Last updated on Mar 28, 2024

What do you do if performance evaluation affects your compensation in Private Equity?

In private equity (PE), your compensation often hinges on performance evaluations, which can be both a motivator and a source of anxiety. When your financial well-being is tied to your ability to deliver results, it's crucial to understand how these evaluations are conducted and what you can do to ensure they reflect your true contributions. Whether you're a seasoned PE professional or new to the field, navigating the complexities of performance-based pay can be challenging. Let's explore strategies to manage and potentially improve your standing in such a high-stakes environment.

1 Know the Metrics

Understanding the metrics used in your performance evaluation is paramount. In private equity, these can include deal sourcing, portfolio company performance, and exit strategies. Familiarize yourself with the specific criteria your firm uses and how they are weighted. This knowledge allows you to align your efforts with the firm's goals and focus on areas that have the most impact on your evaluation. If certain metrics are under your control, prioritize them to maximize your performance and, consequently, your compensation.

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Lateefat Omokanye B.A, PMP, ACIPM, HRPL

Dynamic HR Professional | Performance Management Expert | Recruiter | Learning & Development Specialist | Zoho Software Guru | ForbesBLK Member | Women4Tech Advocate
In my experience, understanding the metrics used in performance evaluations within private equity was pivotal for optimizing my compensation. I made a concerted effort to familiarize myself with the criteria my firm prioritized, which encompassed deal sourcing, portfolio company performance, and exit strategies. By understanding how these metrics were weighted and aligning my efforts accordingly, I was able to focus on areas where I could have the most significant impact. This strategic approach not only enhanced my performance but also positively influenced my compensation, as I directed my efforts towards areas directly tied to the firm's goals and objectives.
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2 Set Objectives

Once you grasp the metrics, set clear and achievable objectives for yourself. These should be specific, measurable, attainable, relevant, and time-bound (SMART). By setting such goals, you create a roadmap for success that is aligned with the evaluation criteria. Regularly review and adjust these objectives as needed to stay on track. This proactive approach demonstrates your commitment to delivering value to the firm and positions you favorably during evaluations.

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3 Seek Feedback

Proactive communication with your superiors about performance expectations and progress is crucial. Regularly seek feedback to understand how you are perceived and where you can improve. This dialogue can provide insights into the less quantifiable aspects of your role, such as leadership and teamwork, which are often considered in evaluations. By actively engaging in feedback sessions, you can address any concerns early and avoid surprises during formal evaluations.

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4 Document Success

Maintain a record of your achievements and contributions. This documentation should include deals closed, value added to portfolio companies, and any innovative strategies you've implemented. Having a tangible record of your success is invaluable during evaluations as it provides concrete evidence of your performance. This practice also helps you articulate your value to the firm and ensures that your accomplishments are recognized and rewarded.

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5 Professional Growth

Investing in your professional development can have a direct impact on your performance evaluations. Pursue opportunities to expand your skills and industry knowledge, such as attending conferences or obtaining certifications. This commitment to growth not only enhances your current performance but also demonstrates to your firm that you are invested in contributing to its long-term success. As a result, you become a more valuable asset, which can positively influence your compensation.

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6 Negotiate Fairly

If you feel that your performance evaluation does not accurately reflect your contributions, be prepared to negotiate. Approach these discussions with a clear understanding of your achievements and their impact on the firm's success. Be professional and use your documented successes as leverage. Negotiation is a skill in itself, and doing it effectively can lead to a compensation package that truly represents your worth to the private equity firm.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Michael Correale

Managing Partner | Bookmark Partners - Private Equity
In a Private Equity setting where performance evaluation impacts compensation, the individual focuses on delivering results aligned with the firm's objectives. They prioritize clear communication with supervisors to understand performance criteria and seek feedback for improvement. Through diligent work and value creation for investors, they aim to positively influence performance metrics and enhance compensation opportunities. Additionally, they pursue professional development to optimize their contributions and maximize compensation potential within the organization.
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What do you do if performance evaluation affects your compensation in Private Equity?

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1 Know the Metrics

2 Set Objectives

3 Seek Feedback

4 Document Success

5 Professional Growth

6 Negotiate Fairly

7 Here’s what else to consider

Private Equity

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