’s a high-pressure environment, but the reward and impact are significant. To prepare for this type of position, HR professionals should seek to build their fluency in technology, broaden their business acumen, and widen their networks and experience.
In this increasingly competitive and complex market landscape, private equity firms are realizing how critical it is to identify, recruit, and retain top HR leaders who can address modern enterprise challenges. Interested in learning more about the trends shaping the HR landscape in PE? Reach out to the JM Search team.
You can view the webinar replay here, and to stay up-to-date on trends shaping the human capital landscape, subscribe to our blog.