Finding an operating partner is rarely a streamlined process, especially if both sides are accustomed to a traditional recruiting process consisting of a pool of candidates, narrowing them down piece by piece, and eventually arriving at a top three list, where the winner is chosen. The ease of traditional searches is due to every one of the roles being searched for being straightforward, meaning they have an expected amount of duties to be accomplished as well as a baseline experience level. This helps the candidate identify whether the role is a fit for them, as well as helps to narrow down the candidate pool from the hiring team’s side.
Hiring an operating partner is nearly the exact opposite of a traditional search. When a firm is utilizing an operating partner, it will have a broad idea of what is needed to accelerate the portfolio company, from adding a new division to growing the sales team, etc. What exists in between those core duties is an entire mess of gray area, where they want and expect the operator to do what they do best, improving just about every function that needs improvement. So, if the duties cannot be outlined fully, what about the title and permissions? The operator could be an Executive in Residence, an external consultant, an advisor, or all of the above. While titles never should have too much importance, having a ‘clearance’ level of seniority will be an important aspect of who will be answering to the operator, and how much authority they will have over the portfolio company’s employees.
So how can a firm perfect its search process to be as attractive as possible to the operators?
It starts with outlining how the role needs to be designed, not only from the portfolio perspective but within the firm as well. Will it be revolving around a singular portfolio company, or more of a ‘mercenary’ operator, floating between all fund investments? Is there variation in the role or is it performing one duty and maximizing value within that? Many answers can be found by analyzing the market, and seeing what others are doing (the same as a comparable analysis for valuation). Beyond outlining duties and responsibilities, figuring out timing, and deciding who is best for this type of role is essential. Will bringing in a former entrepreneur have the same effect as a Harvard MBA type? Do they need experience in one core function within an industry? Being as specific as possible is not a detriment that will cause you to lose out on potentially good candidates, it will make the relationship and draw to the perfect candidate even stronger.
How do you sell the operator once they’re with you?
Interviewing for high-leverage positions is typically abstract conversations rather than formal interview processes. Being involved as the Partner/CEO of a firm is essential in displaying the importance/value needed by the operator, as well as developing relationships that help both parties buy into one another. The main priority for most operators is to leave their mark by doing big things, executing impressive feats, and letting their horses run. If the Partner of a firm can’t paint a picture of the impact necessary to be made by an operator, as well as the vision behind them, they won’t have the confidence, nor the want, to take an investment-backed company into the stratosphere. Financial needs can always be taken care of with incentives, but it is the qualitative characteristics that get top talent to sign on the dotted line.
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