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. This month’s musings cover everything from deal sourcing to ESG, and all things human capital.
Dyana Baurley, Vice President, and Christen Paras, Managing Director, of Middleground Capital were interviewed this month for PEI Buyout’s Deal Sourcing in the Mid-Market issue. In the interview, Dyana and Christine share Middleground’s unique approach to deal sourcing, how they integrate technology into the deal sourcing process, how ESG plays a role, the importance of branding in the process, and more.
On this episode of the Private Equity Funcast, Jimmy Holloran and Paul Stansik share lessons they’ve learned from working inside the portfolio over the past 2 years. They cover their learnings and tips on how to get the most out of your next team offsite, commonalities in great management training, how to make hiring and performance management more human, and how to foster cultures that last.
Last month in our roundup, we shared KKR’s ESG report, to share with you their thoughts on the importance of ESG and we have seen the importance and relevance of ESG continue to grow as our Q3 PE Insights report showed ESG diligence crack into the top 10 of diligence activity for the first time ever. This KKR blog shares the impact private equity can have when focused on ESG, as it shares the story of a small family-owned business KKR backed and how they are tackling the problem of sustainability in the e-commerce industry.
As companies continue to battle The Great Resignation, the attraction and retention of human capital have remained a top priority across funds and portcos, leading to many companies changing their employee benefit plans. In this interview with Lovell Minnick Partner Brad Armstrong, he shares his observations on how “changes in employee benefits are impacting investment and M&A activity”.
Within the first few minutes of my conversation with Matthew Garff, two things became crystal clear: He fundamentally believes in what’s possible and he approaches potential problems with radical honesty. This is a personal as well as professional attitude and has served him well throughout the course of his three decades career.
While the last two years have often felt like a mission impossible, Garff and the team at Sun Capital Partners (perhaps the name of the firm says it all?) remained a bright light for their portfolio companies, traversing uncharted territory and ultimately coming out ahead—mostly due to their investment strategy of focusing energy and resources on industries they know well, and a commitment to the people side of their founder and/or family-owned businesses. In his words: “Human capital is the most valuable asset in most companies, and people enable what’s possible. They are what ultimately make it successful.”
From working with founder-owned companies and prioritizing the Chief HR role to assessing acquisition targets through operational due diligence, in this interview, Garff reveals insights into how he thinks about the future of private equity and why that narrative needs a reboot. I couldn’t have said it better myself! Spoiler alert: although he spent several years of his career acquiring golf courses, his son is the real expert on the sport now.
Sean Mooney: Why is the due diligence process so vital to the acquisition or add-on process when assessing a company’s potential?
Matthew Garff: When we acquire a business, the company often needs help understanding what’s possible—far beyond what has already been accomplished. Generally speaking, with founder or family-owned businesses, they have had their heads down for a long time, grinding it out; so, when they engage with us our first objective is to try to uncover (or help management reach) the “possible.” The due diligence process allows us to understand where the business could be performing three to five years from now.
A good example is our portfolio company National Tree. It was a second-generation, family-owned business and a market leader in selling seasonal home decor through online marketplaces like Amazon and Wayfair. They had over a decade of experience working with these online marketplaces built a market leadership position in their niche products, which we learned through diligence would continue to grow. We also recognized their capabilities in sourcing and dropshipping products. With these core strengths, we saw an opportunity to leverage these skills and expand into tertiary markets, which National Tree is now doing.
As a result of our findings, and our roadmap for achieving what’s possible, in the last two years the company has experienced tremendous progress—they have added executive team members, instituted new operational systems and disciplines, and opened the door to add-on opportunities that will expand product categories and accelerate growth.
A nod to BluWave here: you helped us with FP&A resources that worked with us for several months after closing. This was an integral part of what we are now seeing in terms of National Tree’s expansion and continued market leadership.
SM: How is the process different when working with a founder- or family-owned business?
MG: I’d say the major difference is ensuring that there is a smooth transition from a cultural perspective. Typically, these founders and family owners are very attached to the business and even though they want to evolve and grow—which is why they partner with Sun Capital—they are seeing a lot of change happen to what they built, and that can be difficult. We collaborate with them on the “Shared Vision Plan” to ensure we are aligned in every way on the strategic direction and that they are on board with the changes.
SM: What are some of the obstacles the industry is facing?
MG: The industry is really healthy and the capital and know-how from PE is very constructive. However, too often I hear the pervading narrative that “PE is a destructive force in business through leveraging businesses.” The biggest obstacle we currently face is a negative perception of the industry, touted by those who have a public voice but choose to focus on the failed companies which were owned by private equity. The truth is, many private equity investments provide wealth creation for families, fuel innovation, and enable the economic growth engine.
I always say that these detractors offer a view of PE that’s akin to someone from another country visiting Los Angeles for the first time on the one day of the year when it actually rains. Then, they go back to their friends and say: “Ha! I knew it. Los Angeles isn’t sunny, it rains every day!”
SM: What are some of the factors driving the momentum in the industry?
MG: In general, buyers are now more specialized by industry, and this makes them more informed. At our firm, we adopted the “focused industry” approach many years ago, and as a result, we are more refined in our thinking and decisions. This is good for sellers because they can find an investor-partner who understands the nuances of their particular business and industry.
I’ll use National Tree again, to give a clear-cut example of how this specialized approach benefits both parties. Currently, I spend most of my time in consumer and digital commerce. When National Tree had a rough patch with Wayfair, I picked up the phone and called my relationship at Wayfair. Within days, the problem was solved. In short: specialization supports the momentum we are now seeing industry-wide.
SM: How do you think about human capital when it comes to acquiring and managing portfolio companies?
MG: I believe human capital is one of the most valuable assets of any successful company. End of story. Several years ago, we wanted to increase the attention our portfolio companies were giving to human capital. As a solution, we 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.
If we are considering a company for acquisition, one of the key components of “HR diligence” is seeing if they have this role filled. If they do, it signals they are proactive versus reactive. Unfortunately, most companies are extremely reactive, but we’ve come to understand that having a Chief HR Officer is a core part of the business strategy. It’s not always easy to fill this role, because HR is too often put in a reactive role. But the HR function needs to be elevated to someone who can ask questions like: “Is there a hiring strategy and plan for who we hire six months to a year from now.”
SM: Many companies are going through hiring and recruiting challenges. How is Sun Capital helping support your portcos to this end, and what are some of the suggested solutions?
MG: We have long understood that strong cultures lead to strong performance. As a regular practice, we conduct surveys at our companies and measure the results. This is the only way to improve on it. When we are looking at companies to buy, or even when we visit our portfolio companies, culture is a key focus because it can make the difference in terms of hiring and retaining top talent; and having the most capable, skilled employees leads to better performance.
As an example, I was visiting a prospective company a few weeks ago, and as we walked the warehouse the employees were eagerly coming up to our tour guide, a company executive. They were saying hello, high-fiving, and seeking his attention. It became immediately clear that the company had a strong culture, and when we did some more digging we found that turnover was low and profitability high. This strong, healthy culture we witnessed first-hand also translated to strong performance.
While recruiting is certainly more of a heavy lift right now, I always remind our portfolio company leaders that employees need to understand the vision, and they need to know everyone—including managers and executives—are rowing in the same direction. When an employee feels like “our mission statement is ‘X’ but no one seems to follow it” this undermines culture, and can have negative consequences (not to mention high costs).
As a slight aside, the founders and Co-CEOs of Sun Capital have developed our company culture around the concept of radical honesty. In short, having honest conversations and being encouraged to voice our opinions is a core part of our DNA. This means everyone, from every level of our organization, is given the opportunity to be heard.
SM: Are there any industries that are being overlooked by PE firms right now? If so, why do you think that is?
MG: Successful investors often exhibit the quality of being open-minded and avoiding the temptation of the crowd, because the crowd is not always correct. For example, at present “brick and mortar” businesses are viewed as unfavorable, and in some cases, this is deserved. But many retailers that have strong underlying businesses will stand the test of time.
We recently acquired a mattress retailer called Mancini’s Sleepworld. For the last few years, the conventional thinking has been that online mattress retailers like Casper would push traditional retailers out of business. As it turns out, the opposite has been true; Casper now has physical stores, because customers actually want to “try before they buy.” By the way, Mancini’s is doing great and we expect this trend to continue.
Sun Capital has been a successful early adopter in other industries that may seem out of favor. Fortunately, this has allowed us to exit at higher multiples than we entered in areas like HVAC, produce, and contract manufacturing. While we do spend ample time deliberating the merits of a business based on industry trends, we try to stay open-minded based on a variety of other factors and be aware of what we see happening at a personal, local, and community level.
SM: Given all your past investment focus on golf courses do you have a favorite?
MG: If I’m being radically honest (I knew that would come back to bite me), I’m not a good golfer, and I really don’t get on the course much anymore. However, my 16-year-old son is an avid golfer, so when he asks me to join I generally take him up on the offer—it’s often the only time I get to spend with him. We recently spent a day at Rancho Park in Westwood (Los Angeles, CA), and apparently, it has the most traffic of any golf course in America. I was obviously thrilled with so many onlookers, given my current trend of 120+ strokes.
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.
A PE fund managing partner came to us with a critical need for an operational performance and improvement consultant that could evaluate and redesign the existing layout in one of their manufacturing portcos’ warehouses. Since acquiring the portco, the PE fund had discovered that there were foregone profits due to the lack of logistical reason that had gone into organizing the warehouse. They immediately needed a lean six sigma type consultant to come in and optimize the layout, process, and flow of the warehouse in order to increase operational efficiencies. We quickly worked to understand the key criteria of their need and then leveraged our data and human ingenuity to match them with two select, exact-fit, pre-vetted healthcare services senior advisors from our invitation-only Intelligent Network. The client selected their ideal choice and the PE fund was able to confidently engage the individual to drive operational performance and improvement by increasing warehouse efficiency.
We have a deep bench of ops performance and improvement consultants with a wide array of industry experience and skillsets. We would be happy to quickly connect you with the exact-fit ops performance and improvement consultant or any other service provider you need. Contact us here and our team will begin helping you within 24 hours.
PE Firm needs commercial due diligence and GTM strategist for construction target
A PE firm managing director came to us with a critical need for a commercial due diligence and GTM strategy provider for a target they had in the construction industry. Since identifying this target, they were looking for a group that could quickly perform diligence to determine if the market was strong enough for investment, and then promptly post-close help them develop a GTM strategy. Close to obtaining exclusivity, the PE firm was looking to find a provider with experience in the construction materials space that could move quickly once exclusivity was gained and stay engaged to create value post-close.
BluWave identifies provider to meet exact needs
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade commercial due diligence and GTM needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of providers that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria and then connected the client with three select pre-vetted providers from our invitation-only Intelligent Network that fit their exact needs.
Firm engages with ideal provider to confidently move forward with investment
Less than 24 hours after the initial scoping call, the PE firm was introduced to three PE-grade providers that specialized in commercial due diligence and GTM strategy with experience in the construction materials industry. The client selected their ideal choice, and the PE firm was able to confidently engage this provider without wasting time or costs. They were able to leverage their insights to move forward with the investment and then utilize the same provider to quickly begin creating value in the new portco by developing a GTM strategy.
They have done a good job, been very responsive and given us valuable insights. I would give them good ratings on everything, would recommend them to others and I expect we will use them again in the future.
Firm needs operational diligence for target VMS manufacturing company
A PE firm principal came to us with a critical need for operational diligence on a target they had in the vitamins, minerals, and supplements (VMS) manufacturing space. A week into the diligence process after signing an LOI, the firm needed someone to answer their question on how the target could increase throughput given their issues with on-time delivery, backlog, and capsulation of their powders. They urgently needed an ops diligence provider with experience in the VMS space that could identify areas for operational improvement during their 45 days of exclusivity on the target.
Using our extensive network, BluWave identifies top PE-grade providers
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade operational diligence needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of operational diligence independent consultants and boutique firms that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria and then introduced the client to two select pre-vetted operational diligence consulting groups from our invitation-only Intelligent Network that fit their exact needs.
Firm properly assesses target company using selected provider
Within 24 hours of the initial scoping call, the PE firm was introduced to two PE-grade ops diligence providers with extensive experience in the VMS space. The client selected their ideal choice. The PE firm was able to confidently engage the provider without wasting time or cost and ultimately identify ways for the target to improve their throughput. The firm was so pleased with the provider’s operational performance and improvement recommendations that they engaged them again post-close to implement them.
Managing partner needs operational performance and improvement consultant for warehouse redesign
A PE firm managing partner came to us with a critical need for an operational performance and improvement consultant that could evaluate and redesign the existing layout in one of their manufacturing portcos’ warehouses. Since acquiring the portco, the PE firm had discovered that there were foregone profits due to the lack of logistical reason that had gone into organizing the warehouse. They immediately needed a lean six sigma type consultant to come in and optimize the layout, process, and flow of the warehouse in order to increase operational efficiencies.
BluWave identifies two exact-fit providers from pre-vetted network
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade operational performance and improvement needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of ops performance and improvement groups and independents that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria and then connected the client with two select, exact-fit, pre-vetted operational performance and improvement consultants from our invitation-only Intelligent Network.
Client engages provider to drive operational excellence in portco
Within 24 hours of the initial scoping call, the PE firm and portfolio company were introduced to two PE-grade ops performance and improvement consultants that specialized in optimizing efficiencies in small assembly-oriented manufacturing companies. The client selected their ideal choice and the PE firm was able to confidently engage the individual to drive operational performance and improvement by increasing warehouse efficiency.
Firm critically needs senior advisor with software industry knowledge
A PE firm principal came to us with a critical need for a senior advisor that could provide them with industry insight on a target they had in the application security sector of the software industry. Before moving forward with an investment, the firm needed someone with technical industry expertise that could frame the competitive landscape for them, how the target was positioned against competitors, and apply this to the market opportunity. They urgently needed a mid-to higher level advisor with technical sector expertise that could answer their questions within 7 to 10 days.
BluWave quickly connects firm to advisor with industry expertise
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade senior advisor needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of senior advisors across an array of industries that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria and then connected the client with the select pre-vetted senior advisor from our invitation-only Intelligent Network that fit their exact needs.
Firm engages advisor to gain valuable industry insight
Within 24 hours of the initial scoping call, the PE firm was introduced to a select PE-grade senior advisor that had deep experience working in the application security industry and was now doing consulting in the space. The PE firm was able to confidently engage the advisor and gain the necessary industry insights they needed from someone with technical expertise in order to make an informed decision on whether or not to move forward with the investment.
IT diligence provider needed for healthcare portco
A PE firm vice president came to us with a critical need for an IT diligence provider for a target they had in the intellectual development disabilities area of the healthcare services industry. With an LOI on the target and a need to close the deal by year-end, the PE firm urgently needed an IT diligence provider that specifically understood this niche area of the healthcare industry to come in and identify IT needs, risks, and opportunities for the target within the next two weeks.
Using pre-vetted network, BluWave identifies exact-fit provider
Leveraging our founder’s 20 years in private equity, we have extensive frameworks for assessing PE-grade IT diligence needs. BluWave utilizes technology, data, and human ingenuity to pre-map, assess, monitor, and maintain deep pools of IT diligence providers that uniquely meet the private equity standard. We interviewed the PE firm to understand their specific key criteria and then connected the client with a select pre-vetted IT diligence provider from our invitation-only Intelligent Network that fit their exact needs.
Firm engages provider to make informed deal decision
Within 24 hours of the initial scoping call, the PE firm was introduced to a select PE-grade IT diligence provider with experience on similar projects in the behavioral health and rehabilitation space. The PE firm was able to confidently engage this provider without wasting time or cost and quickly gained the needed information about the target’s IT systems to make an informed decision on how to proceed.
Every quarter our team analyzes the projects we work on with our 500+ PE fund clients to get a bird’s eye view of the market. This report (grab your copy here) calls out the trends that we are seeing across thousands of projects.
Key findings include deal surge continues – but due diligence is still a major area of focus, value creation is gaining momentum – one thing to specifically call out is that portfolio company operation performance and improvement had a huge spike in Q3.
To see these insights and more, watch the video below.
Arlington, Texas-based William Tincup is currently the President and Editor-at-Large of RecruitingDaily, one of the leading content publishers and conference organizers in the HR and “People” space. He stands firmly at the intersection of HR and technology and wears multiple hats as a seasoned writer, speaker, advisor, and consultant to hundreds of companies. His latest creative endeavor is hosting Recruiting Daily’s “Use Case” podcast, where he interviews executives from across various industries including our CEO, Sean Mooney and gets them talking about everything from launching companies and managing employees to their greatest successes and most profound failures.
To keep himself otherwise occupied and “feeling useful” (his words), Tincup serves on the Board of Advisors for companies like Clovers, MojoRank, Diversely, Skillset, Geescore, SturdyAI, Work4, and SmartRecruiters. He’s an active advisor and mentor with The Workplace Accelerator (Southeast Asia) ATK LABS (Israel) and Talent Tech Labs (New York City). In 2020, while the rest of us were trying to adjust to Zoom fatigue and mask mandates, he was actively advising three acquired companies: Altru, sold to iCIMS Q4 2020; Talentegy, sold to Jobvite Q3 2020; and Hyphen, sold to Betterworks Q1 2020. Let’s not forget he was also a board member of Talentegy, a company sold to Jobvite Q3 2020.
Suppose that doesn’t send your head spinning and also wondering what this Texan is eating for breakfast. In that case, rest-assured Tincup is less concerned with tooting his own horn and more focused on helping HR and talent acquisition (TA) professionals navigate uncharted waters—particularly in the wake of the pandemic and shifting cultural tides. His knowledge of everything from what candidates want from jobs to the importance of interim executives is worth listening to, if not ripping out several pages from his book.
Kyle Johnson: Tell me about your journey to RecruitingDaily.
William Tincup: I fell in love with HR while in business school, specializing in marketing. My first entrepreneurial endeavor was a web development agency; I later co-founded a full-service advertising agency. While at the ad agency (then called Starr Tincup, now The Starr Conspiracy), we specialized in helping vendors and service providers market to HR & TA specialists. Essentially, we learned what worked and didn’t work when marketing to these practitioners. While doing so, I was the partner in charge of everything HR & TA for the agency. The deeper I got into it, the more I fell in love with the profession. In 2010, I was lucky enough to sell my equity to my business partner, and then I shifted my focus to HR & TA full time.
I started by consulting vendors and practitioners in change management and user adoption of HR & TA software. I did that for a few years and loved it—I worked equally for both vendors and practitioners, solving real problems. Then, I decided to dig deeper into primary market research to learn more about implementations, user adoption, and vendor selection. After learning so much from the folks in the trenches and further expanding my knowledge base, I joined the team at RecruitingDaily to build the events and training business. In my current role, I get to talk with vendors and practitioners every single day. It’s incredible because I continually gain insights into where they see the world similarly and differently.
KJ: What is the number one thing you see people searching for right now regarding types of jobs and work?
WT: In short, “something new.” More specifically, 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 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!”
Data certainly supports this new mindset: candidates are searching Indeed, Hired, ZipRecruiter, and company career pages using the words “remote” and “remote work.” They aren’t wasting time applying to jobs that don’t support their new ideal career. My take on this is simple: organizations that support remote work and its flexibility will win over those who choose not to. Talented people are going to work the way they want to work.
KJ: Talk a bit about Critical versus Important talent and the implications of both in getting the right talent in place?
WT: HR & TA has historically looked at talent through the lens of 80/20, meaning 80% of the value of any given organization is derived from 20% of the workforce. That would be essentially the “critical” talent. Important would be everyone else. When I interact with investors, they tend to use the lens of 90/10, which is an even harsher way to think of critical talent versus important (or necessary) talent. Again, this is a historical view of talent. This has been the way we’ve viewed succession planning, training for high potentials, executive search, and more.
I think we’ve got to update our worldview when it comes to talent; not only do we need to focus more on skills, but skills needed at that particular time. Just as manufacturers look at “just in time” production, we need to think about talent from that perspective. What skills do we need right now, this moment, this hour, and this week, for this project? It becomes less of a game of what you’ve done in the past and how relevant your skills are right now. Genuinely talented people will always push themselves to acquire new and most relevant skills. So, some of the same people will be on the list as if nothing changed from the history lesson above, but other folks that didn’t have a certain pedigree, skill color, gender, etc. but DO HAVE the critical skills needed will find themselves on the list. Having scarce and vital skills is now how you separate yourself from everyone else.
KJ: From your vantage point, what keeps HR up at night?
WT: It comes down to three things: (1) what is/isn’t “hybrid” and how do they do work, (2) how do they effectively attract talent, and (3) how do they effectively retain talent? Let’s unpack each of those:
#1—No HR leader knows how the hybrid workforce will look in the future. It’s all guesswork at this point. COVID forced us to rethink the workplace. We were already tracking towards remote work; the pandemic expedited the process. With other variants likely to come, no one knows when a safe return to the office will happen or if it will happen. This leads me to the next exciting aspect of hybrid work: the emerging concept of “everyone returns to the office” versus “I want to work remotely forever,” which are purposely opposites, but that’s what HR is dealing with right now and in the near future. How do they effectively navigate “radical flexibility” with all talent? Talent will ultimately decide where and how they work in an outcomes-based environment (read: knowledge working jobs).
#2—Talent attraction, acquisition, and recruiting have become more challenging as the talent is now empowered to ask tougher questions. The table stakes have changed. Let’s say you have a great culture. Well, that’s fantastic; but how did your firm respond during COVID? Did you furlough or lay off anyone? If so, have they been hired back? If not, why and what kind of package did you give them to get through the pandemic? That is a primary candidate question thread. Then comes the more complex stuff with questions about DIBEE (diversity, inclusion, belonging, equity, equality), social justice, remote work, and transparency, to list a few. So, the job of a great recruiter got harder. Don’t cry for Argentina; the best TA pros are highly compensated and in short supply. That just made things interesting. Hiring a TA leader pre-COVID was not impossible—indeed, not as hard as placing a data scientist or software engineer, but it’s getting real close to impossible at this point. Candidates’ needs have changed, as I’ve already noted. Recruiters’ needs have also changed. Companies that recognize this will work hard to retain the best recruiters.
#3—With retention, there are NO RULES. Do whatever you must to keep talented people. Whatever it takes. Turnover isn’t a curse word. Trees die in any given forest every single day. What you and your team should be focused on is “regrettable turnover.” Regrettable, meaning talent you wanted to keep but were unable to keep for whatever reason. How do you stop the bleeding of regrettable turnover? A few helpful hints: communicate that you value them, recognize the value they bring to the organization, find out what’s important to them and do your best to fulfill it, compensate them above market, conduct monthly stay interviews, and offer them continuous training. You get it. Do whatever it takes to learn what drives them, and then do whatever it takes to keep them engaged. No one wants to talk about it, but this is singularly the most essential thing HR does for a firm. Retention of top talent is the job. Get great at it quickly!
KJ: Why do you think interim talent and experts are such a vital component of the workforce right now?
WT: A few things to consider here, (1) expertise is earned, (2) it turns out B12 is a good idea. Let’s explore…
Throughout one’s career, we gather all kinds of experiences. Good, bad, historical successes and failures, and we should tap folks that have been there and done that. It doesn’t mean that we’ll do it exactly the way they have, but it could help us avoid simple mistakes. For instance, an HR leader that’s been a part of 20 union contract negotiations would be great to have at the table as we navigate a new deal with our union workers. That person can give us insight into things we don’t know and learn fast enough to impact the new contract. So, experts are vital. Early in my career, I was advised by a highly successful oilman in Dallas. I asked him over coffee, “what was the key to your success?” He responded, “simple, I let experts be experts.” Simple advice, but you’d be amazed at how many executives hire experts and summarily disregard their advice. Kidding not kidding.
That might not be immediately recognizable in terms of the B12 reference, but interim talent is like a shot of B12. If you’ve ever had a shot of this stuff, you almost immediately feel better. Interim talent is a lot like that—new eyes on old problems. A new set of eyes can see things that might even be obvious, but the previous folks didn’t reconcile for whatever reason. Interim talent also doesn’t necessarily have to play by the same rules nor play politics. They’ve been hired to an interim capacity to fix things. If you’re a Pulp Fiction fan, Mr. Wolf is an excellent example of interim leadership. All the other guys could have probably figured out what to do, but Mr. Wolf had been there and done that. He had a plan and communicated effectively. Problem fixed. Interim talent is an excellent way to invigorate or reinvigorate a team and organization like a shot of B12.
KJ: What question should I have asked you but didn’t?
WT: Well, you asked great questions, but I think I’d be remiss if I didn’t mention the recent decision by the SEC to include workforce data in publicly traded companies’ earnings calls. It’s new but has been in the works for over a decade. It will be weird at first, but I see it as an excellent opportunity for HR & TA leaders. If our house isn’t in order, now is a great time to get it in order. It’s pretty simple when the SEC says something is noteworthy, Wall Street listens. What happens on Wall Street eventually makes it to Main Street. So, if you’re not studying the new regulations, you might want to burn some hours learning what is required to be reported. I mention this not to scare anyone; think about the tremendous opportunity that’s been granted to those responsible for talent.
