How Does Someone in HR make partner?
How Does Someone in HR make partner? Why?
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Hiring the right talent is a big deal in PE and is something that isn't to scoff at.
However, pay attention to whether or not they are "Partner" or "Partner: XYZ". People who have the "XYZ" are often not the same.
There is also a trend of needing diverse sets of partner suites to help LP fundraising.
I have been seeing this happen with increasing frequency at a number of middle market PE firms we are invested in, especially since COVID. It's usually someone very experienced (obviously) and the job is a mix of human capital activity at the PE firm as well as equally, at the owned portfolio companies. Any Senior Partner at a PE firm will tell you that the management team is the #1 driver of success in a deal and also the thing that's toughest to get right, especially when the deal is not performing as expected. To me, it makes all the sense in the world that strategic HR is finally being elevated to the stature it deserves.
From what I have seen, it can be an interesting gig for the right person- you are doing executive assessments, placing hard to find, high-impact talent at portfolio companies (even more impressive when the portfolio companies are in rural areas), building out org. structures in carve-outs, handling the PE firm's associate recruitment process.
The thing is that more often than not they’ll just hire a SHREK to do most of the heavy lifting or relationships are the deal partner’s. I’m not sure how that warrants anything close to Partner compensation
Perhaps I am too old for this site but I don't know what a SHREK is. Your point on the relationships being the deal Partners, maybe. That certainly used to be the case in the past but I think that mindset is changing at some of the forward leaning firms. People are going from "oh, Senior Partner #2 knows this amazing CFO from a past investment he worked on, so let's just hire them" to "what's the best possible talent that we can place in the CFO function in portfolio company #4 based in a rural town in Alabama". Oh, and by the way, how do we intelligently craft a management incentive plan to extract this person from a much larger company to join a smaller EBITDA business; ie. how much can you push the MIP % to trade off against a lower absolute EBITDA number / do we want this person that much / who else will follow this person to our business / what new synergistic relationships will he bring etc.. All very high-impact ideas with a strategic HR angle that can act as a real value-add sounding board to the deal Partner.
I am not saying every firm is doing it this way. Just that this is how some of the smarter ones I have seen are thinking about it.
Exactly, look at alpine.
It’s their most boasted VCD.
Dude she isn’t a real partner
She’s a partner in title. So it looks good for LP diversity stats, and she gets the title she wants. But they could hire a new HR person tomorrow. Not saying HR isn’t important, and she probably is a great contributor, but there is a difference between the head of HR/IT/CFO etc type person at a fund, and a real partner of the firm.
The reality is, an HR partner makes very few investment decisions. She *influences* the deal decision makers, but if the deal goes upside down... her neck is not on the line.
As long as LP decks put diversity in the front, I'm sure we will see a similar trend continue. People follow the money and the money wants diverse "partners"
Also assuming much fewer hours. I mean what’s the output like, 2 hours a day of real actual work?
She makes zero investment decisions. She leads HR.
Most places very different compensation and carry than a real Partner.
I like idea of getting these competences into the PE firm, but its a fucking joke to call it a Partner. Often a pet project for Managing Partners and does not really give any value - but is a good LP story.
Does hr usually get carry?
Because there’s more to building a scaled, institutionalized firm than just having deal partners? You’ll see partners lead various functions: HR, CFO, COO, BD, IR, Portco Ops etc. Yes, some could be considered “back office” like HR or finance, but they generally do have carry and sometimes economics in the mgmt co. A partner leading BD or IR could make a ton of money while having a comparatively cushy WLB.
These people are also a dime a dozen IMO despite what the children on here think. Good back-middle office people at smaller PE firms are worth their weight in gold to deal partners who can focus on what they do best (investing) and leave operational functions to others.
Enough people complain about there not being women at the partnership level. One of the few somewhat competent woman in that age range who work at the firm happens to lead HR. Promotion by default. Shuts the LPs up and you don't actually have to pay her like one.
Lol have you ever played video games with your younger cousin but the controller you gave them has no batteries in it? Same thing here
Be Donna Paulsen
HR at a PE firm is not the same as portco mgmt hiring and they’re minimally involved.
The latter is far more value add and is primarily driven by third-party vendors that are VERY good at that sole function (finding elite CEO/Executive candidates).
No one in HR is qualified to do that. At best they’re dynamic business leaders capable of developing and managing a strategy and process around employee benefits, year end reviews, on going training, associate recruiting (also recruiter driven), HR compliance, joined/leaver dynamics and external marketing from a people mgmt perspective. At worst, they’re rudimentary back office support/admin and not great at it to boot.
At a MF, maybe head of HR can make partner — maybe. Look at KKR, BX, Apollo, I’m guessing the head of hcm is a partner at each of those places because they’re presiding over a (relatively) massive organization with varied business and functional needs, so it’s going to be a very sophisticated and dynamic executive in that role. Not unlike a COO or CTO.
Some PE firms will sometimes also hire an internal role to drive portco leadership hiring. This is usually to supplement/manage the third-party work and/or to have more of a strategy and process around that function. That hire would typically be some with a ton of relevant contacts, so maybe a Sr hire from Russell Reynolds or EgonZender or someone with a fat Rolodex from McK etc. While thay may be a well paid role, they’ll seldom be partners. It’s more somewhere between portfolio operations and a Sr Adviser/operating partner type function.
Compare and contrast HR partner vs exec search firm + HSP/DSP?
No
Its so fucking uncool to put a partner title to these individuals when junior and mid-level are usually top bucket people, working their ass off and that has sacrificed a lot on their path towards the partner title in PE. Joke.
Look, I get what you are trying to imply in this post. I will say, however, that a fantastic HR leader is invaluable to any organization. You know why? Because in any organization you will inevitably have to deal with dipshits and psychotics that do asinine shit and you need someone experienced in HR to know how to deal with these situations for the organization. In my experience at respected organizations, you have a bunch of HR minions that are kind of clueless, but there is usually the head HR person who is in fact the gravekeeper for the company. Someone who knows how to bury the bodies and keep them buried.
You realize a private equity fund is a business like any other, right? And HR is a key business function? Perhaps you’ve read a 14DEFA or management presentation once in your life? The HR head is usually a top 10 executive. They handle everything from hiring to firing to payroll and benefits to workplace standards.
This is not to say that most HR functions aren’t overbuilt and little fiefdoms, but to think that only investment professionals should be partners at a private equity firm shows you have no understanding how business works.
They only hire and fire based on decisions already made by someone else. At least in PE. Workplace standards? I never even spoke to hr after starting anywhere. Are they communicating these telepathically?
So you don’t think things like negotiating packages for senior leaders; handling severance and termination discussions; selecting benefits providers; mediating workplace disputes; keeping relationships with headhunters; and generally managing the assholes in a typical PE firm is an important function?
maybe you never spoke to HR because they were too busy dealing with the other partners instead of “Associate 1 in AM”
They’re not risk takers and don’t command the same pay. Simple as that. If you’re a top 5-10 listed firm you should get paid like other HR professionals of firms that size, not like a PE partner. You’re a functional lead.
As someone who is intimately familiar with comp for these roles I can guarantee you that despite them being presented as ‘top 10’ in importance, their pay / incentive packages are nowhere near the top 10 of any company I’ve ever diligenced. I’m most will sit in the 25-35% of sweet allocations for example. And probably similar for cash pay and likely at 20-30% of what the CEO / CFO (read: actual c suite) get paid.
No one says parts of the HR job arent important, it’s just that it doesn’t command the same pay and that’s consistently proven (idgaf about titles personally) - and that’s especially true at white shoe firms with partners, as those decide on the actual talent decisions in those firms (internal and portfolio).
What's this mean? Their carry?
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