The Nuances Of Hiring Senior Leadership Within Private Equity

Stanton Chase’s ‘Fewer and Focused’ strategy homes in on a cultural fit

On the surface, the formula for a successful business leader seems well-documented, clearly defined, and widely accepted. This formula often indicates a strategic visionary, critical thinker, and superior communicator. It points to a leader who demonstrates emotional intellect, financial acumen, who promotes growth, and is a cultural contributor. However, in a private equity setting, the formula for hiring a successful executive must be significantly altered.

Over the past decade, I have served with private equity portfolio firms in leadership roles and as an Independent Director, while also completing various executive search assignments for private equity partners. In doing so, I have experienced the importance of using a reformulated method that allows for more precision when evaluating talent within the private equity environment. This private equity hiring formula still factors in the aforementioned leadership characteristics, yet it places a much heavier emphasis on industry-specific, enterprise-specific, and cross-cultural expertise.

Industry-Specific Expertise
Private equity placements demand relevant industry-specific experience compared with many general corporate hires where functional experience can translate more easily. Prior industry expertise allows the new private equity executive to more quickly and seamlessly onboard, which is critical for having an immediate impact in the organization.
Functionally specific requirements:

• Chief Executive Officer: Current knowledge of the given market trends, a robust network of industry contacts, and an understanding of the relevant technologies are all minimal consideration requirements.
• Chief Operating Officer: Extensive technical knowledge, operational, and management experience in the sector is needed, as is a network of industry talent to explore for future recruits.
• Chief Financial Officer: Private equity experience is emphasized to minimize financial risk, while industry-specific experience is oftentimes relaxed relative to the other C-level role.

Private equity talent acquisition seeks fresh, original candidates demonstrating a wide array of leadership qualities buttressed by keen industry experience and knowledge.

Enterprise-Specific Expertise
Within the private equity realm, we partner with the firm to create a unique strategy in assessing how an individual’s leadership traits will manifest in the organization’s particular environment.

• Alignment of goals, incentives, and timelines: Compulsory leadership traits for private equity executives include action-orientation, dedication, tenacity, adaptability, and agility. Private Equity firms are working against intense timelines and a candidate must be able to understand and embrace the organizational trajectory.
• Willingness to be a hands-on leader: One of the most difficult attributes to evaluate in a C-level leader is a given candidate’s innate ability to “get their hands dirty” when required. Leadership success in private equity portfolio firms is uniquely correlated with the willingness to get down in the weeds. Interestingly, this need often disqualifies candidates commonly sourced from large, corporate environments who typically have not operated outside the confines of a well-supported organization.

We have cultivated methods to evaluate a candidate’s willingness to balance hands-on leadership while empowering employees. Our approach includes validated, psychometric assessments combined with insights obtained through structured conversations with candidate references, former colleagues, and other relevant parties. This multifaceted approach provides a clearer, more comprehensive understanding of the candidate and their proficiency as a hands-on leader.

Cross-Cultural Expertise
Seeking a candidate that is a cultural fit or a “meaningful cultural additional” is not a novel concept. The nuance within private equity lies in the need to distinguish a new executive’s ability to build a solid rapport and working relationships throughout the multilayered structure of the private equity firm as well as the portfolio company.
Evaluating the cultural fit among an executive, a private equity firm, and a portfolio firm is as much “art” as it is science. The intangible nature of cultural fit cannot be found on a resume or CV, but in a labor-intensive deep-dive analysis of core values, communication style, team-building expertise, motivational capabilities, common experiences, and general background. Stanton Chase’s “Fewer and Focused” business strategy allows us to dedicate the time necessary to thoroughly evaluate our client’s company culture. Subsequently, through a combination of experience and proven assessment strategies, we evaluate the fit of each candidate finalist based on the cultural landscape of our client.

Many of our clients rank senior leadership hiring as one of their top organizational pain points. This is magnified in the private equity realm due to the sector’s inherent complexities and compressed timelines. It is commonly accepted that leadership drives organizational success. However, it is less recognized that limited availability of resources to properly vet new leadership often negatively impacts organizational performance.
Modification of the hiring formula to account for the leadership distinctions in private equity can yield improved results when selecting your next leadership investment. At Stanton Chase, we have adapted our proven processes and methodologies to navigate the nuances of private equity to help you identify industry-specific, enterprise-specific, and cross-cultural expertise in candidates specifically aligned with your organization.

About the Author:
Ken Nimitz is an accomplished retained executive search professional with an extensive industry-based background who has completed a number of C-level and VP-level assignments across a broad spectrum of industry segments and functional roles. He holds a passionate belief that “business is a team sport” and that identifying strong leadership is not only about high standards of qualifications, experience, and capabilities but even more about alignment of core values, cultural fit, emotional intelligence, strategic vision, and communication skills.