The Case for a More Data-Driven Approach to Talent Management

Cracks are forming around Private Equity’s (PE) traditional process of creating value. The method of “buy, gut, flip, and repeat,” is no longer seeing the success it once had. These days it’s more challenging to grow portfolios by simply “buying smart.” Hold periods for investee companies have multiplied, and operating groups have increasingly limited time and resources. A data-driven talent management approach requires active monitoring, reshaping, and upgrading management capabilities from the ground up.

Strategic transformation of talent and leadership across the portfolio is the new, sustainable way of creating value.

Creating More Value Through Talent Management

PE can create long-lasting value through talent management as a core competency at the portfolio level. From an investor’s perspective, a strong team of talent can add as much as 30 percent to a company’s market valuation

To create value from talent management, PE firms need a new approach to leadership and talent. The talent management process needs to start early and be very active. Acquiring and developing top talent needs to be a priority. Management capabilities don’t transform overnight, and firms that adopt tools to help with monitoring and tracking are sure to pull ahead.

Diversity Pays Off

Not only is it essential to acquire and develop top talent, but having a diverse workforce is also highly beneficial. By assembling employees of varying backgrounds and perspectives they generate a variety of insights, ideas, and superior returns.

PE is notorious for lack of diversity. There are too few women and people of color serving in lead investment roles. A Preqin study found that only 17.9 percent of PE employees worldwide are women. Another study by Deloitte and Stanford University found that the private investment industry has low racial and ethnic diversity. The lack of diversity is even more astounding if you strictly look at leadership positions.

For further proof that having a diverse team is beneficial, one study in Harvard Business Review found that diversity improved financial performance among venture capital professionals. Another study from Boston Consulting Group found that diverse teams were a key driver of innovation and produced 19 percent more revenue. The bottom line is that diverse teams make organizations more robust and increase profit. 

Tools of the Talent Trade

PE and Venture Capital firms are now responsible for building their own competitive leadership teams and those of their portfolio companies. It sounds like a big job, and it is, but PE firms that lean on data and technology to help them in their talent transformation will reap the benefits. 

Most firms use LinkedIn as a talent management tool to reach and find future employees. Nearly 630M business professionals gather on LinkedIn and it is the most effective place for B2B marketers to engage with decision-makers, influencers, and leaders.

Some firms subscribe to LinkedIn Sales Navigator to deepen their capabilities. Sales Navigator includes improved search capabilities, visibility into extended networks, and personalized algorithms to help firms reach the right decision-maker. 

These are great tools, but the problem with using LinkedIn or LinkedIn Sales Navigator on their own for talent management is that these systems don’t connect to the firm’s CRM. Ultimately, there is not a great way to gather and track information on both the CRM and LinkedIn at the same time. 

“Human capital is the biggest issue that we’re having.” – Richard Grajewski, Huron Capital Partners

That’s all changing with Altvia. Altvia was explicitly built for PE and Venture Capital to help firms seamlessly evolve and manage the complexity that comes with growth. Leadership teams can assemble and track the data needed to manage talent with a direct integration between LinkedIn and Altvia—allowing talent management data to show in the CRM. 

Data isn’t siloed in one system, but shared for better visibility, internal communication, and improved efficiency. From storing candidate resumes to tracking specific attributes such as salary demands, potential start dates, and skills, firms have the advantage of both systems to build a talented and diverse team that will add value. 

Need to fill a bunch of roles? By using technology tools like Altvia, firms can keep track of all of the roles they are hiring for, both internally and externally at portfolio companies. Pipeline tracking keeps it all organized and tracks due diligence of candidates. Hiring becomes more streamlined, efficient, and effective. 

Conclusion: Transform the Talent Management Process with Altvia

Gone are the days when firms could simply leverage their finances, slash costs, and expect to unleash value. It’s become common knowledge that attracting and developing a talented and diverse team will add long-term value. By combining the power of LinkedIn and Altvia, firms have the tools that they need to build powerful teams and ultimately, a highly desirable portfolio.

Are you Interested in seeing how Altvia can help your firm transform the talent management process?

A traditional crm was built for general ‘customer’ scenarios

Software platforms have made the world a better place by making work a better place. Indeed the world is better off when people enjoy their jobs even marginally more, and workplace applications on big CRM platforms like Salesforce.com have done that and much more.

But the potential that platforms like these offer presents diminishing returns: once the platform provider has engineered too many industry specific components into its platform, its usefulness for other industries begins to be threatened, and with that so do the usefulness of the component tools built into the platform.

So it is with the CRM category that Salesforce.com has defined: it is generic enough to work for many industries, and yet still offers the potential for others to round off the edges and nail more vertically-oriented and extremely tailored software solutions.

Private capital markets are actually a great demonstration of this dynamic. Where generic CRM platforms simplify — appropriately so — to assume there’s a business, a customer, a sale, and service of that customer, there are a few industry-specific pieces that are missing.

Take for example, that investors become customers by investing through legal entities the GP raises. It’s a subtle but important nuance that just doesn’t make sense at a platform-as-a-service level (because it’s overly complicated for a simple one-time sale that many industries require), but which can easily be added without 10 years or software engineering. Once provided, the rest of the platform’s components become tremendously powerful again and you’re set to take over the world.

As a traditional CRM in our pillars methodology, these nuances must be present to properly account for investors in these legal entities, potential target companies and which are owned by these entities, the context of all interactions with these parties (as well as the appropriate overlap, ie co-investments), and how you’re arriving at finding these opportunities on both sides of the equation, such that you’re able to piece together what’s effective and what’s not. Not just because we say so, but because these are the very relationships and data that are key to the motivation behind a CRM in any industry.

It’s critical, too, that the valuable publicly-available information that helps to enrich CRM systems and save users painful steps of entering it themselves is fully-integrated at the platform level.

Again, look no further than the 3,000+ pre-built integrations that Salesforce.com — the creator of the CRM platform concept — has at a platform level to do so, and which only exists by way of holding just short of overly-specifying certain industry workflows that would present challenges to properly integrate.

Stakeholder reporting and communication (investor relations) draws on a range of datasets

The traditional “customer service” model of CRM systems once again makes overly-simplified assumptions about the customer relationship when applied to private capital markets.

In fifteen years I personally have yet to hear the terms “warranty” or “service call” in this market because it’s just not the same. But make no mistake, as uncomfortable as it may be to say aloud, customer service is more important now than ever and it’s constantly happening; the industry is, after all, considered to be a financial “service”.

As it turns out, that service is primarily information-based — it’s driven by data and takes the form of reports and analysis that drive decisions, and then end up again in investor-facing reports and analysis.

The foundational elements of a private capital markets CRM must be built such that they accommodate this data (like we discussed above), but so too that it can accommodate additional supporting data that investors (customers!) need in the context of service.

Oftentimes this supporting data — financial metrics and time-based values, for example — is believed not to meet the traditional definition of CRM and the natural thought is “well, better do this in Excel!”.

While I happen to believe Excel is still the greatest software application ever built, its introduction to this value chain we’ve discussed herein actually creates the problem many firms suffer from: key data needed to provide customer service (again: effectively the entirety of a firm’s reports and analysis) is now in disparate systems and detached.

Both of those dynamics are important and distinct: not only is this supplemental data disparate, but when brought together there is no logical association that can be made between the two data sets.

Allow me, then, to make the point very simply: not only can this financial and time-based value data (you may be thinking about is as “portfolio monitoring” or “accounting”) be a part of a CRM, it is arguably the most important part of a CRM because it’s at the core of what providing service to the customer entails — information that comes out of data!

Firms need a digital method to engage stakeholders (ie investor portals)

Investor portals are not new; in fact, for many of us — including myself — they conjure up horrifying nightmares in which we’re aimlessly guessing at folders to find the newest document we need.

So in lies the opportunity: not only have the portals we’ve come to hate not simplified the process of acquiring information, they’ve failed to create an entirely new experience that is “customer service” driven.

To be fair, this is not a B2C market where you’d be long out of business for not having focused on customer service and thus the customer’s technology-driven experience. But don’t expect to be around too much longer if you aren’t thinking about this shift.

Today’s institutional investors increasingly expect this same consumer-like experience, and a massive opportunity is being missed by not providing it. It’s not about providing them the experience they desire; it’s more about the ability to measure engagement that is had in return.

Put simply: what’s keeping the market from providing this experience is the availability of the information that’s required to create the service that provides the experience.

If you’ve hung in this long, you know that by focusing on your CRM, you have the data that’s required to manage the customer relationship and the technology-driven experience through which that information is shared to create a differentiated and opportunistic customer experience.

talent management