Private Equity and the Talent Function

Download the 2023 Report

Entromy, BluWave and TalentScape are excited to release their second annual report on the talent function in private equity.

This year’s report offers an expanded scope and span to deliver topical, new insights and perspectives that will help inform the current and future states of human capital in private equity.

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Featuring insights from:

Key Insights From the 2023 Report:

Top priorities

Top priorities for survey participants included “managing inflationary pressures on compensation within portfolio companies,” “optimally right-sizing portfolio company employee numbers in the face of a weakening economy” and “balancing investing in talent with the challenging macroeconomic climate.”

Paths to Value

Survey participants primarily chose 3 distinct paths for adding value as a talent partner: Acquirers (34%), Assessors (39%) and Advisors (27%). Download the full report to discover the specific priorities, tendencies, blind spots and growth opportunities for each of these paths.

Domain knowledge

94% of survey participants reported that the talent function in their firm possesses the critical business and domain knowledge to be a credible resource for investment professionals.

Post-Close Playbooks.

51% of survey participants reported that their firm has built and implemented a post-close human capital playbook for each portfolio company.

HR data

46% of survey participants reported that their firm collects and analyzes HR data from across the portfolio to analyze and predict risks.

Private equity firms are increasingly driving value creation through talent levers. Initially, a new talent function typically picks one of the categories noted in this study. Over time, they expand to include at least one of the others and start to develop a “major” and “minor” philosophy. I suspect that most firms would say they are ‘best in class’ at one they consider part of their differentiation. The challenge is expanding into the other paths-to-values where 1. Expansion of scope might be outside the head of talent’s core expertise and 2. Further investment into the talent function has constraints since most PE firms are lean in their internal operations.

- Operating Partner, Talent at M

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