Why do investment funds want change in the boards?
If thehe two-thirds of the funds want to shake up the staffs of the companies they have in their portfolio, it is obviously not out of whim.
Investment funds have a four-year results culture. So when they change teams, it’s to go faster in the short or medium term and earn even more money.
Fabrice Coudray, director of executive search at Robert Half
During the covid, but also since the geopolitical disturbances and the inflationary context, some funds have seen their investments melt like snow in the sun. Many are also in the process of resuming their balls to avoid too massive financial disappointments. “When they invest in a box, the funds do not systematically change the management team immediately. But whether massive or not, management team surgery will happen”he adds.
Ability to do “storytelling””
According to the Boardroom Navigator 2023 study* by Robert Half, the ability to do “storytelling” – therefore to use their story to sell the company, is not appreciated at its fair value.
“It may seem a bit cream pie, but storytelling is essential in a company. We are not looking for poets but leaders capable of speaking the truth. When they tell a fairy tale and the reality is quite different, there is a huge distortion and this impacts the commitment and motivation of employees. But also the ability of companies to attract talent”explains Fabrice Coudray.
Mental agility pegged to the body
The funds aim for high profitability over 4 or 5 years. Time for them is even more money than elsewhere. “The world is changing and in particular the relationship to work. The leaders sought by the funds must, among other things, be able to evolve in their relationship to work, collaborative methods, artificial intelligence, etc. They are not looking for candidates steeped in certainties, incapable of questioning themselves, systematically preferring blaming others for all the dysfunctions”argues the headhunter.
Green leaders, like the color of the dollar
In 2024, the taxonomy of the European Union, which aims to specify the economic activities having a favorable impact on the environment, will be extended to companies with more than 250 employees whose turnover exceeds 50 million euros. Legislation to protect against human rights abuses in supply chains will also be phased in.
Funds no longer have a choice: they must integrate ESG criteria into their strategy. And if in passing, it can earn them a few dollars, then yes, they agree to see life in green.
“One of my clients, for example, was looking for an HR manager responsible, among other things, for managing ESG indicators. In the meeting, the CEO made it clear that he didn’t care about these ESG criteria but that they no longer had a choice: either the company went all out or it risked losing half of its suppliers and tenders. Despite his personal convictions, the manager of this fund-driven company decided to go ahead anyway”illustrates another headhunter.
Know how to quantify your added value
“When I hunt for a candidate for a company belonging to an investment fund, I seek to know very thoroughly what the candidate has achieved in his previous experiences, in what time frame, what has been his added value, what -which he wouldn’t do again…all this, backed by figures. I also test its resistance to stress, its resilience… The funds are looking for key men/women who know how to drive without a co-pilot, not poets”insists Fabrice Coudray.
In South America, for example, leaders already have decades of experience in leading a business in a context of high inflation, and are now well placed to help their European counterparts.
Philip Hendrickx, Director Executive Search Belgium
Even more extensive reference checks
Fabrice Coudray recognizes that taking references is even more advanced when he is hunting for investment funds.
“I need to identify the candidate’s mode of operation but also how he handled failures. When a candidate tells me that they have succeeded in such a project, I ask their former managers about their real contribution and involvement,” he illustrates.
As we can see, the funds are not satisfied with the storytelling provided by the candidates. They over-validate the profiles before hiring them.
Infographic: the skills expected of a business leader managed by an investment fund
According to study Boardroom Navigator 2023 Robert Half – Infographie Cadremploi
*The Boardroom Navigator 2023 study is based on a survey of 400 members of management committees and 50 investment funds, based in France, Germany, Belgium and the United Kingdom. Respondents work across a wide range of industries, and in companies with at least 50 employees.