All-nighters, 90-hour weeks, cancelled weekends and no holidays form part of the fable surrounding the private equity industry – dedication and worth measured by hours spent at the office and sacrifice of personal life, skriver the Drawdown.
Unsustainable and unhealthy, the culture nevertheless persists in parts of the industry, putting professionals at risk of burnout and firms in danger of losing their main assets.
In the corporate world, the problem has become commonplace enough, causing some companies to throw vast sums of cash at it, paying for burnout prevention programmes for its senior executives. Johnson & Johnson developed a $100,000 anti-burnout package for its executives that includes consultations with physiologists, dietitians, executive coachs and a host of other special services, according to Bloomberg.
At the end of May, a group of VCs signed up to The Investor Pledge for Mental Health, promising to pay for a first therapy session with cognitive behaviour therapy startup Hellokip as a way of strengthening workplace focus on mental health and avoiding burnout for the founders in their portfolio companies.
Both The Investor Pledge for Mental Health and the J&J programme serve the same purpose: protect valuable human capital. Founders and executives are the most prized assets in driving value and growth. Losing one is a costly affair, and years of training and investing in development are lost when an executive departs.
Though private equity faces the same challenges of long hours, demanding work, regular travel, high-pressure work environments with unrelenting expectations of producing top outcomes, efforts such as J&J’s are yet to be seen in the industry.
Private equity is a very high achieving industry, and it’s the high achievers that you need to be most careful of because they are at most risk of burnout,
–Gail McManus, PER
Gail McManus, managing director of private equity executive search company PER says she does not see burnout as an industry-wide problem in PE, and does not know of any company-wide efforts across GPs and VCs – in part due to their relatively small sizes.
“Burnout and exhaustion are managed sensitively on a case-by-case basis at the firms by providing support to people, or it is hidden and the partners in the firm don’t know it’s happening,” she says. “There is a lot of pressure on people to perform and a lot of pressure on work-life balance.”
McManus says development coaches she has spoken to reveal private equity execs are increasingly scheduling rest periods in their daily calendars, as a way of breaking up the relentless pace of work they are faced with.
“Private equity is a very high achieving industry, and it’s the high achievers that you need to be most careful of because they are at most risk of burnout,” McManus adds.
Executive burnout may not yet be an apparent issue in private equity, but the promise of a better work-life balance is an attractive prospect for private equity professionals.
The Sixth Swedish National Pension Fund (AP6), which makes fund investments and direct investment, says its focus on providing a good work-life balance for its employees has been key in its ability to attract and retain high quality personnel. Due to it being a state-owned entity, it is unable to offer remuneration packages in competition with buyout firms.
“Ensuring a good work-life balance forms part of our ‘magna carta’ and has proven to be crucial in attracting competent staff, despite not being able to offer the substantial incentive programmes that private firms can,” says Ulf Lindqvist, head of communications for the fund. “We can offer a balance between work and private life.”
AP6 has been able to attract senior, experienced individuals from large PE funds, in part due to a more balanced approach to work life. Lindqvist says the pressure of working in PE is a common topic in the industry: “We hear people talk about a large burden at work, and we hear a lot about the long hours.”
The PE industry appears to have avoided large-scale issues with employee burnout so far in its history, but that could well be because burnout and mental health issues caused by the high-pressure environment is simply not discussed or publicised. Regardless of how widespread this issue is at present, the risk will only increase as firms become larger and more institutionalised. Exercising due caution in managing the firm’s work-life balance can not only help attract and retain talent, it also aides gender diversity across the organisation. With top talent increasingly difficult to come by, offering prospective employees more free time to spend their hard-earned money could be the small edge needed to secure the highest performers.