2021 Global Leadership Monitor: Private Equity Faces Talent Challenges

Our 2021 Global Leadership Monitor asked nearly 200 private-equity portfolio company CEOs, C-suite leaders, and board members around the globe about their views of challenges and opportunities in the year ahead. Their responses offer a rare view into some of the common themes among organizations with private equity ownership, and what distinguishes them from other types of organizations, namely public companies.

Judging by their responses, attracting and retaining talent will be a top concern in the year ahead, even more so than changing consumer behavior, uncertain economic growth, and major health threats. Portfolio company leaders see a potential talent shortage and acknowledge that their companies do not prioritize employees as stakeholders to the extent public companies do. Most portfolio company executives are willing to move to new employers, up sharply from pre-COVID levels. Also in contrast to public company executives, portfolio company executives are relatively pessimistic about their ability to get a handle on emerging issues such as sustainability and DE&I. These are topics that often help rally employees around a larger purpose, helping to retain them during difficult times.

With this, portfolio company leaders will want to look harder at how well they are listening to employees and elevating their voices around the issues that matter. This may also be a year to revisit culture, to ensure it is serving strategy by clearly defining the company’s priorities and engaging each employee around them.

A talent shortage looms amid changing consumer behavior and economic uncertainty

Finding talent and meeting consumers’ changing needs rose to the top of concerns for portfolio company executives, along with the lack of clarity around the economic outlook. The talent issue is the one they feel least prepared to address, likely because both business needs and employee expectations are shifting so rapidly.

Talent availability is the top challenge for portfolio company executives

_{Source: RRA 2021 Global Leadership Monitor, n = 195 global, PE portfolio company executives}

Portfolio company employees have less influence than those at public companies

Portfolio company executives see consumers as their most influential stakeholders, followed by two groups that often overlap – investors and the board. Employees are a distant fourth for portfolio company leaders, in contrast to their status among public company executives. Given the concern about talent availability, elevating employee voices may be an area for portfolio company leaders to revisit.

Employees hold less sway at portfolio companies than at public ones

Over the next five years, which stakeholder groups do you believe will have the greatest impact on your organization’s strategy?

Many leaders are ready to make a move

Portfolio company executives are more than twice as likely to be interested in a new employer today than they were before COVID first struck. While hold times and equity considerations will likely influence their timelines, burnout may also be driving the desire for change.

Portfolio company leaders are increasingly interested in switching employers

Revisiting culture and purpose will be essential to addressing talent concerns

Portfolio company executives are relatively confident about their executive teams – more so than public company executives – but notably less confident about their teams’ ability to embrace the opportunities of ESG and DEI, with ESG particularly low. This may mean missed opportunities to rally employees around a larger purpose that will keep them engaged in the organization through difficult times.

My executive leadership team…

% of executives that agree or strongly agree with each statement

Methodology

The 2021 Global Leadership Monitor surveyed more than 1,300 global board members, CEOs, C-suite executives, and next- generation leaders in the first quarter of 2021. Among those were 195 private equity-backed portfolio company leaders and 709 public company leaders.

Key stats on private equity-backed portfolio company leaders:

Geography: 76% Americas, 18% Europe, 5% Asia, 2% other*
Industries: 27% consumer, 20% healthcare, 19% INR, 9% professional services, 8% technology, 8% financial services, 9% other

Key stats on public company leaders:

Geography: 73% Americas, 14% Europe, 12% Asia, 2% other*
Industry: 23% healthcare, 22% consumer, 18% technology, 14% INR, 13% financial services, 6% professional services, 4% other

_{*Note results are weighted to account for regional differences.}