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How to succeed as a Chief People Officer in Private Equity Healthcare Portfolio Companies

11 Jan 2023

Compass Executives recently discussed thoughts and suggestions on how to succeed as a Chief People Officer in Private Equity Healthcare Portfolio Companies. This is based on our consultants knowledge, expertise and experiences within the PE-backed markets. 

The UK private healthcare sector is thriving, with 50% of deals in Q3 backed by Private Equity, a 12% increase from last quarter, attesting to investor appetite from both the UK and abroad. At the same time, the PE market has fuelled competition for talent to lead portfolio companies.

PE funds and portfolio companies are recognising the immense value a Chief People Officer (CPO) can bring to the table, from enabling growth and leading change, to ensuring HR compliance, reflecting the increased value PE funds place on leadership, culture, and engagement.

This has led to an increased demand for CPOs and a change in the skills and requirements of these new hires. CPOs are leading organisations through a sector skills shortage and helping companies face macro-economic difficulties while preserving their culture. They are also aiding in the pursuit of growth and the need for more advanced people leadership.

What is a successful Chief People Officer?

Successful CPOs are first and foremost business leaders, adept at identifying and using the right human capital levers to optimise company performance. They have change management experience and the ability to support quick transformation efforts in the PE environment, using people analytics and HR technology to drive change and bring others along in the process. They make decisions based on data and their broad experience in (a good mix of large, leading organisations as well as smaller, growth-oriented businesses is always desirable). Strong financial expertise also enables them to work effectively with the leadership team and operating partners on key business decisions.

A successful CPO will have the capability to go from strategy to execution. Strong executors with an emphasis on measurable outcomes, ultimately the aim of a PE fund is to magnify the value of a portfolio company with a return on their investment through a profitable transaction in the future.

Private Equity and the role of Chief People Officer

PE is looking for someone with precision, a robust metrics focus, and a data-focused attitude, those who quickly get to the point converse better with PE sponsors. Clarity of thought, Successful CPOs keep the long-term objectives in mind whilst simultaneously drilling down into the details and knowing what good looks like when it is scaled. Talent acquisition experience is critical for growth companies, which often lack talent acquisition infrastructure to scale the business.

As a CPO in a private equity environment, data and impact measurement are essential in successful leadership. However, many portfolio companies have immature systems, especially in HR, which often require making important people decisions with limited or imperfect information. The best CPOs recognise patterns, identify the root cause of issues, and make timely, effective decisions that drive long-term business value.

People leaders who can handle ambiguity well, lead with empathy, and create inclusive and supportive cultures often thrive in a PE environment.

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