How do we create a winning culture? And how does this actually work for a PE firm’s people and practices? These were questions debated by leading PE firms during a panel that Kevin Kelly moderated during the fall PartnerConnect West event.
How Do We Create A Winning Culture?
As the CEO of Altvia, one thing that has been top of mind for me is identifying, building, and maintaining a great corporate culture. I was thrilled for the opportunity to spend some time with a couple of successful PE firms to learn more about how their efforts to build winning cultures have had great impacts in their firms, in the portfolio companies in which they invest, and ultimately lead to greater returns for their Investors.
First, let’s lay some foundation about what culture is. Culture is the cumulative collection of experience, knowledge, attitudes, and values. Culture is communication. Culture is the system of knowledge shared by people. Culture is a way of life and an approach to doing business. It seems that many companies today are committed to building a successful culture that fosters both professional and personal growth, and takes performance to the next level.
So what does a winning culture look like for a PE firm? As I learned in preparing for and moderating the panel, it’s different strokes for different folks. One approach is to focus on the Go-To-Market (GTM) strategy for both the firm and the companies in which it invests. One of the firms in the panel spreads the knowledge base for all of their three target channels across their investment teams versus a siloed approach and developed a common set of terms and considerations as it evaluates investment opportunities. Since all members are armed with a common framework, there’s a strong sense of empowerment as a team. They use a “divide and conquer” approach along with a consistent methodology for measuring opportunities in both a qualitative and quantitative way. While adopting this new culture was somewhat cumbersome at first, this team foundation coupled with broader subject matter expertise has become a proven formula to deliver successful performance as reflected in the firm’s Net Promoter Score and channel growth.
Another approach discussed in the panel was to focus on a “team-first” approach; structuring roles and compensation so that all members of the firm were more closely aligned with the interests of its Limited Partners (LPs). In this instance, the PE firm was in a unique situation as it didn’t have a single founder and so its culture was not built around a single personality – instead, there was an open framework upon which to build the company’s culture. This translated into key performance metrics and processes being aligned with their client’s goals and interests. Everyone is aligned around the same goals. And if a team member leaves the firm, then his/her ownership stake is left with the firm. With this structure in place, the firm’s success is aligned closely with LPs success.
And no discussion about winning cultures is complete without a spotlight on the people. A winning culture focused on people can be attributed to hiring the right people for the right job and developing cohesive collaboration among teams that fosters trust and alignment. One PE firm developed a steering committee comprised of their CFO, controller, HR, marketing and senior managing directors who meet every month to improve processes including fundraising, tracking and deal workflow. At Altvia, we conduct cross-functional team “Level 10 Meetings” on a weekly basis as part of the EOS approach (Entrepreneurial Operating System) to identify and solve issues, provide a feedback loop and stay focused.
I can share that for Altvia, having a consistent framework and a regular dialog has been instrumental in us fostering a great culture in everything we do. We are able to efficiently collect input from team members who are able to add insights into decision-making process and take an active role. And to help ensure the right people are in the right job, Altvia provides job candidates a RoundPegg survey for cultural assessment on top of an in-depth interview process. If hired, the new employee takes a Strengths Finder survey that profiles personalized strengths insights, which describes what makes you stand out from others, brings greater awareness to your talents and provides steps to help you leverage your talents for achievement. Then, your top five strengths are folded into a team-wide assessment so that everyone can better communicate and collaborate in support of success at the company level.