Backstage

In today’s new, post-pandemic world, remote work options have become the norm, which can be appealing to both employees and employers. The shift allows employers to increase their talent pool and potentially lower labor costs, while allowing employees to live where they please without having to be located close to a company’s physical office. However, these new arrangements don’t come without challenges. Employers must be certain they are compliant with local laws where they hire talent, which is easier said than done. For these reasons, Middle Market Growth convened a special roundtable in September to discuss best practices for private equity firms hiring employees remotely in today’s ever-changing environment and to explore the pros and cons of a remote workforce.

DANIELLE

FUGAZY (moderator):

How would you characterize the hiring environment today?

JULIA KAROL, WATERMILL

GROUP: I’m going to use the word brutal. Hiring C-suite executives who can execute in an uncertain environment, like a COVID pandemic environment, or now going into a recessionary environment, is very difficult. And finding actual labor for plant floors has become increasingly challenging as well. There is a lack of available talent at every level. There is also the fact that we have all reassessed our values and what we want from our careers, and there is a resulting reprioritization of where people want to spend their time and energy, and it’s presenting challenges in the workforce.

ILAN WEISER, ELLENOFF

GROSSMAN & SCHOLE: The labor shortages are significant right now, especially in hospitality. There was the allure of working out of a van or working from your summer home that’s kind of faded off. People are getting back to work, but there’s still a general feeling among employees that maybe they should be looking around to see what else is out there. We’re also seeing more lateral movement. Employees are leaving long-term jobs in search of a better workplace culture, more flexibility, more happiness. People are staying at companies for six months or a year. In the past, they were staying at the same job for much longer.

NICOLE FORBES, G-P: We’re seeing that talent, particularly younger talent, is demanding more from an employer. They’re focusing on work/ life balance, flexibility in the job and demanding more from the work relationship. Talent nowadays is thinking about work in a different way than we’ve seen in the past. In terms of the company side of things, a lot of our clients are expanding their search by looking for talent in locations where they wouldn’t have looked before. Especially now that some companies are moving away from having a headquartered location, finding talent in a particular location isn’t as important.

MICHELLE NOON, CLEARHAVEN PARTNERS:

Variable is the word that comes to my mind. I agree that there are aspects that are absolutely brutal relative to historical norms, but there are also benefits. We are hiring at our software portfolio companies. The pandemic and the move to more work from home opened up geographic aperture and flexibility for our companies’ hires but also for companies that might have a higher wage standard, such as Silicon Valley-based businesses, which have the potential to encroach on second-tier tier cities that have great talent and drive wages up there. On the other hand, our companies are no longer constrained to hire in a radius around their headquarters location.

FUGAZY: How is the ability to hire talent anywhere helping and/ or presenting challenges?

NOON: It is a double-edged sword. On the one hand, it’s allowed us to think more globally, or at least nationally, about talent and not be restricted to a certain geography. On the other hand, our businesses are relatively small businesses. They tend to have 100 to 300 employees and a few dozen additional contractors. As a result, there is a lot of benefit to maintaining some degree of nucleus. A 100-person company spread all over makes it very difficult to establish a culture, create uniform processes and make decisions quickly and with conviction. Despite the fact that there is potential to work from anywhere, we have still prioritized having the ability to get people together on a regular basis at our portfolio companies.