How is Private Equity Recruitment Changing?

It’s a great time to enter the field of private equity (PE). There’s more demand than ever for quality candidates and there’s still plenty of potential to build a lucrative career.

That said, the hiring process has changed significantly over the last decade or so, with aptitude and psychometric testing becoming increasingly common. If you’re entering the private equity recruitment process, here’s what you need to consider going forward.

Why should you work in Private Equity?

Private equity remains a highly-rewarding career, with the potential for exceptional salaries and long-term career prospects. It’s important to understand that the field is highly competitive and generally requires both experience and a robust skill set to enter, but once you’re in, you’re on a career path that is both desirable and potentially lucrative.

There are several important things you’ll need to work in PE: 

• Relevant qualifications in either business or finance.

• Previous experience in a similar role, such as analysis or investment.

• Exceptional networking, problem solving and analytical skills.

• An understanding of the more technical aspects of private equity.

Private equity firms are generally smaller than investment banks but still deal with large market caps, supporting portfolio companies across various industries. Private equity firms tend to hold on to their investments for longer, giving you plenty of opportunities to build long-term and sustainable investments before selling for a profit.

Why is Private Equity Recruitment Changing?

There are several reasons why businesses in the private equity space are moving beyond simply scanning CV’s and standard job interviews:

1. Supports hiring based on cultural fit

In the modern workplace, cultural fit is just as important as technical aptitude. Businesses are increasingly looking for ways to determine how a candidate might operate on a day-to-day basis and reduce the potential of a bad hire.

This is why psychometric testing or personality profiling is becoming increasingly common during the hiring process. A personality test can help an employer understand a candidate’s behaviour in the workplace – such as whether they’re spontaneous, outgoing or how they operate as part of a wider team. If you’re entering the private equity field, expect the application process to include one of these tests.

2. Mitigates bias during recruitment

Many companies are looking for ways to remove potential for bias during the hiring process, especially as diversity and inclusion becomes more important in the workplace.

Aptitude tests are a great way of building a profile of a person in an anonymous way – removing information such as gender, names, age or education that would otherwise cloud the hiring process.

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How is Private Equity Recruitment Changing?

Here’s the various ways in which clients in the PE space are changing the way they approach recruitment:

1. Aptitude testing

Aptitude tests aren’t new. Many people in many different fields often have to undertake a formal test or presentation during the interview process. That said, we’re increasingly seeing clients in the PE space place more emphasis on different types of aptitude testing that builds a more complete profile of a candidate. 

Fundamentally aptitude tests assess your ability to reason, how well you understand your field and the extent of your skillset. Your ‘score’ is then measured against a typical benchmark to see how well you perform against the wider industry average. The different forms of testing you might experience include: Fact checking, verbal and numerical reasoning, abstract understanding and how you approach various situations.

2. Psychometric testing

While it might sound daunting, psychometric testing is simply another term for personality testing. Employers use psychometric testing to help understand a candidate’s interests, motivations and typical behaviour in the workplace. 

In most cases, these tests provide a series of questions based around specific situations or feelings and the candidate responds with how much they agree or disagree. Once the candidate has answered the entire series of questions, the employer is able to build a more complete picture of their personality. 

Some of the different personality tests include the Myers-Briggs model or the Occupational Personality Questionnaire – both are which take different approaches to achieve the same goal. It’s important to remember when you’re completing these tests that there are no wrong answers and you’ll typically be given the opportunity to complete it at your own leisure – time or pressure constraints can impact the accuracy of the result.

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