Edelman Financial Communications & Capital Markets
August 10, 2016
Strategic communications consultancy serving the global investment management industry.

Alternative Asset Managers Must Pivot to Outflank Silicon Valley Recruiting

A version of this article originally appeared in the August 10, 2016 issue of FundFire Alts .

By Mike Geller and Greg Marose

Silicon Valley is going head-to-head with Wall Street for the top business market talent, and alternative asset managers stand to lose ground if they don’t adjust to the new playing field.

As alts managers navigate today’s volatile market environment, generating alpha and gathering assets is no easy feat, and it is times like these that reinforce the critical role of attracting and retaining the industry’s best and brightest minds in order to deliver strong risk-adjusted returns. However, recruiting rising stars has grown increasingly challenging as the war over top analytical and quantitative talent has expanded to the alluring world of technology.

The reality is that hedge funds and private equity firms face converging headwinds. Politically charged rhetoric inside the Beltway and on the presidential campaign trail is directing rancor toward the capital markets. Millennials in the job market are also no longer making decisions based purely on compensation. These shifts are occurring as the expansion of the financial technology marketplace and an uptick in innovative start-ups establish a new frontier for dynamic talent.

One could argue that financial sector recruiting efforts have historically relied too heavily on small networks of potential candidates and on the prospects of earning a very comfortable living. This runs in stark contrast to the pitch currently made by many emerging and established technology companies. These innovators continually demonstrate an understanding that today’s generation wants to be inspired and work for companies that have their best interests at heart. Young job-seekers want to push the status quo and work on noteworthy assignments and in their own ways positively impact the world in which they live.

Although every alternative asset manager’s recruiting objectives varies in size and scope, one thing is clear: winning the war for talent means throwing out the old playbook. Waiting for applicants to knock down the door is a non-starter in the current climate. The conventional approach of paying hefty fees to headhunters and referral agencies is also no longer a guarantee of success.

As firms evaulate their recruiting efforts moving forward, it is time to put in place a new game plan that integrates best practices from communications, marketing and quantitative measurement. This is the new path to attracting high-quality individuals that will adapt to your culture, contribute to the bottom line and help foster an atmosphere that mitigates costly turnover. Here are three learnings from Silicon Valley that hedge funds and private equity firms are beginning to draw on:

Proactively define and drive your firm’s public persona : According to LinkedIn’s 2016 global recruiting report , a rising number of organizations consider “employer brand” their top priority when it comes to attracting elite applicants. Approximately 68% of businesses cited their website as the best tool for building their brand. Firms recognize how a website that houses dynamic content embodying their culture and vision is important when showing – rather than just telling – prospective hires why they should apply. Goldman Sachs’ Careers Blog  and Greylock Partners’  website are both best-in-class examples of purposeful branding through content. The old days of having a splash page with all of your information behind an investor log-in are gone. It is critical to have a modern website that provides recruits and stakeholders with pertinent information they need to understand the firm’s strategy and your value proposition.

Implement a multi-channel approach to attract top talent: You cannot wait for the best applications to flow in solely through campus recruiting booths and your website. If you do, you are going to be left behind. Proactive media relations, social engagement and expert commentary and research all go a long way to defining how your firm’s culture is perceived. For example, several financial sector executives have recently been the subject of the New York Times’ Corner Office column , which sheds light on leadership styles and provides a look under the hood at top firms. Leveraging social media to target individuals with the skills and qualifications you seek is another progressive move that savvy firms are employing. Companies that do this well – including Citadel  and KKR  – are successful in creating online communities for job candidates that bring like-minded individuals together. This can be a powerful tool in driving the perception and reputation of your firm over the long-term.

Measure your progress and continually refine your strategy : When human resources teams and internal business teams align on recruitment strategies, they should identify key performance indicators to measure the success of their efforts. These benchmarks can include the volume of quality hires, growth of the applicant database, employee perception feedback and other customized metrics. The takeaway is that effectively measuring data – such as résumés received or website visitors – enables firms to assess whether efforts are working and ultimately optimize messages, content and outreach tactics.

While the foundational elements of recruiting and retaining personnel will always rely on the efforts of human resources teams, the landscape has shifted. Elite graduates and experienced professionals are balancing their monetary, cultural and work-life balance preferences. They want it all.

Alternative asset managers need to respond to today’s new market. Proactive recruitment and retention strategies now need to be on the agenda of operations leaders and principals alike.

Mike Geller is executive vice president & head of Alternative Asset Management in New York.
Greg Marose is senior account supervisor in New York.

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