People and Talent Outlook: Getting the Right Talent in the Right Seats to Position for an Exit

Eric: I'm glad to hear you speak about the vacancy rate because it proves our notion of a strategic people officer continuing to grow in today's private equity climate. To have that strategic people officer that's looking after the attract, develop, retain, and belonging aspects of a firm is critical, and everyone seems to be chasing that top 1%. With that said, what are you seeing in terms of 2024 in demand of the type of people leaders that folks are looking for?

Alex: If I look at most searches, we're seeing three themes that really come up in terms of core skill sets.

1. The Talent Expert - Someone who can really think about attraction and being competitive in the market from a compensation, employer brand and reputation standpoint. On the other side, they are also tasked with how we retain, motivate, and engage the talent we already have within the organization.
2. The Culture Builder - It's ever challenging in a hybrid remote environment and organizations are approaching the return to office a bit differently. So, thinking of the culture and engagement side becomes critical as organizations need to make shifts or go through change.
3. The Operational People and Talent Leader- This candidate has solid business acumen and sets an operational foundation within the organization. So, it’s really understanding both the strategies and initiatives that the ELT is implementing. They are the ones thinking through driving bigger impact across the organization.

Eric: How is the lack of exits affecting executive compensation as it relates to Chief People Officers and their willingness to make a move in this market?

Alex: There certainly is some reluctancy to make a move because of market uncertainty, causing supply to be a bit tight on the candidate side. At the beginning of COVID, people leaders really wanted to stay and ensure that they're setting the team up for success, and now it seems to be wait and see. From a compensation standpoint, I think strategic CPOs have been in high, high demand and come at top dollar. We're seeing the $400,000+ range in terms of OTE and then about a 5X multiple of OTE for equity as market norm for people leaders.

Eric: I've been meaning to ask you, what distinguishes people leaders from some of the other functions in your opinion?

Alex: These executives are helping to define what good looks like within private equity more broadly, and I find that extremely interesting and compelling. I also like that it's a relatively newer focus within private equity as it relates to being a true strategic driver for value creation.