Ayesha Javed, Editor, Private Equity News  – 10th March 2014

Next time you interview a candidate for a senior executive position at a portfolio company, don’t rule him or her out for being detached, unfriendly or having little propensity for building rapport.

These are the characteristics of some of the best candidates to lead portfolio companies, according to research from executive search firm Marble Hill Partners. The research, conducted with the help of chartered occupational psychologist Paula Duncan, assessed management teams at private equity backed companies across 36 areas of activity to identify successful characteristics of management teams at these companies compared with their peers at companies that were not private equity owned. “Clients often get very excited about the wrong type of person, someone who may look right but ends up wasting everybody’s time. We are deciphering the process at Stage 1, adding precision to the science of executive search for private equity backed businesses,” said Sam Smith, Managing Director at Marble Hill Partners. “It’s about enabling clients to make the right appointment with the maximum degree of comfort.”

The research found that many of the best managers lacked “highly developed interpersonal skills,” and could therefore be “perceived as uncaring/detached, making the use of relationship-based engagement tools difficult”. They can also be “blunt” when delivering feedback and demonstrate “frustration with others taking less responsibility”. But these characteristics, the study found, are largely driven by the best leaders’ tendency to be very focused on delivering results for the company as a whole and will often put that goal above personal gratification or their own agenda and short-term gains. “The biggest surprise for me was how internally referenced our respondents were,” said Ms. Duncan. “Most people’s definition of success is externally referenced (e.g. am I beating x or y?) This population are ‘opt outs’ – they don’t care what their peers think. All they are concerned about is self-fulfillment and achieving the goals they and their investors have set.” “They don’t seem to think pleasantries are important. Relationships are driven by task delivery rather than any need to sustain friendships,” added Ms. Duncan. “Bringing people with them is something our group has the ability to do, but building relationships is purely in the service of task delivery. They don’t think twice about rattling cages; the only question is ‘can you do it or not?’ Friendships are reserved for weekends.”

Working environment was an important factor for many of the executives assessed. They thrive in a workplace where energy levels and standards are high, a can-do attitude is valued and entrepreneurial attitudes are rewarded. Problem solving and reasoning skills were “outstanding” among the best executives. They also tend to be more comfortable managing risk, initiating action, seizing opportunity and working in the spotlight. Making money is not the primary incentive for many of the most successful executives, according to Mr. Smith. “Deeper drives are at play. An absolute desire to succeed, an innate need to be part of achieving something, participation in the journey; that is what counts.” According to Mr Smith: “People that succeed in private equity….. are desperate to get out of bed in the morning and achieve something. What they share is an utter focus, a burning desire to deliver the mission and realise their ambitions. They want to be in the Champions League, playing in The Championship is not an option.”