The importance and evolution of the HR job function within Private Equity

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Richard Pearce recently joined a panel discussion at The Drawdown’s HR & Talent Summit 2021, discussing how the role of the HR job function in private equity – and in private equity backed companies – has evolved. Here he shares his five key takeaways from the day:

1. Increasingly, private equity firms want to meet the HR lead as part of the deal process

“The HR lead is now an important person to meet as part of the deal process, they will help you to understand the people strategy and culture, which will be fundamental to future growth prospects. Previously deal teams would always meet with the CEO and CFO, and then maybe the CTO, CCO or Head of Sales. It is a good indication as to how the role of the HR leader has evolved.” 

2. The scope of a company’s HR responsibilities will continue to increase 

“The forced implementation of work from home suddenly made the employer directly responsible for their employee’s wellbeing at home and outside the office. This re-calibrated the relationship between the employer and the employee and that isn’t going to go away. The genie is out the bottle now and not only is addressing it the right thing to do morally, if you don’t, I strongly believe you will not be able to attract and retain the best talent, and you will become less competitive.” 

3. The last year has demonstrated the benefit of having a strong HR network in the portfolio 

“At ECI we wanted to create the environment for ideas to be shared quickly across our portfolio. Everyone was facing very similar challenges and could learn from one another. For example, if you take wellbeing, there was all sorts going on, whether it was exercise classes, mindfulness sessions etc. Our job was firstly to spot who was doing it well and promote it, and secondly to create a support network for HR leaders to fall back on, whether that was opening channels for them to directly chat to each other, or providing an HR legal expert for them to talk to.” 

4. Talent development in hybrid is going to be harder than we think 

“The hybrid model is almost certainly going to be the approach for most firms, but a lot of thought will need to go into how we remedy the challenges it creates for training and development. At ECI, I know that a lot of the mentoring is unofficial, it’s overhearing conversations and chatting through things quickly. That has been lost, and now will need to be provided proactively, whilst previously you could rely on osmosis. Changing review processes, creating ‘anchor days’ in the office, and encouraging more proactive training will help, but I suspect this will remain a big challenge in private equity firms and their portfolio over the coming years. It’s not something we will all get right on 21st June; this will need to be reviewed regularly and carefully over a longer period.” 

5. The growing importance of culture in private equity, rather than just talent 

“Traditionally private equity firms would think about ‘Talent’ in their portfolio, but would be less focused on firstly, people and culture across the portfolio, and secondly, on the culture in their own business. Increasingly private equity firms and the HR function in private equity firms are turning that same lens on themselves, with a renewed focus on creating a fantastic workplace culture, that means they can attract and retain the best people. That hasn’t just been relevant in the last year, but the last 12 months have really highlighted a lot of strengths (or weaknesses) in culture and engagement. The same is true in the portfolio. Where a business has a great culture, our role is to protect it, and where culture has room for improvement we will try and help with that process using tools from our People Toolkit.” 

About the author

Rich Pearce

"I work in ECI’s Commercial Team to support our management teams in unlocking growth opportunities by offering hands on support as they need it. I also lead our People function which involves driving the people agenda across the portfolio and managing much of the HR-related functions internally here at ECI."

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