One of the more prevalent developments within Portfolio Operations teams has been the creation of the Human Capital Partner. As money and debt become more of a commodity, and transformation expertise is more regularly and uniformly deployed, one of the remaining levers ripe for differentiation centers around Human Capital.
The prosperity of a PE firm has a direct correlation to the quality of the people involved with their deals. The right people make a big difference during diligence when trying to accurately price a deal. The right management team has a disproportionate impact on the return the company is capable of hitting. The network of the deal partners may lead to an insulated proprietary process which can insure a positive outcome. Properly designed, a Human Capital Partner should be impacting all of these dimensions for success.
There are a number of different points of view related to the right background for a Human Capital Partner. That will ultimately be a debated topic inside the PE shop. But once they center on the right background for their needs, there are some common themes on which a Human Capital Partner should deliver in order to create value. In interacting with many of these folks over time, I have analyzed the ways in which they are successful and codified it into a “Value Creation Pyramid for Human Capital”, set forth below.