Culture, engagement and succession planning in private equity
Few would dispute that 2023 presented formidable challenges for the private equity sector, necessitating a strategic reorientation in value creation for 2024.
At our recent breakfast event, "Redefining Transformation for Value Creation", our panel of industry experts including Josephine Hus , Ramon de la Sota and Michael D'Onofrio , took a comprehensive look at the landscape of private equity, especially in today’s environment filled with high-risk investments.?
The conversation expanded from the typical focus on financial and operations to include multiple themes, from culture, engagement and succession planning and operational strategies and value creation to transformation roles and market complexity.?
Over the coming weeks we will be sharing insights for each of these themes, starting with culture, engagement and succession planning in private equity.
What role does culture, employee engagement, skill development, and succession planning have in the success of an investment??
We asked our panelists to weigh in on a critical issue: "What role does culture, employee engagement, skill development, and succession planning have in the success of an investment?"?
Their responses shed light on the integral role these softer elements play in the hard metrics of investment success, to include crucial human elements, such as:
Building a strong company culture
Michael D'Onofrio, Chief Transformation Officer, tackled the complex issue of where culture fits within the agenda of transformation efforts.?
"I think it's a really good question. What I've been struggling with is if this falls within the domain of the Chief Transformation Officer or not? Because you would love to do it after you've done all the other stuff, but it's already Saturday afternoon."?
Michael further elaborated on the difficulty of cultural shifts, "You get culture on tech wrong, but you get culture. It takes months and years to fix culture."?
This insight not only highlights the critical importance of culture in transformation efforts but also the challenges in adjusting it.
Keeping talent happy and engaged
Ramon de la Sota, Operating Partner, emphasised the crucial step of identifying and maintaining key talent right after an acquisition.?
"Culture is long term, but immediately post-acquisition, is identifying critical talent and maintaining them, whether that is through economic incentives but also career progression. Sometimes just a pat on the back and saying, we're behind you, works wonders."?
Ramon went on to address the importance of mitigating the risk of talent turnover due to uncertainty about their future roles, "But that risk of people leaving because of the ambiguity, because they're not sure whether their next role is going to be, you've got to really quickly quench that."?
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Sharing from his experience, he added, "When I ran carve out last year, my first hundred days I went on the road talking to people, just making sure that the sort of 15-20 people which were critical, and it's not C level, it's C level -1 and -2 are fully on board. You know what we're doing and hopefully then we can put some kind of package together which makes sense for them. And again, it's not just economical, it could be recognition, career path."?
Ramon's insights underline the importance of direct engagement and clear communication in retaining essential talent during periods of significant change.
The challenge of assessing culture and engagement in private equity
Josephine Hus, SVP, PE, discussed the difficulty of assessing the impact of culture and engagement within organisations.?
"First of all, very difficult to measure. You launch all these surveys and look through all these platforms online. But is it good, is it bad, and what does that mean for the business?"?
Reflecting on the private equity sector's engagement with these aspects, she noted, "Unfortunately, private equity hasn't gone to that level to really actually care and drive that."?
Josephine then described her proactive approach to understanding organisational health, "My recent experience, we do a bit of a health check. Is the culture really bad? Or is there people churn? Especially when it's about a services-heavy business and you rely on those people, and the talent is an important factor, but it's not really looked after unless you have a CEO or Chief Human Resource Officer that really cares and they manage to do it on top of the valuation that they need to deliver."?
Her insights shed light on the overlooked opportunity in private equity to value and actively manage the softer elements critical to a company's success and well-being.
Human-centric factors are an integral to a robust investment strategy
The insights from our panel made it abundantly clear: culture, employee engagement, skill development, and succession planning are not just additional considerations but foundational elements for the success of investments.?
These human-centric factors are integral components of a robust investment strategy, playing a pivotal role in shaping organisational resilience and performance. Addressing these aspects head-on is crucial for navigating the complex and high-risk investment environment of today. By prioritising the human element alongside financial and operational strategies, firms can foster environments conducive to sustainable growth and success.
If you want to find out more about the themes discussed in this event, hear about upcoming events, or would like to be involved in our 2024 events programme as a partner, speaker or guest, connect with me, Julia Barber , Director, Platform Engagement, Renovata & Company
Renovata & Company is the global talent platform maximising value creation for the private equity community across the deal lifecycle. Our platform brands, including Renovata, Segalen + Associes, Aggancio, Renoir and Zeren, deliver the transformational talent and market intelligence that drives investment returns.
With a heritage in software and technology-enabled services, Renovata & Company now serves digital-first companies across multiple industries, globally.
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