Human Resource Careers in Private Equity
Welcome to our guide to Human Resources careers in Private Equity
In the private equity sector, the human resources and talent acquisition roles are as competitive and sought after as the rest. With the sector itself constantly evolving, the recruitment opportunities grow too and our clients are looking for ambitious and talented HR generalists who will not only hit the ground running, but take the initiative and lead.
Sections/Chapters:
- The Chartered Institute of Personnel and Development
- Differences in HR between large and small organisations (headcount, not assets under management)
- The correlation between firm size and autonomy; The benefits of working in Private Equity in terms of visibility
- Three HR aspects that PE firms always expect
- The difference between operational and strategic HR
- Back yourself to be good. What does good mean?
- Next Steps
The Chartered Institute of Personnel and Development
If you are entering the world of human resources, an accreditation from the Chartered Institute of Personnel and Development (CIPD) is highly regarded, providing you with professional credibility and recognition among your peers.
This professional body for HR and people development provides three levels of
CIPD qualifications: Foundation Certificate (Level Three), Associate Diploma (Level Five) and Advanced Diploma (Level Seven). The Foundation Certificate is A-Level equivalent and not really enough to get ahead in the industry. The Associate Diploma, equivalent to a bachelor’s degree, is all you need until you become a Senior Director. The Advanced Diploma is equivalent to a master’s degree and is useful for further senior development. It is worthwhile contacting the CIPD for advice if you are unsure what modules to take. It all depends on your experience, which can in certain cases be transferred into credits, thereby reducing the overall number of modules required for your accreditation.
People in private equity don’t necessarily know very much about human resources, so the CIPD accreditation is widely regarded within the industry as a guaranteed fail-safe reassurance of your ability and knowledge. If you don’t already have a CIPD accreditation, it is worth signing up for one. This can be added to your CV while it is ongoing, and at the very least it is an indication of intent.
If you are currently in higher education and considering a career in human resources, there are many degree courses available with a CIPD accreditation attachment, for example bachelor’s degrees in human resources management or business. If you have these accreditations right from the start, they will aid your progression through your career in HR.
Differences in HR between large and small organisations (headcount, not assets under management)
If you ask any HR professional about a company’s size, they will inevitably refer to headcount – but if you ask anyone else within finance about the size of their company, they will tell you in terms of assets under management. This is something HR practitioners in private equity need to be aware of as no one else talks in terms of headcount when referencing the size of a firm. However, there are some noticeable differences between large and small firms in terms of headcount, which influence the types of HR teams that work there.
In larger banks, every scenario that could potentially happen has most likely already happened and policies will exist. There will always be someone you can ask and there will be an existing procedure to be followed or a policy handbook detailing how the situation was handled in the past.
In a smaller company, such as a PE firm or another niche buy side firm, human resources will inevitably be less established. Even if something you are dealing with has happened before, in all likelihood the previous resolution may not have been recorded. There is also a faster paced environment in niche buy side firms, so decisions need to be made quickly and situations resolved without delay. In private equity you have to be adept at acting without much guidance or assistance and very little precedent. If you are not comfortable in such an environment, you will not be happy working in this sector.
Larger firms often have their HR services organised according to the David Ulrich HR model, a centre of excellence model used by large corporations around the world to improve their HR efficiency and efficacy. Ulrich’s model helps to organise the roles and responsibilities across HR departments and moves away from generalist HR services to differentiating the HR roles and processes based on whether they are people oriented, or strategically or operationally focused. HR professionals are divided into four significant categories: Strategic Partners who develop strategies and evaluate the systems and procedures; Administrative Experts who manage the internal operations of the organisation; Change Agents who work on transformation and innovation – often through training; and Employee Advocates who manage the employer/employee relationships to benefit the organisation as a whole. Furthermore, these different centres of excellence can be situated all over the world within one company and are not necessarily always on site.
Conversely, niche buy side firms require HR generalists, rather than specialists. They are looking for HR professionals who are both hands on with the operational work as well as strategic thinkers. In the private equity sector, the HR role really encompasses working at the coalface as well as higher level strategic work, such as providing executive coaching to the board. When a contract needs to go out urgently but the admin staff have left, the HR professional is the one to get it done. When payroll needs to be run, HR is required to check the numbers carefully before signing off to ensure no errors have occurred. There could be staff members who have had a pay rise or a pension increase which has not been registered on payroll, but should be. HR needs to catch that.
The correlation between firm size and autonomy; The benefits of working in Private Equity in terms of visibility
Visibility as an HR professional is different between large and small firms. If you are one HR practitioner among hundreds at a large firm, it can often become more about your political manoeuvring in the office than your work. Your idea will be reported to a manager and further up the chain, until it finally gets discussed at levels to which you have no direct access. If the idea comes back down again, it will either have been radically changed, or modified and not as effective. You will most likely not get the credit if it works or get the blame if it doesn’t.
In private equity HR, you have autonomy and gain broad experience in the varied role of an HR generalist. However, you are far more visible in your role, which means more scrutiny but also more recognition of your work. The benefit of this environment is not only the great variety in the work, but also the fact that it allows junior HR practitioners to gain greater access and exposure to higher levels, which would not be possible in a large bank. That said, large banks do have a greater number of very senior level roles due to their size.
Three HR aspects that PE firms always expect
- Long tenure
- Sector experience
- A good academic record
In the private equity sector, the human resources and talent acquisition roles are just as competitive and sought after as the rest. Long tenure and sector experience are the two main aspects firms are always looking for in their HR hires. The more experienced you are, the less important your academics become, but an excellent academic record still makes the right impression for these roles, where a good work ethic and intellectual acumen are desired qualities.
In private equity HR, consistent previous roles over a decent period at an organisation will always trump a CV with numerous shorter term roles – no matter how good you are. Consistency and stability are important aspects to highlight in your work experience as no firms in this sector accept job hoppers, and that includes contractors. Three to four years in a role is considered a good time. More than ten years is considered too long. A succession of two-year positions is considered job hopping. You are generally allowed one short term position, but overall you have to put in the time to show that your job history is consistent and stable as long tenure in a role counts for a lot.
Sector experience is always preferred, which includes private equity, hedge fund, venture capital, SME and financial services experience. Ideally, private equity HR roles are filled with people who have previously worked in the same type of buy side firms as they can hit the ground running due to their experience of smaller teams and the sector as a whole. Alternatively, recruiters would consider a top sell side organisation as long as you have not been siloed in a particular HR specialism. They would also accept someone from one of the top four accountancy firms or a top international law firm. Just as with the CIPD accreditation lending credibility and recognition to your role, prior experience in one of these companies provides similar assurances. It is widely accepted that to get into these firms, the top banks, accountancy firms and law firms, you must be excellent anyway and you already have the right work ethic. Recruiters do occasionally consider someone from a respected technology firm, such as Google or Meta or a FinTech such as Revolut, but placements coming directly from commerce and industry are very unlikely. Your only way in would be with a huge amount of luck or applying directly.
The difference between operational and strategic HR
Essentially the difference between operational and strategic human resources is one of the immediate outlook and the longer term overview. Where strategic HR is focused on ensuring that human resource objectives meet the organisation’s long-term business requirements, the operational side is focused on the tactical day to day activities.
We see many CVs of people in their late twenties and early thirties who consider themselves to be strategic, but they generally need another ten years’ experience before they can realistically describe themselves as such. Never try to come across as more senior than you are, because you are applying to people who work at the strategic level and they will regard you as too inexperienced for that characterisation. There is nothing wrong with knowing how things work, such as the operational lifecycle and BAU (business as usual). To become a good strategic leader, knowledge of the operational lifecycle is essential as you understand exactly what your team is doing and you are also in a position to give good, proven advice. When you move to a new buy side firm, your operational experience will be invaluable, helping you pinpoint weak spots or inefficiencies in that operational lifecycle and finding ways to improve them.
Back yourself to be good. What does good mean?
Niche buy side firms need HR generalists. They are looking for driven individuals who tick the right boxes in terms of tenure, sector experience, academics and attitude. True HR generalists tend to thrive in private equity firms as the work often covers such a broad spectrum of human resources and employee relations. To succeed in this area, you need to be familiar with the operational detail, while also aligning strategies with business results and maintaining a good overview.
Having the right attitude and flexibility will always stand you in good stead. A lot of time off from work might not be so noticeable in a large bank but it is conspicuous in a PE firm, with the resultant ramifications for a small team. Your presence will be expected at client events, no matter the inconvenience. During the annual compensation round, you will inevitably have many late nights with the expectation that the workload and the deadlines come first. A PE firm is no place for clock watchers.
You must acknowledge the visibility and high expectations in a PE firm as anonymity and average are not accepted. That is why you need to back yourself to be good – not just at your job but also in your attitude and how you work. If you don’t – if you are just average – you will fail in the role. If you take the initiative and deliver the best, you will shine and reap the rewards.
Next steps
Now that you have a better understanding of the human resources function in private equity, you can grab the opportunities armed with the knowledge of having what it takes to succeed.
If you would like to discuss this in more detail with us, please get in touch. With our wide-ranging client base from niche boutique specialists and smaller Family Offices, to diversified multi-fund investment firms, we have a reputation for providing the very best talent to the UK market.
