Private Equity Talent Management  

Talent is increasingly a key driver of success in private equity (PE) investments. This is particularly true across the UK and Europe, where workers have strong employment rights and people-intensive sectors make up a large proportion of the economy. The people-intensive sectors seeing a boon in private equity investment include:

• Financial and professional services
• Technology
• Healthcare and life sciences
• Consumer and retail.

With market uncertainty rising and investment hold periods extending, private equity firms are sharpening their focus on the people dimension of portfolio companies. This has led to the development of more robust value creation plans, with talent strategy as a core pillar. In this article, we focus on what the most advanced PEs are doing today — and what to expect in the next three to five years.

Historically, PE firms’ engagement with the topic of talent has led with executive assessment, search and recruitment. Today, that focus is expanding significantly.

Many firms now have human resources specialists embedded within their  investment teams, alongside operational excellence teams that support portfolio companies from diligence process through to exit. These experts work across a board range of talent topics, including:

• More sophisticated tools to assess, reward and retain talent
• Organisational design and governance journey planning
• A more nuanced and employee led approach to Total Rewards
• Strategic approach to workforce and leadership planning.

HR data analytics is playing a bigger role than ever too. Leading firms actively monitor publicly available data sources alongside internal HR data to track:

• Turnover risks
• Recruitment success
• Productivity per FTE
• Cultural signifiers

This acts as an early-warning system, helping firms identify talent risks and opportunities and intervene before they impact value. 

Compensation and benefits are also under closer scrutiny. Top PE firms support portfolio companies with market benchmarking data and specialist advice to design pay and benefits packages that attract and retain top talent while managing overall costs. Some are moving towards global benefits management models, appointing a global head or a single broker to streamline governance and identify cost savings.

Importantly, high-performing firms have moved away from creating standardised human capital "playbooks". Instead, they tailor solutions to each company’s unique needs and have clear governance over roles and responsibilities. Structured roadmaps, peer learning, and well-timed advisor input from executive search partners and talent advisory firms play a critical role.

These shifts reflect a growing recognition that talent is a key determinant of investment success. Yet, more than half of PE funds still don't routinely conduct human capital due diligence. Even fewer formally include talent risks in investment committee discussions. This represents a significant missed opportunity — one that is likely to change in the coming years as investment firms increasingly integrate talent planning into overall investment strategy.