The combined effects of globalization, demographic shifts, technological advances, the COVID-19 pandemic and increasing regulation mean PE firms and their portfolio companies are looking to create more agile and adaptable workforces. In light of these factors, it is getting harder to recruit, manage, motivate and retain talent.
For the first time ever, there are four generations co-existing in the workforce: traditionalists, baby boomers, Generation X and millennials. It is clear that new entrants to the workforce have differing expectations to previous generations: millennials want to join firms whose values align with their own, and while Gen Z are not yet working in full force, early indicators suggest they will seek out organizations that make a positive impact on society and have a highly diverse workforce. Purpose-driven, socially responsible organizations have become magnets for young talent.
But it is not just the new entrants who are forcing PE firms to rethink. The make-up of the workforce itself is changing, with the definition of “employee” now encompassing full-time, contingent, remote and even robotic. Digital applications will continue to expand their presence, in some instances replacing and in others enhancing current roles.
A future talent agenda will also need to incorporate a proactive approach to diversity, equity and inclusion (DEI), ensuring a strong tone is set from the top. Incorporating a comprehensive DEI strategy will address a firm’s commitment to elevating society while expanding its talent pool and creating new perspectives in investing.
A time for transformation
The success of the PE industry is rooted in its ability to help companies transform and adapt to changing conditions. If firms are to succeed in the NextWave of private equity, they must apply those same abilities to transform their own business models and use digital, purpose and transparency, and talent as new levers of value creation.