Finding the right fit

Hiring fresh talent is a key challenge for private equity firms today. Finding a resume that ticks all the right boxes may provide insight into a candidate’s skills, competencies, and even networks; but even then a new team member may not fit the firm’s culture or meet some other criteria.

Of course testing for core competencies is a critical – if not the most fundamental – aspect of the hiring process. However, it is not the be all and end all of successful recruitment. In recent conversations with pfm, multiple industry sources have stressed the need to assess a candidate’s character. They’ve also shared insights onto the recruiting strategy itself, discovering that sometimes striking the right tone can mean adopting a less formal interview strategy. Below we summarize four approaches taken by industry leaders.

(Anonymous) CFO
“I don’t have a set of questions”

We’ve all heard the “Where do you see yourself five years from now?” question during an interview. Or the common “What would you say is your biggest weakness?” follow-up. GPs may even have a few common industry-specific interview questions they regularly lean on when assessing candidates.

But some in the industry are rethinking that strategy. “I just like to ask some questions about what they understand about the role and let the conversation flow from there,” says one private fund CFO asked about his recruitment strategies.

The CFO says a more informal interview provides a better sense of what the candidate actually knows about a position in finance or operations, as well as what skills they can bring to the table. Generic interview questions often lead to perfect pre-prepared answers, he’s discovered.

Moreover, GPs looking for tax specialists and other professionals with a particular skill-set are more often challenging candidates with real-world situations the firm is facing, rather than dreaming up hypothetical scenarios for testing purposes.

“We don’t have the budget to have a deep team so we need people who can hit the ground running,” the CFO said.

Philippe Bucher
Chief financial officer/ Chief operating officer
“Every candidate gets exactly the same questions”

The (somewhat) opposite strategy of playing the interview process by ear is adopted by Philippe Bucher, CFO and COO of fund of funds Adveq.

“The most important thing is to have a structured process,” he says. “I don’t think it matters what you ask, but how the process is run is vital.”

He says Adveq will do an online test before the more structured interviews so every candidate gets exactly the same questions. “When you look at them and evaluate whether or not it was a good response you are not drawn away with a nice person switching the context a little bit.”

If a candidate passes these preliminary stages they advance to a more open-style interview where applicants are judged on cultural fit with the firm.

Here Bucher pitches a few prepared questions to each candidate that can be answered in any number of ways. “My favorite is: how would your mother describe you? Then how would your best friend describe you? How would team members describe you? And finally how would your boss describe you?”

The point, says Bucher, is to capture a variety of responses to tease out what a candidate’s actual strength and weaknesses are, noting a best friend, mother or boss all have different vantage points on the candidate.

Another benefit is these types of questions can test candidates’ ability to think on their feet, a must-have in the competitive world of alternative assets. “I find these questions nice because it’s not too much an interview question and everyone can easily answer it. But I want to have questions people can’t prepare too much and where I really get the full picture.”

Ian Harris
SL Capital
Chief operations officer
“I want to test their ability to interact”

“We wouldn’t be inviting anyone for an interview unless we were sure the basic grounding and required skills were there,” says Ian Harris, partner and COO at fund of funds SL Capital. “The things I find more important are working style, aspirations and their ability to interact.”

Harris says that the ability to challenge not only peers but senior team members and third party providers is essential in today’s back office. “Gone are the days of an accountant sitting in the corner not having to deal with anyone; all the roles we have are highly interactive where interpersonal skills are important.”

Harris’ thoughts echo recent comments made by Carlyle Group co-founder David Rubenstein, who also said he wants his employees to be able to engage with people, adding that it’s not just the responses he notices but also whether the candidate asks questions too. The Carlyle boss said he’s impressed by the effort candidates put into preparing themselves for the interviews, but is often amazed when he asks somebody who has travelled to an interview “Do you have any questions?” and they respond no.

Harris says that the ability to engage with the rest of the team is important because he is always thinking about the team’s development and where the role will take someone.

“I want to ask candidates where they want to be in five years’ time. It’s useful to see what people think about looking forward, not that there is a right or wrong answer. I’m not going to be concerned if they say I want to be doing my job or if they just want to be doing this job very well. A lot of that depends on how I see the role developing. I’m not just hiring for the role now but also the team’s future development.”

Katie Solomon
Genstar Capital
Vice president of human capital
“Get to know the candidate as a person”

“I found that I often learn more about candidates in the first twenty minutes of an interview – talking about where they grew up, their families and early influences, how they decided where to go to college and what to study – than I do in the hours of discussion that follow,” says Katie Solomon, vice president human capital at private equity firm Genstar Capital.

She says that not only does the information provide useful – as past-behavior can be a great predictor for future behavior – but also creates a more open and personal tone for the discussion, builds rapport, and makes candidates more forthcoming.

Solomon then says that talking about the resume should be the next step. Helpful questions include: Tell me about the accomplishment that stands out as a career highlight? Describe the most difficult team project you have led? What is the most challenging experience you’ve had? How did you work through it? And what did you learn?

She adds not to worry about breaking up the flow by probing for detail with follow-up questions, such as: How did you do that? What happened next? How did others respond? What was the outcome?

In the end, Solomon recommends GPs treat each interview as a marketing opportunity for the firm.

“Candidates come to an interview ready to pitch their skills. As an employer, you have a similar mandate – to sell promising candidates on your firm. In addition to hiring the right person for the role, the goal should be for all candidates to walk away with a positive impression of your organization.”

Considering how small and intertwined the private equity community is, one could easily cross paths with a rejected candidate on the other side of a future deal or as a co-investor. So no matter what interviewing techniques GPs may adopt, a little kindness to the hordes of job seekers out there today is always a nice touch too, of course.