The evolution of HR
Attracting talent in an increasingly competitive landscape, nurturing and developing teams, navigating the post-Covid landscape - today’s HR and talent practitioners have plenty on their plates. Our recent HR & Talent Summit explored these pressing challenges.
Karen Sands, CFO & COO, Hermes GPE
Martina Sanow, partner & deputy COO, Hg
Richard Pearce, investment manager, ECI Partners
The Drawdown (TDD): How has the perception of people and talent management changed within private equity?
Richard Pearce (RP): The remit has been massively expanded and it’s not just something that is paid lip service to anymore; that it’s only about pay and recruitment. To be fair, I don’t think it has been for quite a few years, but I think the difference now is you can no longer get away with that kind of thinking.
During due diligence we now actually want to meet the HR lead as part of a process. Previously, we might just see the CEO or the CFO, maybe the CTO, head of sales or commercial officer of some kind; it’s now important for us to see the HR leaders.
Karen Sands (KS): One of the biggest assets for a PE firm is its people and that’s true at the GP level and the portfolio company. But it’s quite difficult to convert talent into an asset on the balance sheet. You need to look after your people, you need to invest in people and incentivise individuals. And therefore you need to make sure you’ve got the tools in the toolkit to offer individuals the help they need. It’s not just about getting someone to come through the door and hope they perform; it’s a much longer relationship.
Martina Sanow (MS): The perception of and importance of HR and talent has escalated. I’m really pleased that we had this big push over the last year where the organisation is seeing the function differently and is starting to really appreciate the value add that HR and talent professionals can give. I’m not saying that wasn’t the case before, but the remit of the role has expanded enormously.
TDD: What has the pandemic specifically done to the HR function?
RP: The forced implementation of work from home suddenly made employers directly responsible for their employees wellbeing in a way they weren’t before. Previously, it was a bit like school; if the child does something wrong outside of school, it’s not the school’s responsibility. This has recalibrated the relationship between the employer and the employee. It’s a change in a kind of contract between the employer and employee, and I think it’s a permanent one.
TDD: When it comes to mental health, there has been a level of awareness, but now it seems private equity really does care. Do you agree?
KS: An employer’s duty to its employees has increased significantly. And as a result employers do care about their employees because it’s about performance and delivering outcomes for investors. This is really important for attracting talent, and particularly if you look at Generation Y and Z. Employers have to embrace these things and offer wellbeing programmes.
TDD: What kind of initiatives have been introduced that speak to this level of care?
MS: We have had a number of speakers come in and we ran education and awareness events. Mental health has been a key topic on all our board and partner meetings over the past 12 months. Additionally, we are working with an organisation that describes themselves as a PT for your mental health. A couple of times per month they are available to everyone. Team members can book a slot and talk about anything, whether that be a good day or a bad day, or a family issue, it can pretty much be anything. It has proven very popular.
TDD: What does post-Covid and the return to office look like?
RP: We originally looked at this back in September when we rather over optimistically assumed the world was going to go back to normal by Christmas. We conducted a large survey of the team, which resulted in a long list of guidance; I don’t want to use the word rules, but ultimately they were. We got a bit of pushback; that a lot of the rules and principles were too binding. We learned that you can’t legislate for something where you don’t know the outcome. If you try to put conditions in place for something that’s very hard to predict, you’ll probably get it wrong.
It’s really important to remember that we went from all being in the office to fully remote pretty much overnight and things didn’t grind to a halt and fall over. The approach we’ve taken now has been to revisit that work and run a couple of focus groups to see how things have changed.
MS: We also ran a lot of surveys, held one-on-one and team discussions to understand preferences, what has worked well and what hasn’t. We also came up with high level guidance but we don’t refer to anything such as a policy. It’s down to the teams to decide what works best for them, but making sure we have alignment across the firm.
Going forward it’s about embracing WFA: working from anywhere. In practice we’re not going to dictate when people have to be in the office, instead, you do your work where you do it best. And we will of course have a number of quarterly town halls and offsites on the firm level where we expect everyone to be there in person, because that is very important.
KS: It’s important to acknowledge some of the inefficiencies that have shown themselves through remote work. For example, it’s tricky to ring someone and ask a quick question; everything seems to be a scheduled call. And that can mean ending up with inefficient days simply because you need to speak with eight people.
Also, working remotely can impact your own personal development, and that of the team and the greater good of the business. This is particularly acute when you’re trying to attract and develop people; some of the best ways of learning and developing is observing how others behave and how they interact with others. Or it might just be sitting down with someone and having the ability to say, “Can you go back two steps? Can you go forward two steps?”
Unfortunately, remote working doesn’t lend itself very well to enhancing and nurturing talent, particularly if you run a trainee development programme. If you’re recruiting graduates or an analyst that hopefully is going to go through your investment programme, this can hamper their development.
Now, that doesn’t mean they need to be with others five days a week, 12 hours a day, but it’s ensuring you get the right balance. Giving people the agency to decide whether they’re coming into the office, while recognising that being with people is critical.
TDD: What will your approach to talent development be during this transitional phase?
RP: This has been a real challenge for us and was one of the big questions we tried to answer in planning for the future. We found that a lot of learning on the sharp end of projects or deals actually increased on a one-to-one basis. That’s because it’s easy to jump on a call with the partner or the director leading that particular piece of work. What was missing was the stuff around the edges. Previously, we had an informal mentoring structure where our investment managers would rotate in and out of partners’ offices every six months. They would literally be sitting next to each other and it meant they could listen into those tough calls with portfolio company CEOs or with the bank. And that’s the stuff that’s been lost. Also, we could see if they were struggling and if they needed a bit of a break, or an arm around them.
We’ve made that more formal and codified it. We’ve made a small change whereby the 360 feedback forms, which are completed after every big piece of work, are also now required at the end of the six month mentorship period. The mentor requests a 360 feedback form from the mentee to review how well they coached. This puts the onus on the partner that part of their role is to coach and guide that person over that six month period.