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If you’re in the middle market, you’re probably used to doing more with less. Less time. Less margin for error. Less room for the wrong people in key seats. That’s why talent decisions aren’t just “HR things” — they’re value levers.
Having worked with dozens of mid-sized businesses (many of them private equity-backed), I’ve seen how three seemingly simple moves on the people side can unlock serious value. These aren’t abstract theories. These are practical shifts that change the game.
We recently hosted one of our Thought Leadership Connections virtual series, where a group of operating partners and human capital leaders got together to discuss these 3 moves – and how leaders can better implement these within their portfolio companies. Collectively these moves don’t just occur in a vacuum. They come out of a broader growth mindset that recognizes human capital as one of the most vital levers that should get the same attention as key business decisions. The key is to start with the end in mind of business of the investment thesis and value creation plan, and explicitly align these strategies with how they will positively impact them.
- Choose leaders based on what the business needs next,not what it’s needed before.
We’ve seen firsthand what happens when leadership selection is based on comfort, experience, or pedigree instead of fit-for-future. A business entering its next stage of growth needs leaders who are aligned with the operating rhythm, complexity, and cultural realities of that stage — not just people who’ve “done the job” somewhere else.
What separates the good calls from the great ones? A clear understanding of what success will look like, and the tools to see how each candidate stacks up against that vision — not just in skills, but in mindset and adaptability.
How Lodestone Helps:
We help our clients align their future business requirements and investment thesis with the profile of leadership success – the specific attributes and leadership behaviors needed to deliver on the thesis. By using assessment tools that simulate and assess the specific behaviors and traits needed for a portfolio company, we’re able to predict the strengths and development needs of individual leaders and leadership teams.
Our Executive Assessments provide a multi-method approach to assessing leaders, combining interviews, personality inventories with leadership simulations that reflect the specific imperatives leaders must master. This objective, business-centered approach to human capital provides PE leaders and portfolio company executives with much clearer data to help them key decisions with greater confidence – and avoid those highly risking (and costly) decisions.
- Help your management teams to think like investors.
Plenty of smart mid-level leaders don’t realize how their decisions ripple into value creation. They focus on tasks and timelines, not margin or momentum. That gap is fixable.
We’ve seen companies transform when managers are taught to read the business, not just run their functions — to connect the dots between team dynamics, customer experience, and the levers that actually grow enterprise value. It doesn’t take an MBA. It takes exposure, coaching and development, and a few key lightbulb moments.
How Lodestone Helps:
Even with all the advances in technology, AI, and analytics, when it comes to people mid-level and even senior leaders often rely on their own judgment alone (e.g. interviews) to make vital people decisions. Considering nearly half of PE firms needed to replace their CEOs of portfolio companies (60% unplanned), the risks of doing so are huge, with the potential to significantly erode early value creation and ultimate delivery of the investment thesis.
Discerning PE leaders are increasingly turning to human capital science to treat their people investments with similar rigor as they do capital investments. First, taking a more “fit for future” approach outlined above for hiring and promotion decisions. But also investing in leadership development programs and coaching to ensure help their leaders level-up to the key behaviors most needed to drive the investment thesis. Lodestone’s executive team assessments and LEAD leadership program for high-potential leaders both provide resources that assess and develop such skills – ensuring portfolio companies have strategic clarity of their strengths, grow and development areas, and a clear plan to address them.
- Don’t wait for team dysfunction to become business dysfunction.
Some leadership teams limp along for years — just functional enough to avoid collapse, but misaligned enough to erode trust, delay progress and cross-functional collaboration needed to drive growth.
The highest-performing companies don’t wait for drama to address leadership dynamics to impact their business. They get ahead of this issue by creating intentional space for real conversations, healthy friction, and shared accountability. That doesn’t happen in quarterly ops reviews. It happens when leaders treat their relationships as strategic assets and build the skills to work through tension, not around it.
How Lodestone Can Help:
Our Team Effectiveness workshops provide portfolio companies with a process and forum to help Management Teams evaluate and optimize their performance as a high-performing team.
Our Knowing Me/Knowing You team workshop leverages personality insight inventories to help a team gain new perspectives and appreciation for their different styles, as well as their strengths and development areas in the context of their value creation strategy. The team works through a process to establish or re-establish operating norms and a charter to provide clear purpose and a standard for the team to operate against. Increasingly, clients seek to use the charter and norms to continue to benchmark and evaluate their progress via quarterly progress check-ins and refreshers.
Our Vision and Values workshop empowers Management Team members to revisit their current vision and refine it for the future, to ensure it is as clear and compelling as possible. Participants also revisit their organizational values and how the team is currently modeling them, driving new energy and focus on “living the values” to ensure the right behaviors are reinforced to support key growth strategies and the VCP.
Our comprehensive tEamBITDA solution combines the above Team Effectiveness workshops with an executive assessment for of up to 5 key executives (can be extended to the full leadership team), and personal advisory/coaching for the portfolio company CEO as the executive sponsor.
In summary – these moves don’t require a 12-month transformation plan. They just require intention, consistency, and the right nudges at the right moments. When human capital decisions are tied directly to value creation, talent stops being a wildcard — and starts being one of your most reliable drivers of growth.
