The Institute for Contemporary Leadership (ICL), in conjunction with global communications marketing firm , concerted a premier panel of private equity leaders in New York City at the Harvard Club on September 26th. Facilitated by the ICL, the candid panel of private equity managing partners addressed successful practices to radically strengthen senior leadership performance within the firms’ portfolios.
The discussion opened with compelling research from the partnership between the ICL and Entromy. Jan Jamrich, CEO of Entromy, presented the critical findings from the 2018 Leadership Study, which included perspectives from over 100 senior executives. They shared their insights on talent challenges and trends using the Entromy platform. Through the Entromy’s AI-based platform, the study generated nuanced insights automatically that are typically only obtained through extensive focus groups and interviews.
Many insights from the study resonated strongly with the panelists, senior executives, and PE partners, especially the one on cultural attributes of high performing companies: “highly collaborative, entrepreneurial, and customer focused.” By contrast and paradoxically, a culture of “results-driven” was the most sited cultural characteristic in companies with average performance.
The panelist discussions further delved into approaches and working with senior leadership of portfolio companies. Many common themes emerged, including the need to quickly gain an early assessment of senior executives’ leadership, most notably the CEO. As a leading PE Partner noted, “If results are good, it is easy to ignore leadership and cultural issues, but then when returns worsen you bash your decisions. We now conduct a leadership evaluation early and often, and a dialogue focused on leadership… we used to just think about business quality and growth when assessing companies, but now we have added leadership and cultural quality, which has become part of underwriting.”
Panelists also agreed on having an open mind to making quick changes at the highest leadership levels, noting that organizational change is healthy and managing change is inherent to transacting and growing companies. Additionally, the panelists noted that industry experience was “ not the number one factor for replacing and bringing in new CEOs, as well as agreement that incumbent CEO past performance is not indicative for future success. The most successful CEOs of PE portfolio companies were described as “curious” and “culture-focused.” The panel also strongly agreed on the need to be opened minded about CEO selection — go out of the box and hire for leadership and adaptability and hunger rather than knowledge or industry experience.” Another senior PE leader noted that his team has “learned that our outgoing CEOs can be totally different than incoming CEOs. Different styles can be effective at different points in the lifecycle and making sure you align leadership styles with company state is a major learning point.”