Private Equity and the Talent Function

Investing in Talent Operations has become critical for long-term value creation.

Visionary Talent Management Strategies Help PE Significantly Outperform Laggards.

Beyond the placement of key executives, Visionary Talent Partner teams are working to reduce turnover across the organization, optimize executive talent composition, and execute periodic data supported reviews of talent, culture, and organizational maturity in order to hit one-year value creation targets and increase the possibility of total value creation goals.

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The shift in focus of Private Equity firm strategy towards talent has revealed areas of opportunity and clear steps forward to accelerate value creation:

  • Visionary firms had the highest degree of firm cultural buy-in on the importance of a
    talent team, as well as mature processes to support talent in portfolio companies.
  • Advancing firms are putting emphasis on talent practices but have not standardized their
    approaches or developed consistent playbooks across the portfolio.
  • Traditional firms have aspirations but are at various early stages on advancing talent
    topics or gaining buy-in from the deal teams, and talent practices are largely opportunistic
    or supportive to value creation plans.
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Private Equity firms nominated for being distinctive at managing talent.

Key Findings

90%
Data & Analytics are Underused

Analytical approaches to management scorecards and protocol will replace gut instincts and interview-driven assessment of leadership. Assessments will include both executive search and talent firms, but also a more scientific, analytical approach to assessments.

52%
100-Day Talent Action Plans

It is essential for PE firms and the executive teams at the portfolio companies to move quickly in order to start potential corrective actions early during the holding period in order to maximize chances of hitting aspirational value creation assumptions.

41%
Standardized Talent Processes

There is a shifting trend towards establishing playbooks of evaluation, resources and support at different stages. With the increasing recognition that leadership talent is a major driver of superior returns, talent partners are able to gain buy-in from deal-partners.

"At Francisco Partners, we aim to play the “long game” as it relates to executive talent and create career paths that don’t end with the exit or sale of a business. We ideally are looking for hungry executives that want to build an affiliation and longer-term partnership with us and will ultimately go on to play a number of roles in our ecosystem, whether several successive operating roles in our portfolio companies, Board/Advisory roles, and/or Operating Partners roles."

- Ryan Greene, Operating Partner at Francisco Partners Consulting

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