Issues relating to talent and how to recruit and retain, were presented at GAIM Ops Cayman, in the context of ethics, leadership and resources.
There is little argument that the most important factor determining an organisation’s success is its people and with the high cost of getting the right employees and training them, hedge funds need to be thinking hard about how to keep hold of their brightest stars. “With pressure on fees and the need to manage costs, hiring the best staff is expensive,” one recruiter said, adding that compensation levels must be monitored to make sure they are in step with the industry.
But compensation isn’t usually the main reason for an employee to jump ship. “Nine times out of ten, people leave because of something the manager did or didn’t do, so we are talking about micro factors,” he added. If there is an issue with compensation then that is something that can usually be addressed.
Deferred compensation packages are popular and many hedge funds have these in place. Typical terms see a third to a half of total compensation paid back over a three year period, while we are also seeing more onerous terms on non-compete agreements, generally now restricting activity over six or nine months, compared to the more normal three months.
Most people think the organization they work for is generous, with medical plans, phone calls and more vacation, but these elements are not going to keep someone at the firm and free lunches are seen as self serving because it implies the employee will have to work through their lunch.
Funds need to be more creative in building a happy and friendly team environment. This can often start with ensuring there is an open dialogue and staff are comfortably able to raise issues. You might have an open hour once a week, where issues can be brought up. Another suggestion is to implement a charity programme where staff can pick a charity to donate to and volunteer a certain number of hours each month.
“Charity initiatives and such need to start from the top,” one panelist said. “Having a gym is all very well but if senior people don’t use it then it won’t work. Just having a happy hour on a Thursday won’t work for everyone, but if you have a number of elements in place then it’s a good position to be in.”
The panel also looked at how hedge funds are going about the selection of board directors. The type of things being considered are the nature and composition of the board, as well as what the rest of the market is doing and a general preference for institutional knowledge.
Once you have the right talent you still have to monitor your employees. It’s not a case of really spying, but remaining vigilant and keeping an eye out for alliances, which should be discouraged. “When your ideal team is in place, don’t screw it up and keep them motivated,” the panel said.