Does Preftige Matter Anymore?: Blackstone to Bypass Scramble for Investment-Bank Talent in Bid to Diversify Hiring
Source: WSJ
Link: https://www.wsj.com/articles/blackstone-to-bypass…
Blackstone Group Inc., one of the most coveted employers on Wall Street, is throwing out a key section of its recruiting playbook in a bid to improve its hiring process and increase diversity.
The investing giant and its private-equity peers have long engaged in a yearly race to pluck junior investment bankers already trained in spreadsheet and PowerPoint wizardry from firms such as Goldman Sachs Group Inc. and Morgan Stanley. The prize for those lucky enough to make the jump: entry-level jobs that can pay as much as $300,000 a year at some firms.
Now Blackstone officials say the firm plans to sit out that contest in favor of on-campus recruiting, already its main source of talent and one that it is expanding to bring in more candidates directly from schools, including historically black colleges and universities and women’s colleges. Blackstone, which has been working for years to extend its campus reach, says it will directly recruit from 44 schools this academic year. That is up from just nine in 2015.
The change has been in the works since last year, but Blackstone is implementing it at a moment when companies are grappling with how to address racial inequality following the killing of George Floyd, an African-American man, while in custody of Minneapolis police.
Globally, 40% of Blackstone’s current incoming class of analysts are women, up from less than 20% in 2015. Nearly half of the members of its incoming U.S. analyst class are women or minorities, and the firm says half of its major businesses have a woman or minority as one of the top two leaders. But officials at Blackstone, which doesn’t disclose overall diversity figures, acknowledge they have a lot of work to do to transform a business that is still overwhelmingly white and male, especially in its uppermost ranks—as is the case with most of its main rivals.
Given its heft and prestige, Blackstone’s decision to sit out the bank-recruitment rush has the potential to influence how other firms find talent in an industry in which only 11.5% of senior executives are women, according to a February report by Preqin, and an even smaller percentage are black or Hispanic.
Blackstone, the largest buyout firm with $538 billion of assets, received nearly 15,000 applications for just 90 full-time analyst roles that started last year. It has two main sources of new junior talent: campuses and investment banks, which have their own hotly competitive entry-level hiring operations.
In the case of the latter, recruitment used to happen during the summer after applicants’ first year on the job, but it has steadily crept forward as private-equity firms jump the starting gun in hopes of securing the best candidates. In 2019, recruiting took place in September, just a couple months after candidates began working at banks—for roles that wouldn’t start until summer 2021.
hat has forced buyout firms to predict how candidates with barely any relevant experience will perform nearly two years ahead of their start date and has put pressure on applicants to make decisions about their futures before many are ready. Blackstone executives say that their reliance on investment banks, which have their own diversity challenges, also has the effect of narrowing the funnel of applicants and hampering the firm’s effort to draw from a more varied talent base.
“We can widen our aperture of applicants to include a much more diverse group of people,” says Paige Ross, Blackstone’s global head of human resources.
Blackstone has already developed an internal training program for its summer analysts, who work at the firm between their junior and senior years of college. These temporary hires, recruited directly from colleges, typically end up comprising more than three-quarters of Blackstone’s full-time analyst class for the following year.
Under the new model, Blackstone will still recruit from banks but will do so on an as-needed basis and only after candidates have some experience.
bump
whatever will help them get more LP money I guess
Was on a deal with Bx, and their diversity is also LP money. The son of Dell is joining BX as a PE analyst... So take these news with a pinch of salt it’s good for PR.
What do you mean their diversity is also LP money..?
LPs are increasingly focused on addressing ESG initiatives with respect to where they deploy their capital. Though, checking this box will always come as a secondary consideration to allocating capital to investment firms that have a strong track record of proven returns. But for those that have the luxury, it is definitely nice to have both.
Well they hire kids from their LPs (Dell the billionaire is an investor into Bx through his Family office). And would not be surprised if Bx does the secondary buyout of Dell enterprises after Silver Lake.
Read through the comments on the WSJ article itself and found it quite alarming that so many people lack basic reading comprehension skills.
I think this is a welcome move as it relates to the egregiously accelerated timeline that comes with "on-cycle" recruiting these days. It was refreshing to see more candidates hold off on recruiting on-cycle during their first month on the job this past year. Similarly, it seems like the consensus among an increasing number of firms that traditionally participate in the on-cycle process is shifting in the direction of only partially filling open seats for their incoming classes using first years and then aiming to come back to hire more experienced candidates on a rolling basis.
44 colleges lol their intern class is going to be a massive frat party
and the award for the most elitist comment on the thread goes to Intern in IB - M&A! congratulations!
as a black sophomore at baruch college with a 3.1 gpa, i am now looking forward to working at black stone!
You will never work at Blackstone, bud. But keep trolling if it makes you feel better about yourself.
Edit: Clearly our lovely "Prospect IB - Gen" above is not black and doesn't attend Baruch... hence my original comment.
You can get to black stone, sure, but Blackstone would be a very long shot here.
Good luck with that, because a 3.1 gpa will certainly work against you.
Anyone know what the 44 target schools are?
u want me to list them out for u
if you have them that’d be awesome, thanks
Blackstone?... more like WHITESTONE!!
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Ah, the ol' take one black and the rest from HSW (non URM!) .... touche, Blackstone, touche
Lol this is lip service in a number of ways. The most apparent one, which would be clear to anyone that is familiar with Blackstone's PE analyst program, is that none of their analysts stay on to be associates. They have a three year program (one of the sweatiest analyst programs on the street) that's known to be a accelerated jumping board to the best hedge fund opportunities out there; logic being, instead of spending two years as an IB analyst, then two as a PE associate, then jumping to a blue chip hedge fund, I'd rather spend 3 years as a PE analyst, and make the jump to a hedge fund after that, shaving a year off the time it takes to get there. If you want to be a PE associate at a megafund, then taking the Blackstone analyst offer is ironically dumb because a) you'll be a year behind your peers who'll be an associate their third year out of college when you're still an third year analyst, b) you don't get headhunted for a wide variety of PE associate positions like your peers because you're already at a PE shop (headhunter logic being why would you leave blackstone pe if you want to work in pe?) and c) Blackstone has a historically awful rate of internal promotion of PE analysts. What all this means is that the Blackstone PE analysts spend three years getting grinded being forced to work for less money than their peers at EBs, while wearing a tie every day, and in exchange get the best brand name in finance stamped on their resume and the best hedge fund looks of any analyst program on the street, and all of them take that opportunity and bail ship after the analyst program ends. So long story short, on-cycle recruiting isn't going anywhere for Bx because their analyst program doesn't result in pretty much any associates so they still need to go to the IB pool to find them. Note that this isn't true for most PE MF analyst programs -- Ares, Vista, and SLP all have had analyst programs for over a decade like Bx and all of them have strong rates of internal promotion to the associate level, and decent retention. Long story short, that's a clickbait title that makes it seem like Bx is just gonna hire a bunch of analysts from ASU and stop on-cycle recruiting when in reality they're still taking 3 PE analysts a year from the summa cum laude pool at Harvard and hiring a bunch of other interns/analysts out of undergrad for their other less competitive (secondaries, fund of funds) / middle/back office (portfolio operations, investor relations) business units.
Yes, sir. The non-prestige hires will be BO positions 100 outy percent
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