Private equity leaders face daunting talent disruptions, AlixPartners survey finds

Talent movement, not supply chain disruption, is making it hard to run their businesses.

 

NEW YORK (March 30, 2022) – Leaders at private equity firms and portfolio companies (portcos) said winning talent and keeping their best workers on board are disrupting their businesses, according to AlixPartners’ Seventh Annual Private Equity Leadership Survey. A whopping 75% of portco leaders cited talent retention as their most daunting challenge and 67% of PE investors said talent recruitment will be their biggest challenge of 2022.

Burnout is on everyone’s minds

With burnout threatening to make it harder than ever to win and keep much-needed talent, have leaders revisited their talent acquisition and retention practices? Yes, according to the survey results. Aside from offering more flexible working arrangements and increasing financial compensation, the highest number of respondents from both groups cited a greater focus on clarifying and communicating their organization’s mission and purpose as ways to improve.  

“Shortage of talent is a key concern for leaders. In fact, of the 3000 global executives who participated in the 2022 AlixPartners Disruption Index survey, 62% said this is an area of greatest concern. Similarly, leaders in the PE industry in our survey said challenges related to talent management outranked--by very large margins--concern about such seemingly equally weighty matters as strategy execution timelines, market volatility, cybersecurity, ESG, and supply chain issues,” said Ted Bililies, Ph.D., Managing Director, founder, and global leader of the Transformative Leadership practice at AlixPartners. “Companies need authentic, highly communicative leaders who can model the core values and positive behaviors that reflect a strong culture. Examples like an open and inclusive culture, a priority on diversity, and a sensitivity to people, purpose, as well as profits, are all emerging traits of successful and effective leaders,” he added. “Businesses must excel at strategic talent management; for instance, ensuring that their companies are paying close attention to employees’ career paths and professional training and development. The entire employee value proposition of many organizations needs to be revised in light of new and changing employee demands.”

A majority of PE firms and portcos have stepped up recruiting efforts

In the past 18 months, as much as 67% of PE respondents and 55% of the portco respondents have “gained” or “significantly gained” new talent, according to this year’s survey. Only 3% of the PEs and 6% of the portcos reported significant loss of talent.

ESG investments aim to address talent challenges

For PE and portco survey respondents whose organizations do invest in ESG initiatives, talent attraction and retention counted among the top three responses by both groups—especially by portcos—joining growth and customer requirements to create a trifecta of investment purposes. In light of this, when asked to specify where they were investing their time and resources into ESG initiatives, more of the portco respondents (61%) selected “Employee welfare and reward” than any other area, including cybersecurity, DEI, environmental impact, corporate governance, and supply chain management. Their response further suggests focus on the importance of attracting and retaining top talent during times of extreme disruption and of escalating competition for the best workers. The response may also reflect portco leaders’ awareness that in tough times, when companies are demanding more and more commitment from their employees, attending to workers’ welfare becomes even more vital for keeping them on board.

Dr. Bililies summed up this year’s survey, “During these difficult times of extreme crisis, uncertainty, and continuous waves of disruption, it is more important than ever for leaders to lean into these challenges and remember the three major competencies that

set transformative leaders apart from ordinary ones: resiliency, adaptability, and emotional intelligence (EQ). This combination enables leaders to address the thorniest challenges doled out by disruption and maintain a strong, supportive, and inclusive culture that the workforce of today demands. And I assure you, your current and prospective employees are watching very closely,” he added.

About the survey

The AlixPartners Seventh Annual Private Equity Survey, conducted in conjunction with Vardis, the global private equity executive search firm, was administered October through December 2021. There were 195 total respondents comprised of 118 managing directors, operating partners, or founders from private equity firms and 77 senior executives (primarily CEOs and CFOs) from portfolio companies. 68% of respondents were based on North America, and 32% were in rest of world. The majority of PE firm respondents reported their firms’ assets under management were less than $5 billion.

Please contact Ed Canaday for more detailed survey results. 

About AlixPartners

AlixPartners is a results-driven global consulting firm that specializes in helping businesses successfully address their most complex and critical challenges. Our clients include companies, corporate boards, law firms, investment banks, private equity firms, and others. Founded in 1981, AlixPartners is headquartered in New York and has offices in more than 20 cities around the world. For more information, visit www.alixpartners.com.