Private Equity – Increased focus on Strategic Talent Management for Value Creation

The strategic importance of human capital has increased as private equity (PE) transactions grow in scale and complexity, and the average holding period is longer. Leadership and human capital are now viewed as more accretive to deal success than operating efficiency or organic growth.¹ And the cost of getting talent wrong can be one of the most expensive mistakes, with sources suggesting a toll of up to 15x base salary (in hard cost and loss of productivity) when a CEO hire fails.²

Since talent management is no longer a post-close or operational necessity, it's a deal-critical function, why is it that around 40% of mid- to large-cap funds don’t have distinct full-time talent management teams?

To date, formal research on the career origins and evolution of portfolio talent partners within PE remains scarce. To address this gap, Russell Reynolds Associates has reviewed the development of the portfolio talent management function, analyzing the professional backgrounds, dominant feeder industries and functions of the people. Talent partners have become a critical part of value creation and are now responsible for executive hiring, organizational design, leadership development, and strategic business partnering across portfolio companies. These professionals are no longer peripheral contributors – they are central to a firm’s competitive edge.

Mapping coverage: Which funds are investing in talent partners?

Contrary to initial expectations, smaller funds are more likely to have dedicated talent partners than their larger counterparts. Talent partners are present at 70% of funds in the $3 billion to $5 billion range, compared to 61% in the $5 billion to $10 billion range, and 59% of funds exceeding $10 billion.

Defining PE talent teams’ strategic roles and responsibilities

Best-in-class talent teams are instrumental in managing multiple stakeholders, driving alignment, and enabling portfolio companies to attract, develop, and retain top-tier talent. Much of their effectiveness stems from building trusted advisor relationships with both investors and portfolio company leadership alike. While rarely stated explicitly in job descriptions, an important aspect of their impact lies in their behind-the-scenes collaboration with deal teams – advising on effective interview techniques, improving hiring processes, and ensuring a disciplined approach to talent decisions. Their contributions, both formal and informal, are substantial yet often go unappreciated.

Our analysis shows that the PE talent remit now spans:

By actioning on the above, talent partners help enhance exit multiples by ensuring leadership quality and effectiveness, compressing time-to-impact for management teams, and reducing turnover risk.

Talent leadership archetypes: Where do PE talent partners come from?

The talent partner landscape is marked by a highly experienced senior cohort, averaging 19 years of professional experience. As expected, talent leaders at larger funds tend to have more experience.

Notably, 77% of talent professionals have been appointed within the last five years, and half within the last three, highlighting the rapid growth and increasing recognition of the strategic importance of this function.

A significant share (39%) of PE talent partners were hired from executive search firms, making it the most common entry point into the role (Figure 1). Others were recruited from operating companies, management or HR consulting firms, and other investment funds. The source of hire can reflect the specific focus of the role, whether it’s executive recruiting, organizational development, or strategic advisory.

Figure 1: Where PE talent leaders are hired from

_{Source: Russell Reynols Associates analysis, N = 145 across 80 funds}

Beyond immediate prior role, our analysis of broader careers presented an even stronger dominance of executive search backgrounds among talent partners. Almost two-thirds (62%) of professionals have experience in executive search in one of their last five companies, with mid-sized funds placing an especially high priority on this background (Figure 2). Meanwhile, industry and consulting experience tends to increase with fund size, whereas experience in financial services companies decreases as funds grow larger.

Additionally, more than a quarter (27%) of talent partners bring combined experience from both executive search and operating companies, while only 12% have worked across search and consulting firms. This blended background equips talent partners with a diverse skill set – merging deep market knowledge with hands-on operational insight – enabling them to better understand client needs, accurately assess leadership potential, and deliver tailored talent solutions that drive portfolio company performance.

Figure 2: Accumulated career experience

_{Source: Russell Reynolds Associates analysis, N = 145 across 80 funds}

This data underscores that PE talent leaders predominantly emerge from people-centric industries – chiefly executive search, operating companies, and consulting. The strong representation of executive search professionals highlights the premium PE firms place on expertise in identifying and assessing leadership talent. Nearly half of these executives have experience in a company, enabling them to build credibility with management teams through firsthand insight. Consulting backgrounds contribute valuable analytical, advisory, and stakeholder management skills, which firms utilize to drive talent and organizational strategies across their portfolios. Additionally, with one in five talent partners coming from other investment firms, the data reflects increasing industry mobility.

Looking forward: Talent leaders create value

PE has traditionally focused on cost and capital, but the true competitive advantage now lies in talent. The rise of the talent partner role underscores a crucial shift: who you hire, how you evaluate them, and how you support their growth are among the most critical drivers of investment success. As competition for top leadership intensifies, firms that embed a strategic talent approach gain a clear edge – accelerating value creation, achieving stronger exits, and delivering more sustainable portfolio performance.

Authors

Emily Taylor co-leads Russell Reynolds Associates’ Private Capital practice. She is based in New York and London.
Heather Hammond co-leads Russell Reynolds Associates’ Private Capital practice. She is based in New York.
Annabel Toren is a member of Russell Reynolds Associates’ Human Resources Officers capability. She is based in New York.
Courtney Byrne is a member of Russell Reynolds Associates’ Private Capital Knowledge team. She is based in London.

Footnotes

_{¹ Bililies, T (2024). Successful Private Equity Firms Manage Talent Differently.
² Smart, G., & Street, R. (2008). Who: The A method for hiring. Ballantine Books.}