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Return on Attention

By January 9, 2017Newsletters

On Friday, the first jobs report of 2017 was released highlighting the following:

  • In December, the US economy added 156,000 jobs, down from estimates of 180,000; October/November reports were revised upward by 19,000
  • Wage growth increased 2.9%, the largest increase in seven years
  • Unemployment and Participation Rates were largely unchanged

We believe the disappointment in new job growth and an increase in wage growth is due to a tight labor market in most segments of the economy. As employers start 2017, they will continue to push compensation up, which will result in the participation rate (% of total U.S. citizens who are working) increasing. In our work, recruiting financial, HR, and COO professionals for private equity executives, we see the following:

  • Continued wage inflation for “A” player executives
  • In a tight labor market, PE investors and CEO’s are finding it more difficult to agree on executive suite job profile priorities
  • Substantial demand for human capital executives (experienced in recruiting, retaining, and developing people) in middle market businesses

As a result, we are advising clients to hire human capital leaders who:

  • Ensure the human capital infrastructure for growth is in place
  • Understand and implement the cultural attributes needed to attract and retain the best talent
  • Push the organization to rethink the manner in which they look at work: streamlining processes, leveraging technology, and eliminating zero value activities where possible
  • Develop leaders up and down the organization who can thrive in dynamic environments filled with opportunity, ambiguity, and, at times, confusion

We believe that human capital led strategic initiatives on talent and where that talent is spending their time throughout the work day are critical to overall PE value creation; a focus on your team members’ “Returns on Attention” will drive higher corporate “Returns on Investment.”

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