Strategic Concepts Human Capital Acuity model specializes in predicting a management team's future behavior and effectiveness at meeting investor objectives, helping equity investors reduce risk, save time and improve performance. The model is used in both deal evaluation and due diligence of target companies and performance management of portfolio companies.
Using our solution investors know a management team better than they know themselves.
Take two complimentary assessments now to see what the real results look like:
Behavioral and Communications Style
Hidden Motivators
Take two complimentary assessments now to see what the real results look like:
Behavioral and Communications Style
Hidden Motivators
Why Human Capital Acuity?
Managing Partners of equity investors consistently rank the quality and capability of the management team as the top criteria in evaluating a target company for investment. Accurate assessment of management teams is frequently sited as absolutely critical in the investment decision process.1
Nearly every mistake I have made has been in picking the wrong people, not the wrong idea.”
Arthur Rock, early investor in Intel, Apple, Teledyne
Human capital is often the most difficult factor to assess of the four main factors in a target company evaluation which are a) human capital, b) product/service, c) market and d) money capital.2
Industry research has shown that investors who utilize a multi-faceted structured management team assessment process realize IRR’s nearly three times higher than their peers. Top performing investors utilize a balanced best practices assessment model as opposed to gut feel.3
How we do it
The Human Capital Acuity model evaluates three main areas;
- Motivation - what drives management to succeed and how to leverage it (hint: it's not always money)
- Communication - how to best communicate with differing behavioral styles (this is a two-way street)
- Competencies - how management's competencies align with those required to meet investor strategic objectives
Deployment consists of three phases; Planning, Assessing and Ranking, Debrief and Development
Planning
For both target and portfolio companies we are involved in creating Human Capital requirements, Key Accountabilities tied to Strategic Objectives, Role Benchmarks and a Balanced Scorecard.
Assessment and Ranking
Conduct online multi-discipline psychometric assessments (cognitive, personality, emotional intelligence, behavioral style, values) and in-person structured behavioral interviews on a team, individual and company basis. Areas of measurement;
- Alignment with and ability to meet investor objectives
- Values, motivation and organizational culture
- Strengths and Weaknesses – Team and individual
- Strategic thinking – Founder, CEO and senior executives
- Problem solving under pressure
- Operational capability
- Decision making methodology
- Management and leadership capability
- Interpersonal behavioral style
Debrief and development
Once a baseline has been established and areas of development identified a development plan can then be created and deployed to maximize the future performance of management and the company.
Benefits
- Saves time: Psychometric assessments provide actionable data quickly.
- Improves performance: Strategic use of assessments results in higher performing companies
- Reduces risk: Spot style, motivational and other conflicts before they can cause (severe) damage
- Objectivity removes bias and prejudgment
- Crosscheck and triangulate against internal assessments
- High degree of validity and accuracy against benchmarks and industry norms
- Results quickly available for use in meetings, interviews and negotiations
- Developmental baseline for post closing portfolio optimization
Traditional assessment methods such as investor/management team interviews, references from the investor’s network and background checks are valuable and discreetly weighted components of a comprehensive qualitative and quantitative best practices assessment process.
1 Eric Langley, Sr., Strategic Concepts structured interviews with private equity firm Managing Partners for research on management team due diligence for the Association for Corporate Growth - 2011
2 Cooper, A.C. Gimeno-Gascon, F.J., & Woo, C.Y. (1994). Initial human and financial capital as predictors of new venture performance. Journal of Business Venturing, 9, 371-395.
3 Claremont Graduate University study of 48 private equity firms - 1998
