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The Experts Weigh In: Reflecting on Themes from 2021

December 28, 2021 Leeanna Nelson

One of the advantages of providing specialized solutions for more than 500 PE funds and business leaders is that we gain a 360-degree view about what is impacting portfolio companies and the private equity industry as a whole. From our hundreds of interactions with fund managers, interim executives, business leaders, and experts from across industries we learn about trends, themes, and opportunities that affect all aspects of PE. As we look ahead to 2022, we reflect on some interesting insights that we gained from our network, as well as our founder and CEO, in 2021 that point to themes to watch for in the year ahead.

Theme 1: Focus on people as core strategy

While it may seem counterintuitive in such a technology- and-data-obsessed culture, what we’ve seen the past year (with no sign of slowing down) is a commitment to focusing on talent and culture as a core part of business strategy. With an anemic and highly “flexible” job market, companies are thinking of innovative ways to attract and retain top talent in order to compete, including giving the CHRO a seat at the table.

The expert’s take: “I believe human capital is one of the most valuable assets of any successful company. End of story. We have put in place a strategy to have our portfolio companies hire a Chief HR Officer—a role that drives strategic thinking, fundamental change through processes, and design efficiencies. This person’s role is to think strategically about the business, then marry that strategic thinking with decision-making around human capital. He or she understands long-term objectives and implements a hiring strategy to meet these objectives. It was a game-changer for our companies and enabled us to swiftly drive change and make money for the shareholders.” — Matthew Garff, Managing Director at Sun Capital

Theme 2: Public policy and its key role for PE

Recently, Congress and the current Administration have put forth measures that could affect the private equity industry and have a negative impact, particularly on women investors. The industry employs over 11 million Americans and supports thousands of small businesses; a fact that sometimes gets lost when legislators are just focused on the balance sheets of the funds.

The expert’s take: “Washington is trying to move very quickly: it’s like being in a baseball game but not knowing what inning you’re in. Oftentimes the intention of these proposals isn’t nefarious or ill-intended; rather, haste makes waste and politicians are drinking massive amounts of information from a firehose. One minute they are talking to someone like me, with a private equity agenda. The next minute, it’s someone from higher education, renewable energy, or critical infrastructure. Our job [as industry insiders and lobbyists] is to inform them about the realities and potential negative consequences in a non-incendiary way so they will actually listen; subsequently, we hope they make decisions based on the data-rich information we have provided.” — Pam Hendrickson, Vice Chair at The Riverside Company

Theme 3: Specialized talent offers a competitive advantage

One theme that started to stand out in 2021, and will likely continue to be true for years to come, was top-level executives leaving companies in search of more flexible, specialized projects that put them in the driver’s seat. What does this mean for the PE industry? A shift in focus to interim, specialized talent who can quickly and accurately provide results during the process of due diligence, recruiting, and beyond.

The expert’s take: “The private equity industry used to be about optimizing companies to get attractive returns. Today, it’s very competitive with hundreds of sponsors participating in every auction, often paying perfect prices for imperfect companies. To stand out, PE firms need to see something that’s not in the investment bank’s book. General insights from generalist advisers don’t cut it anymore. We’re equipping our clients with specialized resources that identify unique information that gives them a fundamentally different perspective in a competitive process.” — Sean Mooney, founder/CEO of BluWave

Theme 4: Prioritization of remote work

After years of testing the idea of working from home, the last two years have catapulted the acceptance of remote work—and working from anywhere—to the top of the “normal” list. In fact, companies report that a substantial number of new employees are prioritizing the ability to work remotely even ahead of a robust benefits package.

The expert’s take: “Candidates who were fortunate enough to be employed during the pandemic but unfortunate enough to deal with the constant disruption and stress are now coming up for air and looking around for new adventures. In tandem with this ‘fancy shiny object’ job search, most candidates learned that much of their knowledge and skills could be effectively managed remotely. That’s a game-changer. Once people figured out they could live in Park City, Utah while working for a company based in New York City, many of them made substantial lifestyle changes to strike that elusive work-life balance. It almost gave people permission to shed old norms and start fresh. They went from thinking, ‘I’m going to be stuck in an office for the rest of my life,” to “holy cow, I can work on the ski slopes!’ — William Tincup, President & Editor at Large for Recruiting Daily

Theme 5: Scarcity and its future implications

One thing is certain—from supply chain to the workforce, scarcity seems to be a theme du jour, if not douze mois une année. But how troublesome is it as we move into 2022, and what can we hope for in terms of how the economy will adjust?

The expert’s take: “Usually shortages are a sign of price controls, and usually when people say ‘we don’t have enough workers’ it means that the price they have to pay is too high to get the workers. Historically, there have only been shortages when raising prices is forbidden. This happened with gas controls in the 1950s. The puzzle with today’s shortages is why don’t suppliers just raise prices? My presumption is that they are afraid of being judged as gougers either by their customers or by the government. Eventually, prices will increase, instead of the other option: not having products. It’s already starting to happen. This will help eliminate the pressure on the supply chain.” — Russ Roberts, host of EconTalk and Hoover Institute Research Fellow

Theme 6: The rise of impact investing with a focus on ESG

Almost every investor you talk to these days, whether for a public or private company, has one thing top of mind: how are our portfolio companies performing against ESG standards, including the initiatives around diversity, equity, and inclusion (DE&I). While ESG has been an important reporting tactic for years, only in the last two has it reached the tipping point. Many firms have already seen a positive impact by investing in diverse workforce development, and it seems that it is definitely possible to have success with a triple bottom line investment thesis.

The expert’s take: “We recently made an investment in a waste management company and our investment thesis was to formalize all policies and procedures, then top grade the management team. After implementing our suggested changes, the company attracted a more diverse workforce, which in turn embraced the ‘professionalization’ of the company. This included the way the company related to and communicated with its diverse customer base. As a result, the company improved its margins, increased customer retention, and was better positioned to win larger contracts from commercial customers.” — Colleen Gurda, Founder of Riveter Capital

Theme 7: Family wealth expands into new industries through collaboration

Family wealth, most often managed by family offices with a staff of ten or fewer employees, is reaching beyond the usual suspects of real estate and legacy business toward direct investments in emerging markets. What was once thought to be “old money” is now shapeshifting with younger generations of family members at the helm, many of whom are interested in collaborating with other family offices to expand their reach.

The expert’s take: “Direct investing has been the core strategy for families for decades. What we’ve seen is an increase in collaboration between family offices that happened less regularly before. For the most part, private equity has been taking the lead on lower market buyouts; and families see the upside and potential of that. Pooling resources allows families to reduce risk [in industries they aren’t as familiar with] and take advantage of companies that land between $3M and $20M EBITDA, who are looking to sell. Families are also looking at platform plays such as buying up HVAC companies and other firms within an industry. We are also hearing a lot of talk now about ESG, and also “business drivers” both of which contribute to innovation.” — Glen Johnson, President of Membership at Family Office Exchange

Theme 8: As consolidation continues, culture is a top priority

While company culture is certainly an important part of any organization’s success, during and after an acquisition the focus on maintaining a “healthy culture” is paramount—and is often the difference between a smooth or rocky outcome. Add-ons and consolidations will continue to be at record highs in 2022, and acquirers are best served to create a solid strategy to ensure culture remains at the top of the priority list.

The expert’s take: “Here’s what we’ve learned with nearly 75 acquisitions under our belt, some of which worked and some didn’t. First and foremost, it has to be a business fit. A lot of people will buy companies when there isn’t a reason for the companies to be together. It’s just about size and irrelevant to the core business; you see this a lot with tech companies. But it’s not only about the business fit; there also has to be a cultural fit.” — Troy Templeton, Managing Partner at Trivest Capital

How specialized recruiters ensure businesses find the right people

December 14, 2021 Sean Mooney

Scarcity is impacting pretty much every aspect of our lives, from groceries to car parts to, in particular, people. Finding the right people for your business has always been a herculean task but in the COVID and post-COVID era, it’s even harder. The highly-publicized Great Resignation has led to millions of capable people outright leaving the workforce. According to the Bureau of Labor Statistics, the rate of job openings in the United States doubled from spring 2020 to July 2021, leading to skyrocketing business demand for talent.

Business leaders are desperately trying to onboard team members with the specific skills they need for the new post-COVID normal because the solution to their shortages can’t be to do nothing. So, the question becomes, how do you find the right people in this challenging environment? Per our BluWave Business Builder Index, the PE industry’s emphasis on human resources has grown from 18% of activity in 2018 to 39% of all tracked activity as of Q3 2021. With the private equity industry’s single biggest focus area being people, this should give every business leader a sense of where they should also be spending their time and attention, as well as a sense of the importance of human capital in today’s business climate.

The private equity industry finds the right people by first taking time to understand the exact type of person they need for each role. They do this by assessing what key attributes are needed via scorecards – including functional role, cognitive aptitude, industry expertise, wage rates, culture, availability, and geography needs.

In order to connect with the individuals that have these needed attributes, proactive private equity firms are utilizing specialized recruiters. How is a generalist recruiter sitting at a desk in New York going to truly understand how to recruit for a niche, mid-sized company in the Heartland? Well, the truth is: they don’t. Specialized recruiters allow for quicker and better results due to their expertise across the key attributes that you’ve identified you need.

Industry Expertise Matters

Prior to becoming an entrepreneur, I was in the private industry for nearly 20 years. During this time, I learned that every industry has unique nuances that are critical to understand. If your recruiter doesn’t know these distinctions, how could they possibly be expected to assess who’s good in each industry? Moreover, while the world is large, most industries are “small.” Really good people in each industry know each other and know who’s good as well as who’s not at different things. Recruiters who specialize by industry typically know the people you need and who’s available before you even call them.

Functional Role Expertise Creates Advantage

Just like every industry has unique aspects, so does each functional role in an organization. The skills needed to be successful in a CEO position are quite different than those needed in a CFO role. Proactive firms get this and use different recruiters, aligned by functional area, for each of their core C-Suite hires such as CEOs, CFOs, CMOs, CHROs, etc. There are certain parts of business that I intimately and expertly understand. However, there are many others like digital marketing, legal, and tax that I do not, so I hire experts who know what great is and use their skills accordingly. Hiring managers should adopt this same mindset when engaging specialized recruiters.

Be Local

There are 197 million square miles in the world and nearly 8 billion people. Even with LinkedIn, it’s hard to know everyone. It’s much easier for recruiters to know who is excellent within their own geographic regions. Geographic alignment for recruiters becomes particularly important when you’re recruiting into smaller cities, more rural areas, and lower-level positions where it’s harder to relocate top candidates. The more local your recruiter is, the better chance they’ll already know who you need.

To Each Their Own

Different people have different skills that enable them to succeed at different size companies and earn different wage rates. Over the years, I’ve learned the hard way that most recruiters perform their best when staying within their company size and wage range sweet spots. Some focus on “rock stars” that lead large companies and/or earn more than $1 million per year. Others focus on mid-size companies and/or $500k-$1million wage ranges. Others on SMBs and $250k-$500k wages. And then there are a sea of people who focus on everything below. Make sure you align your selected recruiter with the company size and wage range they focus on. That way they’ll have a built-in network that is already good to go. If they don’t, the recruiter will likely default to getting one of their junior associates to learn on your dollar and start canvassing LinkedIn, which invariably leads to mixed results.

Hiring the right people is never easy. In the current climate, it’s significantly harder. It’s essential to eliminate as much bias and variability as possible, focus on capabilities, and align your search partners with key candidate success factors. By taking the time to understand what attributes you require in a candidate and then utilizing a specialized recruiter that synchronizes with your scorecard, you’ll find that your hiring success rate and speed of placement will improve dramatically.

If we can help quickly connect you to the specialized recruiter you need, please contact us and we’d be happy to get started quickly.

November 2021 Roundup: BluWave Client Insights

December 3, 2021 Leeanna Nelson

BluWave works with over 500 PE funds from around the globe, connecting them with pre-vetted, best-in-class, third-party service providers across a variety of resource and functional areas. From information technology and manufacturing to healthcare, consumer goods, and beyond, our clients are expert business builders. In other words, they have their heads in the game and their hands on the pulse of news you can use.

Check out the latest, curated collection of reports, insights, and musings from a handful of our PE fund clients on some of PE’s recent hot topics including rising inflation, ESG, product development, and human capital.

Joe Zidle, Managing Director and Chief Investment Strategist of the Private Wealth Solutions Group at Blackstone, shares insights into where investors should look for returns in an environment that will likely soon feature higher inflation, less policy support, and muted returns.

Read what Joe has to say >>>

In this short video, members of the Apax Partners team explain why “impact” is a distinct investment category, why it’s the natural next step for all PE firms, the importance of strong ESG credentials, and success stories from their own impact portfolio.

Watch the video >>>

Matthew Jacobs, Investment Director at Livingbridge, shares insights from his conversation with Mark Davison, former Chief Data Officer at Callcredit and current non-executive director at Mobysoft, about successful product development in software companies.

Learn tips from this interview >>>

While effective human capital strategy remains at the forefront of every business leader’s mind given The Great Resignation, John Broderick, Operating Partner at Argosy Private Equity, shares keys to building an engaging and high-performing culture that naturally drives the execution of strategy.

Human Capital Forum Recap | October 2021

October 29, 2021 Leeanna Nelson

Every quarter we bring together top PE HR and talent executives to discuss current industry topics and to offer leaders in PE Human Capital the chance to gather, share intel, and decompress with one another. In our most recent event, we discussed many topics and listed our top takeaways below.

These forums follow Chatham House Rules, so listed below are high-level takeaways only. Are you in private equity and interested in joining fellow leading PE professionals during our next Human Capital Forum? RSVP for our next event on January 19th.

Employee engagement:

Many firms continue to explore new ways to attract and retain talent – both internally and across portcos. To keep a robust pipeline of potential portco execs, firms are trying various iterations of “Execs in Waiting” and are keeping them engaged via unique compensation models, board roles, happy hours, and ad-hoc advisory work—all for the purpose of keeping the relationship fresh. On the internal fund side, many firms are trying to keep people connected with more programmatic content, i.e. sending firm cohorts on retreats to reconnect and gathering physically in a safe environment via service projects if offices are not yet open.

Deal team engagement:

The best practice for human capital leaders seems to be to offer directed help early in diligence, i.e. be specific with ways that Talent and Human Capital can serve as a resource throughout the diligence process but be careful not to be pulled into everything. The Human Capital resource will then have a clearer view of work that needs to be done post-acquisition, and potentially get a head start on what needs to be done.

Building Operations Teams and Senior Advisor Benches:

Across BluWave’s 500+ client base, we have seen just as many iterations of senior advisor and ops teams. That said, there seems to be a trend of building out functional expertise in some form or another that can then manage external resources or address the portco needs directly, with various scorecards or reporting methods to ensure they are not pulled too deeply into the portco daily activities. There is a concerted effort to build out human capital capabilities across PE funds.

We thoroughly enjoyed the fruitful conversations that occurred during this recent gathering of PE human capital professionals. As noted in our latest PE Insights Report, human capital remains one of the top initiatives in PE, with HR-related activities accounting for more than 50% of all value creation activities in Q3. If we can be of assistance during this busy time, please let us know.

Event Recap: PEI Ops Partner Forum: What makes a great PE talent partner?

October 26, 2021 Leeanna Nelson

Last week, we had the pleasure of participating on the “what makes a great PE talent partner?” panel at the PEI Operating Partners Forum in New York. The panel was comprised of human capital leaders – including, Merche del Valle of Grain Management, Alice Mann of Blue Wolf Capital Partners, Ashley Day, a former Chief Talent Officer, and Michelle Nasir of Arsenal Capital Partners.

It was great to be in person with over 200 leading PE ops partners and to have a discussion with those that are talent-focused about what their jobs look like, now that talent operating partners make up 34% of all operating partners, versus the 3% that comprised the PEI ops partner forum 3 years ago.

We have seen the increase in human capital importance firsthand, with our proprietary data showing human capital initiatives increasing to 39% of PE activity this quarter compared to 17% in Q1 2018.

In addition to the increase of importance that has been placed on human capital initiatives in PE, data has shown that they have also become wide-ranging, covering everything from interim leadership to exec assessment diligence.

Given this context going into the panel on what makes a great PE talent partner, the below are some of the topline takeaways:

Talent roles vary widely across funds:
- When talking to other panelists, we discovered that some of their talent roles are more internally focused on HR within the PE firm itself, and some are exclusively externally focused on portco executives only. It was also discovered that roles vary additionally by how and when they get involved.
Working with the deal team:
- The panelists all agreed there have been changes in the amount of time available to fully execute on all of the responsibilities that may have fallen on talent in the past. They said that with this change, funds need to be more regimented and prioritized in terms of how and where they spend their talent team’s time. In terms of executive assessments, interestingly—some assessments have become less comprehensive. BUT, funds have also become more creative with deploying assessments given the tight market. Many are giving offers that are contingent on assessments and background checks going well.
- For work with deal teams—the primary takeaway is that the earlier involvement, the better. Roles amongst our panelists truly varied as to when they got tapped and for how comprehensive a remit, i.e. “do this assessment” vs “ride along on the deal execution to help us spot red flags.”
Pressurized market:
- Funds have become more regimented due to Covid. They have discovered efficiencies in the process that were developed during the times when everyone was remote and are now helping funds keep up in a highly pressurized market. These playbooks and scorecards have been developed for both internal hiring and monitoring the health of various portcos from a human capital perspective, i.e. turnover, depth of exec bench, etc.

If your firm needs human capital help, we can help make the job easier by connecting you with exact-fit interim executives, HR diligence providers, executive assessment providers, and more. Contact us here if we can be of help and check out our Interim CFO Hub to learn more about how interim executives can benefit you.

Using Lean Six Sigma to optimize teams

July 29, 2021 Sean Mooney

In a recent article for CEOWorld Magazine, BluWave founder and CEO Sean Mooney shared how his love for the beautiful, streamlined, and seemingly perfect Ferrari sports cars that constantly improved with each model led to his love for the concept of Lean Six Sigma. He saw a similar sense of beauty in the ideas of perfecting form, reducing variability, eliminating waste, and continuously seeking improvement.

While the concept was first embraced by the manufacturing industry, it is becoming increasingly popular across all sectors and industries, even in how business leaders think about their people.

You can read the full article and Sean’s thoughts on how Lean Six Sigma is all about people here. And if you need help connecting to the fractional and interim resources you need when you need them in order to apply Lean Six Sigma in your business, you can contact us here.

PE Human Capital Event Recap

July 20, 2021 Leeanna Nelson

These forums are invite-only and follow Chatham House Rules, so listed below are high-level takeaways only. Are you in private equity and interested in joining fellow leading PE professionals during our next Human Capital Forum? Please contact us at events@bluwave.net.

Hiring Portco Execs  

Hiring the “perfect fit” executive for portcos is taking much longer, and many search firms and recruiters are tapped out.  Firms are getting more proactive—even engaging specialist recruiters before the deal closes. 
Many shared tips including focusing on the journey of a candidate—ensuring every interaction involves selling the value of your company and assessing the skill set of the candidate.  And when they find the right person, they are moving quickly.

Attracting and retaining internal PE talent 

To find people (particularly at the senior associate and VP levels), funds are considering hiring off-cycle and considering non-traditional (non-banking) backgrounds, and committing to onboarding and training. Firms are offering mentorship opportunities with VPs or MDs and regular check-ins—proactively soliciting feedback from junior team members to unearth previously un-voiced concerns and providing them a “safe place” in which to do it.
Many are leaning into the culture within the firm.  Branding has become even more important for both fundraising and attracting talent. 
Some firms are leaning into further defining career paths for juniors versus the historical opacity.  Junior talent will get poached if you are not clearly communicating how they stand within the fund.

Lessons learned from hybrid and remote arrangements

Hybrid flexibility varies by firm—some are full-time in-person, some are requiring in-person on certain days, others offering full hybrid with the expectation of in-person during a prescribed number of times per month.  Flexibility is the current perk du jour.  Try the best model for your office, and regularly reflect on whether it is working. It is ok to revisit your model and make changes if needed.

We appreciated this latest session bringing together leaders in PE Human Capital, enabling peer-to-peer discussions on current industry hot topics. During our last quarter, Human Capital projects comprised 40% of our overall project mix, so we are well equipped and ready to help you with those needs.

Interested in learning about how we can help you instantly access PE-grade specialized recruiters, organizational effectiveness advisors, compensation study providers, interim talent, and other custom fit human capital resources you may need? Check out our case studies here. If you have an immediate need, contact us here and one of our team members will be in touch shortly, we’ll be happy to help.

Interim talent means more equitable environments for the future of work

July 14, 2021 Leeanna Nelson

As the chaos and uncertainty around the pandemic starts to settle and businesses dust off the debris of the last year, it’s becoming clear that a new world of work is upon us. What many were predicting would soon be the “new normal” is now the actual normal—especially when it comes to work. The transition back into physical office spaces does not mean the end of remote work. Instead, companies are embracing a hybrid workforce.

Hybrid work combines virtual and onsite employees, whether on alternating days or on a permanent basis, and is a trend that companies are embracing across the country. A recent report from Gartner revealed that 59 percent of companies intend employees to work remotely occasionally, while 32 percent are allowing remote work full-time. For many leaders, however, this now means transitioning again into a new working style: one that facilitates productivity and collaboration among in-office and virtual workers (think: all-hands meetings with half the team sitting together at a conference table and the other half calling in from Zoom).

This is why project-based work is on the rise. Instead of onboarding full-time employees remotely, which has been one of the biggest challenges for HR leaders during the pandemic, companies are calling on skilled experts to complete tasks on a contractual, as-needed basis. As we drive ahead in the new normal, project-based workers will be fueling the future of work.

Project-based work is an integral part of a successful remote workforce

Across the 1,000-plus private-equity-based projects BluWave supported in the last 12 months, one thing stood out: investments in people continue to be the number one focus area in 2021. While technology has helped companies to adapt to remote work, hiring employees who have the skills to work with the technology has been even more valuable.

Hiring workers for specific, often discrete, projects means you can vet candidates based on their ability to meet the demands of that project. Using an Intelligent Talent Network can help you match potential interim workers to those interim needs. This model works well for private equity firms, from senior partners to portfolio company executives, because it engenders trust and rewards results. If you hire people who are skilled, action-oriented, and self-motivated, you can set goals and give them “rope” to freely deliver the best result. Ultimately, project-based work ensures that rewards are aligned and incentives are rewarded in exchange for top performance, which is more difficult to achieve with a more amorphous scope.

Interim work means more equitable environments

Hiring based on a potential employee’s ability to perform against predetermined, outcomes-based objectives helps eliminate bias (unconscious or not) in the recruitment process. According to Harvard Business School, “In recruiting … unconscious bias and affinity bias often express themselves as a preference for one candidate or another because of ‘culture fit.’ Resumes may be selected because of a shared alma mater, or because of an unconscious bias to one name over another.”

When hiring for a long-term fit, companies may choose to give preference to candidates who meet unspoken criteria off-paper—because culture-fit and soft skills are generally more relevant for full-time employees. With project-based work, it’s the results that matter. If someone has a track record of success, they meet the criteria. It’s that simple. Plus, in this system, rewards are made equitable, too. If your project scope is clear, you can offer fair and just compensation for the work that is done—it provides equality of opportunity to perform.

Creating collaborative environments with distributed workers

The key to effectively utilizing project-based workers is putting the right systems in place to seamlessly integrate them into the existing processes and work efficiently across project stakeholders for the duration of their contract.

Clearly defining and communicating goals from the onset, delineating established deadlines, and integrating collaboration tools into operations will help leaders stay on top of a project. These are hallmarks of agile development, which involves short, project-to-project scrums with siloed teams that collaborate consistently through the scrum. Research has shown that agile teams are 25 percent more productive than their industry peers because team members focused on one task at a time.

You can also implement clear structures for assigning roles and accountabilities. A RACI chart is a tried-and-true matrix used to assign roles on a project. A properly used RACI outlines who is responsible for executing tasks, who is accountable for the work, who is consulted throughout the project, and who is informed on project progress. This helps eliminate confusion, reduce duplication or redundancy, and ensure those deadlines are met.

For a workforce still in flux, those equipped for project-based work act as connective tissue and can build the foundation for future stability. Companies that embrace this wave of “normal” will likely be the ones that ultimately find themselves in a winning position.

This article originally appeared in HRFuture Magazine.

Private Equity Human Capital Executive Forum Event Recap

May 8, 2021 Leeanna Nelson

Every quarter we gather top human capital executives across leading private equity funds to discuss key topics that are top of mind. In our most recent event, we covered many topics. Below are our top takeaways.

These events are invite-only and follow Chatham House Rules, so this only touches on our high-level learnings. If you are interested in joining our next event, please contact us at events@bluwave.net.

Return to Office: Though there was variance as to private equity funds approach how/if they will return to the office, Labor Day seems to be the flashpoint when most will begin their version of the “new normal.” In the meantime, office attendance seems to be voluntary, sometimes encouraged.

Some firms are using prolonged location flexibility as a recruiting tool for more junior employees, and others are trying a hybrid model, (all-firm Mondays, Deal Team A Tuesdays) to take advantage of the “organized serendipity” aspects of being physically in the same space.
Individuals are encouraged to share their “vaccine plan” but are generally not required to have it.
Questions arose around the attraction and retention of junior talent who prefer a flexible location plan—and how this may balance with the individual competitiveness in employees wanting to gain an advantage by being in person or preference with facetime.

Diversity, Equality, and Inclusion: Most firms are applying a more holistic approach when considering the diversity within the firm and portco structures, and some sort of diversity diligence and board reporting seems broadly applied.

Many firms are partnering with specialized recruiters or diversity-focused associations to maintain a diverse junior candidate pipeline.
To maintain a healthy pipeline of all junior candidates, some firms have introduced internship programs, or have made offers to investment banking candidates earlier in their careers.
A number of firms discussed using emerging public company standards for their portco boards.

Future of Work: There is broad acceptance that some things will likely remain different for the foreseeable future- either from a location flexibility perspective or a difference in frequency of business travel.

Firms are re-thinking what is required to be done in person (and in-office) and what can be done remotely in order to maximize time together.
Business travel will likely be less frequent in the near term (i.e. dial into the monthly board check-in) but more concentrated and purposeful when it happens (i.e. the portco visit will be bi-annually and will be an intense 3 days of plant tours and management meetings). Some firms are limiting travel to more senior individuals so as to reduce juniors’ time away from other essential tasks.
Many firms have targeted and continue to hone all employees’ digital acumen to optimize communication and collaboration across people and teams, regardless of whether they are in-person or virtual.
Virtual work has prompted a focus on the importance of personality assessment tools (like Hogan) to help team members understand each other better and to accelerate remote relationship building.

HR & talent are a key area of focus for us and our clients. In fact, in our Q1 2021 quarterly insights report, we found HR and talent remain private equity’s top area of focus, accounting for nearly 39% of all due diligence and value creation initiatives by PE in Q1 2021. Activity levels in HR and talent continue to grow over time, comparatively accounting for 32% of projects in Q1 2020 and 25% of projects in Q1 2019. Within this category, we are seeing significant investments by PE in ESG and Diversity, Equity, and Inclusion (DE&I) initiatives.

You can find an overview of our quarterly findings here. To view the full deck, which includes detailed projects by functional area, as well as league tables, reach out to us at info@bluwave.net. A team member would be happy to share our full findings with you and tailor our insights to be most relevant to you and your fund.

How to Build A Resilient Company in Changing Times

April 21, 2021 Sean Mooney

Do you have a resilient company? Does it navigate shifting tides easily, or do your leaders and teams struggle with every minor disruption? What makes certain people better equipped to roll with the punches?

According to bestselling author and ADP Researcher Marcus Buckingham: “people don’t fear change, they fear the unknown.” To use a timely example, if your company is attempting to rush back to “normal” (going into a physical office, business travel, etc.) he suggests having a concrete plan that offers visibility to senior leadership and their teams as to exactly what this will look like.

Simply put, it’s not enough to send a company-wide email that says: “Okay folks, starting Monday, business as usual!”

Furthermore, according to his recent study on building resilient teams: Only 17% of the workforce feels “highly resilient.” Clearly, company leaders across business types, industries, and geographies have a tremendous amount of work to do in the area of building a resilient company.

Another interesting finding of note is the correlation between experiencing constant change and resilience. The data show that workers who experience five or more changes at work are 13.2x more likely to be resilient.

To help make the findings actionable, Buckingham breaks down the workforce into three categories: (1) senior leaders, (2) team leaders, and (3) self. For each bucket, he offers tips for how to help build resilience more effectively, based on questions posed to each group. These include things like vivid foresight and visible follow-through; anticipatory communication and psychological safety; and a sense of agency along with doing work we love.

If you’re a company leader, I highly recommend checking out the full study, or his related article What Really Makes Us Resilient in Harvard Business Review. (Bonus: Take his “Gift of Standout” assessment for free here.)

Why Diversity is Key to Productivity and Innovation

April 6, 2021 Leeanna Nelson

BluWave has worked with hundreds of companies across a variety of industries ranging from manufacturing and consumer goods to information technology and healthcare. Despite the differences that exist between them, one thing remains constant: for today’s companies, innovation and diversity are inseparable. There is no bigger obstacle to the introduction and refinement of new ideas than groupthink, which is why the most creative companies are the ones that encourage robust discussion and debate from multiple perspectives. Diversity is not just a matter of recruiting employees with different backgrounds – it is an ethos that your company should seek to cultivate at every level.

How Diversity Can Be An Engine Of Productivity

Diversity is not just a goal companies should pursue for its own sake – it is a way to pressure test ideas and come up with novel and effective solutions to problems. This is why it should come as no surprise that diverse and inclusive work environments often lead to higher performance. For example, a 2018 Boston Consulting Group study found that “increasing the diversity of leadership teams leads to more and better innovation and improved financial performance.” Meanwhile, according to Deloitte, companies with inclusive cultures are twice as likely to meet or exceed financial targets.

Certain forms of diversity can lead to a reduction in negative outcomes for companies as well – a report from MSCI ESG Research found “fewer instances of governance-related controversies such as cases of bribery, corruption, fraud and shareholder battles” with boards that included women. However, while eliminating bias and increasing representation are essential to the health of a company, these are ways to address a more fundamental issue: diversity of thought.

When companies prioritize diversity of thought, they do not just become more innovative – they are also better able to identify and hedge against risk. Companies that value diversity of thought have access to a broader range of viewpoints and insights, and they make employees feel like stakeholders whose contributions are welcomed and appreciated. In turn, these employees are empowered to offer their perspectives without reservation and speak freely to managers about problems that need to be addressed.

Challenges To Diversity & Inclusion

A commitment to diversity and inclusion begins with equitable hiring practices, but this is an area that has always been rife with bias and discrimination. For example, studies in Sex Roles and the Proceedings of the National Academy of Sciences have found that female, black, and LatinX candidates were viewed as less competent and hirable than their peers. There is also evidence that women think they need to be more qualified than men do when applying for the same positions.

There are many ways to address these inequities in the hiring process. First, determine exactly what you are looking for in a candidate and consistently measure potential hires against a specific set of criteria. This can reduce the bias associated with subjective in-person interviews and identify a larger pool of qualified applicants. Second, develop lists of pre-vetted candidates (this is what BluWave provides to our clients) so you know everyone under consideration already meets your requirements, regardless of race, gender, etc. And third, consider hiring employees on a project-to-project basis (what I call the agile workforce). This will naturally bring a broader range of perspectives to the company because it means new employees are being hired on a regular basis.

Diversity in all its forms is becoming a top priority for companies in many different industries. To compete, the first step is building your hiring strategy around the discovery and recruitment of candidates who meet your needs and bring unique skills and experience to the table.

Promoting Diversity In All Its Forms

Companies are increasingly prioritizing diversity across a broad range of categories. As we discussed above, this does not just mean increasing demographic representation – it also means creating an inclusive culture that facilitates open dialogue and cooperation at every level of the company. Real diversity and inclusion require companies to listen to employees, take their contributions seriously, and amplify the widest range of voices possible. There are many forms of diversity – from racial to geographic to socioeconomic – and companies should celebrate and learn from all of them.

According to Gallup, one of the reasons one-third of employees feel disengaged at work is the perception that their viewpoints and concerns are not taken seriously. The survey found that just 30 percent of American employees strongly agree that their opinions seem to count at work. This should be a disconcerting fact to any company that values the diversity of thought – the majority of employees feel like their contributions are being dismissed, which will make them less inclined to offer suggestions and point out problems when they arise.

This is the opposite of inclusion, but companies can change course by actively seeking feedback via the voice of the employee platforms (which can highlight instances of bias or discrimination), encouraging managers to be receptive to all points of view, and breaking down silos that can separate departments and teams from one another.

Diversity is a word that pops up on corporate websites and in training handbooks often, but company leaders often have a superficial commitment to making their workplaces more diverse. But this status quo is rapidly changing as companies increasingly recognize that an emphasis on diversity does not just make the world a fairer place – it also leads to happier, more innovative, and more productive workforces that will have a greater economic impact.

The original version of this article appeared in People Talk.

5 hacks for your personal and professional life

February 24, 2021 Sean Mooney

One of the silver linings of 2020 was my increased focus on (and confidence in) protecting my time. Spare moments were few and far between, as I, like so many parents in similar circumstances, attempted to walk the fine virtual line between my personal and professional life. A few weeks ago, BluWave spoke with a group of women in private equity to “knowledge share” and provide a space of support as we continue to navigate the “next normal.”

While the conversation was filled with enlightening information and helpful insights about everything from managing employee expectations to helping support portfolio companies poised for rapid growth amidst a still shifting landscape, the takeaways I most appreciated were, in essence, the simplest in theory. Even if you find just one of these useful, you will be one step closer to regaining your sanity.

Hack #1: Schedule a one-hour lunch in your calendar every single workday.

Whether you plan on eating a hamburger at your desk while perusing Amazon, or taking a walk around the neighborhood, do something unrelated to work that offers a refresh.

Hack #2: Take the time to say thank you.

Gratitude never gets old, and offering it is still the fastest gesture to remind someone you are a human—even in an increasingly virtual world. If you are looking to make saying “thank you” a programmatic part of your work life, look no further than the Thnks app, whose tagline “growing business with gratitude”, says it all.

Hack #3: Take a walk.

If you didn’t take a walk during your pre-scheduled lunch hour (refer to hack #1), then take one during a non-video conference or casual check-in call. Even if, like me, sometimes you only get as far as the mailbox, you’ll feel better after moving your sit bones.

Hack #4: Import your commute time into your virtual office life.

Translation: if you used to listen to a podcast while driving to the city, or read a book during your morning train ride, then continue to make that commute time focused on nurturing your curiosity.

Hack #5: Make time for catch-up calls with new entrants to the workforce.

Many of them may be flustered from the disruptions of 2020. Paying attention to these folks will ensure they perform and produce work effectively, and it also creates loyalty: an important aspect of reducing turnover and overall company success.

BONUS HACK: Look your best.

Looking like you’ve got it together on video calls is essential these days. Even if you’re just suiting up from the waist up, here are some colors to consider and some grooming tips to explore.