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The PeopleCap Playbook

Timely insights and actionable people strategies for leaders.

I’m an Investor, Not a Therapist

“We are really good at analyzing markets, financials, and growth potential. We are not as good analyzing the people part.”

“I spend a lot of effort finding the right investments for us, and then I spend all of my time on the phone dealing with people issues.”

We hear comments like these frequently from private equity firms and board members of private equity portfolio companies. In the private equity arena, where the ability to maximize impact and ROI is largely dependent on speed of growth – getting bogged down by people issues can be costly – and spending hours dealing with leadership issues can be really (really) frustrating.

Regardless of the industry, company size, or investment amount, there is one truth: people drive results. As a result, a company’s people strategy is just as important as its financial strategy.

To determine whether your portfolio company has a strong enough people foundation to support the growth you have invested to achieve, you should consider these questions:

  • Is everyone aligned with our vision for the future of the company?
  • Is the current leadership team capable of taking us to the next level?
  • Are the strategic priorities explicitly owned by members of the executive team?
  • Are the senior managers strong people leaders? (or high performers who were promoted out of necessity because the size of their team grew)
  • Is the culture helping us reach our strategic goals?
  • Is the Board in sync with the CEO and leadership team?
  • Is the company able to attract and retain top talent?
  • Does the compensation, reward and recognition system support the growth strategy?
  • Is the organization explicitly structured to execute the current strategy?
  • Does the CEO view the board members as strategic partners? (or meddlesome outsiders)

If the answer to any of these questions is “no” or “I don’t know,” you should dig deeper – so you know where attention and resources are needed first. Financial results are lagging indicators of performance. Digging into people and culture-related issues provides critical data and insights for confident decision-making and improved performance.

If you would like to talk through steps you can take to gain more clarity and confidence in the people side of the business, we are happy to discuss and share additional insights and tips.