While hiring practices are essential for every company, identifying and hiring the right people is critical for Private Equity (PE) firms and their portfolio companies. The success or failure of PE investments often comes down to the skills and abilities of the professionals working on the deal. From conducting due diligence to developing value creation plans to managing portfolio companies effectively, top talent is required at every step. Can assessments help private equity hiring?
A bad hire can potentially cost firms millions or even tens of millions of dollars in lost value, while landing elite performers can provide a significant competitive edge and better returns. Given the importance of finding the right candidate, private equity executive search recruiters must look beyond resumes and traditional job interviews. To fully understand a candidate’s culture fit with a firm, and their unique leadership skill set, including assessments as part of the hiring process, can improve hiring decisions.
The Value of Assessments for Private Equity Recruiting
Assessments allow private equity firms to put candidates through their paces across critical competencies and future performance projections. Some specific areas where assessments can help include:
- Analytical Skills: Strong analytical abilities are mission-critical for investment professionals. Case study exercises, quantitative tests, and other analytical assessments can provide an objective benchmark.
- Leadership Potential: Assessing leadership skills, executive presence, and traits is crucial, especially at senior levels. Situational judgment tests and other assessments can illuminate this.
- Strategic Vision: How well can candidates think strategically and develop value-creation plans? Specialized strategy assessments can provide insight.
- Personality/Culture Fit: Personality assessments allow you to gauge whether a candidate’s traits and motivations align with your firm’s culture and expectations.
- Work Sample Tests: Work sample tests allow you to see actual outputs for modeling, writing, coding, and other vital skills before hiring.
By incorporating assessments into the hiring process, private equity firms gain a more profound, data-driven understanding of each candidate’s capabilities. At Sheer Velocity, we work with our partner Hogan Assessments to choose assessments to provide the depth and detail needed to hire the right employees, identify and develop talented individuals, and build better leaders.
Best Practices for Leveraging Assessments
To get the most value from assessments, here are some best practices to follow:
- Use validated, research-based assessments that are proven to predict job performance. Many low-quality assessments out there lack scientific rigor.
- Don’t rely on any single assessment. Use a customized assessment battery tailored to the specific roles you’re hiring for.
- Make assessments a vital component of the hiring process rather than an afterthought. Integrate them into your overall recruiting workflows and decision-making.
- Provide Train your hiring teams on properly selecting assessments, administering them, and incorporating the data into hiring decisions. Don’t let bias creep in.
- Have a strategy for using assessments at different hiring stages, such as screening, focused evaluation, final vetting, etc.
The PE industry is as competitive as you’ll find. Making well-informed, data-driven hiring decisions is critical for our clients’ success. Making employment assessments a central part of the recruiting process enables PE firms to land top talent consistently and put themselves in the best position to generate superior returns. As a Private Equity (PE) executive search recruitment firm, we have utilized assessments for the past twelve years to provide additional insight into their candidate’s tendencies.
Send us a note for more information on executive hiring best practices while utilizing assessments for your private equity recruitment search needs.