How Kline Hill is focusing on talent and growth

The private equity secondaries firm has been adding products and employees in critical investment and operations functions.

Talent management has been a critical issue across the board, but private equity managers are looking for creative and effective solutions to bring on new employees, retain their top talent and supplement necessary operations in order to be successful.

The secondaries firm, which has been expanding its team as it moves into new geographies and adds more GP-led deals, is trying to stay ahead of market cycles by over-investing in talent and in portfolio positions in order to deal with current talent issues.

Kline Hill’s COO and CCO Eric Swann sat down with affiliate publication Private Funds CFO to discuss the firm’s growth plans, its focus on talent management and how outsourcing and technology have helped the firm achieve its goals and prepare for the future.

Eric Swann

Kline Hill has been growing in recent years, so can you tell me about the firm’s growth plans for the next year or two in terms of personnel and investments?

The firm has grown significantly over the last two to four years, essentially doubling in size and assets over that period. We’ve also added a dedicated GP-led fund to our list of products. Ahead of that we hired the team we needed and had everyone in place to be ready for the launch.

For the next year or two years, I think we have our core team at the senior level in place. For us, the main focus is investing and deploying the funds that we have actively open. But we will be strategic in growth plans and in recruiting the people that are a good fit for our firm and are able to run our strategies. 

Talent management has become very difficult recently. Have issues with hiring or retaining talent impacted your growth plans in any way? If so, how have you dealt with these difficulties?

Obviously, talent management, recruiting and marketing across the board have been pretty competitive. Over the past couple of years, we’ve done a pretty good job at our senior levels retaining our talent and working with the growth aspect of the firm. In a competitive market, we are pleased to have attracted great talent.

I’d say we have the right people for the assets and strategies we have right now, and at the senior level, but we will continue recruiting and focusing on support teams. We are really focusing on our internship class. Because we’re a small firm, we can have people really ingrained in the firm, and we give them an opportunity to come back for multiple intern sessions. I think this provides a really good organic growth story and allows people to understand the jobs they’re signing up for and the culture of our firm.

As a firm, we focus very heavily on culture. We’ve found that people are engaged when they feel they are valued and an integral part of building the business. So through all of this we have tried to make sure that we have the right people for our culture and that the people we have feel like a valued part of our business. 

Can you talk about what Kline Hill is doing to bring in new talent?

We will hire through the typical recruitment processes, but we’ve been trying to forecast out our employment needs and focusing on our internship programmes and building our future growth into that.

We’ve developed a year-round internship programme – in the spring, summer and fall. We bring in two to four people at any given time, on the investment team, in finance and operations and IR, and we give them real work so they can get a sense of the business and what they’ll actually be doing and what the job really entails.

For the second part of that, where it has been challenging to hire, particularly in finance and accounting, we’ve been augmenting our staff with some offshore resources. These folks become part of our team and have allowed us to continue to grow on the operation side without slowing down.

By expanding into the Philippines, we can now take advantage of the time zones because the Philippines is 12 hours ahead of us. We’re able to basically work around the clock on that side of the business. This also allows us to focus on technology and other scale initiatives because we have some capacity built in through the offshoring and the time zone arbitrage.

Are there certain positions or areas of expertise (investment team, finance, CCO, CFOs) where it has been particularly difficult to hire new people?

No. I think it’s actually across the board and things are just taking longer. It’s been a challenge on almost every front.

Because of this, you have to focus a little bit more on flexibility in the work environment. While some firms have been talking about going back to the office five days a week, we’ve remained hybrid to give people some flexibility to commute from other places. This has allowed us to expand because there are people willing to commute three days but probably not five. That flexibility has worked very well for us. 

Is there something unique about your firm that makes hiring for certain positions difficult?

I think one of the main factors is just our office being in Connecticut. We are limited a little bit with geography. If you’re in the city, you have access to all the boroughs around the city and people can commute to a central place, but we are limited a bit in that way.

However, I think the flexible schedule as far as a hybrid environment has actually helped because people are willing to come from further away if it’s only three days a week versus having to commute every day.

How have you worked to overcome the current talent management issues?

A lot of that is planning, most importantly for the investment team.

We’ve always been ahead of that, and we’ve made sure we’re staffed for our large deal volume and try to stay ahead. We have over-invested to make sure we are prepared for the current hiring difficulties in the market as well as future growth.

We’re prepared if there’s turnover, as well. We never want to be in a situation where we can’t process deals – especially because, as we are focused on the small deals, our volumes are larger. That’s why we have over-staffed on this end. This also enables us to be highly responsive to sellers and GPs and provides a degree of balance. If the investment teams are always running very lean, it’s harder to keep that balance and for people to have flexibility.

We’re also positioned to scale as we continue to evolve.  That’s where the offshore augmentation in the Philippines has helped help us; we’ve been able to get ahead of staffing on the finance.

You’ve outlined your strategy for dealing with current hiring challenges, but can you discuss what your firm has done to retain the talent already at your firm?

We think the work-life balance and some flexibility is one of the keys to keeping people. But we also focus on culture. We like for people to feel part of the overall picture and the firm. We’re lucky because it’s a smaller place, so we can keep people involved. We try to have events where we can get people together to create more connections.

You also want to make sure people are being compensated in line with the market. That includes fair compensation and providing benefits and other things in line with, or better than, what’s on market as well. It’s constantly evolving and we have to stay on top of things to make sure that we’re in the best position to retain our people – to make them feel valued and a real part of our team.

On top of all the planning that Kline Hill has done and is doing to grow the firm, hiring the right people and bringing on new employees when needed, are there other resources the firm has employed to make sure everything is able to operate properly?

Absolutely. We are in a technology and scale upgrade mode.

The first part of that is having the people to support the business, which we’ve been focused over the last year. And we’ve been continuing to build out our technology platform on the finance side. We’ll continue to try to evolve and scale our technology so we’re able to process our volumes in a controlled, scalable environment.