Operating Partners Forum: The human dimension of value creation

‘Enhancing talent’ is named the number one lever for growth by a survey of CEOs unveiled at Wednesday’s Operating Partners Forum in New York

One of the world’s leading gatherings of operating partners opened in New York on Wednesday with calls to put talent management at the heart of the value creation process.

A survey of CEOs unveiled at PEI’s Operating Partners Forum New York 2018 found that “enhancing talent” was the number one driver of value creation, a theme that resonated with speakers at the forum.

“You really can’t create value unless you have a good operation,” said Andy Studdert, the former chief executive officer of private equity-owned NES Rentals, one of the US’s largest leasers of construction equipment, such as cranes and forklifts.

Asked the biggest single action he took to create growth at NES Rentals, he said: “This is going to sound really off the wall, but we focused on employee well-being and safety. We were a 41-unit roll-up of small companies. They said they all missed the owner-operator model so we were able to recreate that in a company of 4,000 people.”

Studdert is a former chief operating officer at United Airlines, who was in charge of the crisis centre in Chicago on September 11, 2001 when two United Airlines planes were flown into the World Trade Center in New York.

The CEO survey, carried out by Blue Ridge Partners, found that more than a third of CEOs – 35 percent – are planning major changes in their organisation in 2018 or 2019, with bolstering their talent base named the single most important reform, following by reforms to sales structures.

The forum, now in its eighth year, has a record 435 delegates, including more than 200 operating partners. Topics on the agenda included the synergy between operating and deal partners and how the operational role has evolved to what one panel described as “Operating Partner 3.0”.

Transformations and turnarounds were another matter for debate with “operational reluctance to change” and “inadequate change management” named by delegates as the biggest single roadblock to successful transformation, followed by “overall lack of leadership or a capable change champion”.

Digital innovation also featured strongly with Georgette Kiser, the chief information officer of the Carlyle Group, among the speakers.

But time and again the discussions returned to how human capital is a key lever of value creation. Tim Figueroa, partner at JM Search, which specialises in providing executives for mid-market portfolio companies, led a panel on talent management on Wednesday afternoon. “Talent determines the outcome of deals. That is one of the key takeaways from the Operating Partner Forum. Those with successful outcomes typically have great management teams,” he said.

Figueroa says that the number one search his firm does is for portfolio company CFOs – the most important criteria being someone who has previously been a finance executive at a private equity company.

Operating partners at the event agreed that nurturing talent, having the right team and winning over the workforce lies at the heart of value creation: “Everything starts with human capital,” said one delegate who is the director of portfolio operations at a US private equity firm. “We work a lot with tech firms and it’s absolutely crucial to ensure buy-in from the team when you acquire the firm.”

The forum continues Thursday with marketing for growth and digital transformation to the cloud among the topics being discussed.