We examined the personalities of more than 900 private equity executives to see how they compare to other employees around the world. What follows is a summary of what we found.
For many of us, the world of finance is a mystery, filled with names like Warren Buffett, Michael Bloomberg, and Lloyd Blankfein, who are distinguished from the average working adult by billions of dollars.
We may find ourselves glued to our TV screens and caught up in a love-hate relationship with fictional characters in series such as Billions and Succession. We admire (and sometimes cringe at) the tenacity of the incredibly intelligent and shrewd investor, Bobby Axelrod (Billions). Or watch with a dropped jaw as Logan Roy (Succession) displays bullish and ruthless behavior, even toward the ones he loves.
The finance industry has a reputation for being competitive, focused on getting ahead and winning at all costs. Our pop culture reinforces this reputation. But what do we know about qualities finance executives truly embody—specifically those who work in private equity?
Leadership Skills in Private Equity
Private equity is more than just raising capital. The skills required for success in this industry go beyond achieving high returns. These include driving organic growth, building high-performing teams, creating organizational systems, and having a change-oriented mindset.1
We know that the success or failure of any organization largely depends on its leaders. In finance, and more specifically private equity, leaders make decisions that directly impact the financial health of the organization. These decisions are driven by personality.
To examine the personalities of leaders in private equity, we searched our archives of Hogan personality assessment data for people who work in private equity. Specifically, we looked for people with the following job titles: board member, chief executive officer, chief financial officer, chief operating officer, chief human resources officer, chief actuary officer, chief compliance officer, chief information officer, chief marketing officer, chief revenue officer, chief strategy officer, chief technology officer, partner or cofounder, president, executive vice president, senior vice president, vice president, and director or managing director.
We compiled and analyzed the personality assessment results of more than 900 private equity executives. To determine how the personalities of private equity executives differ from other members of the global working population, we compared these results with our global normative data. Our research identified differences in day-to-day behaviors, behaviors that may get in the way when under stress (aka potential derailers), and motivation.
Everyday Personality Characteristics of Private Equity Leaders
In day-to-day behaviors, which Hogan assesses using the Hogan Personality Inventory (HPI), we found several key differences. First, private equity executives are above average on the Ambition scale, which concerns the tendency to take initiative, compete with others, and drive results. Private equity executives also score above average on Learning Approach, which concerns the tendency to stay up-to-date on business matters and proactively seek out and engage with information or insight. Finally, they also score slightly above average on Interpersonal Sensitivity, which regards the tendency to be skilled at maintaining relationships, considerate toward others, and agreeable.
In practice, we may experience private equity executives as being results oriented and focused on quick yet informed decision-making—capitalizing on the opportunity before it is too late! This is balanced with the need to leverage relationships for the “social capital” they offer.
Figure 1: HPI Profile for Private Equity Executives vs. Population Norm
Potential Derailers of Private Equity Leaders
Hogan examines potential derailers, or behaviors that may inhibit success, using the Hogan Development Survey (HDS). Looking at the personality results of private equity executives, we discovered that they tend to score above average on Excitable. This concerns the tendency to be overly energetic and active but become easily disappointed and lack perseverance with projects or people. They also tend to score above average on Skeptical, which is the tendency to be socially insightful but cynical or argumentative.
Additionally, we found that private equity executives may score above average on Diligent, which is the tendency to be conscientious and hardworking, yet perfectionistic and difficult to please. They also tend to score above average on Dutiful, which is the tendency to work hard to please others.
Thus, private equity executives may be perceived by others as acting quickly, challenging the motives of others, and moving on to the next challenge when the likelihood of success decreases. Because of their high standards of performance and expectations for success, they may be difficult to please and defer to key stakeholders rather than standing up for what they believe in.
Figure 2: HDS Profile for Private Equity Executives vs. Population Norm
Values and Motivations of Private Equity Leaders
Finally, we looked at results from the Hogan Motives, Values, Preferences Inventory (MVPI) to understand the motivation of private equity executives. We found that private equity executives score above average on the Power scale, which indicates desire for challenge, competition, achievement, and success. They also score above average on Commerce, which indicates interest in financials, realizing profits, and finding business opportunities. Additionally, they tend to score below average on Hedonism (desire for no-nonsense environments), Recognition (preference for a culture where work speaks for itself), Tradition (preference for challenging the status quo), and Affiliation (desire for independence).
These results may indicate that private equity executives value success and financial data and may use metrics for keeping scores. Additionally, they appreciate the opportunity to be focused and disciplined, and they may take their work very seriously: “We are here to do a job!” They may have tolerance for ambiguity and believe that process impedes speed. Finally, they may be intentional about engaging with others, preferring to divide and conquer in service of a quick result.
Figure 3: MVPI Profile for Private Equity Executives vs. Population Norm
Overall, these results paint a portrait of the typical private equity executive as someone who is focused on results, hard to please, financially driven, informed, disciplined, fast-paced, intentional, and comfortable questioning the status quo.
What Does This All Mean?
Successful organizations must make good decisions about money and people. Though financial organizations have always recognized the importance of being smart about money, there may be an opportunity to explore the people side of the business and its impact on success.
A key insight is that private equity executives may not be proactively engaging with others (i.e., key stakeholders, peers, direct reports). They may be seen as hard to please with high expectations and a temper when those expectations are not met.
As we mentioned at the beginning, private equity is more than just raising capital. It requires the ability to build high-performing teams and create organizational systems—both of which require time, engagement, and collaboration with others. Finding that balance between getting ahead and getting along may differentiate private equity firms that are financially stable from those that are financially successful.
See how Hogan helps private equity firms manage their biggest investment: talent.
- Richman, S. (2021, May 14). 6 CEO Skills Prized by Private Equity Firms. Battery. https://www.battery.com/6-ceo-skills-prized-by-private-equity-firms/