For years, private capital players focused almost entirely on their investing strategies as the way to drive portfolio success. But in recent years, talent has emerged as a game-changer for creating real value within companies. Now, Private Equity (PE) firms, Family Offices, and others in the private capital world are realizing that smart, strategic human capital management can be the difference-maker for growth in their portfolio companies. This blog dives into why talent matters more than ever, how the Chief Talent Officer role is reshaping the industry, and how leadership and culture drive growth in ways traditional strategies simply can’t.
The Rising Importance of Talent in Private Equity
If you look back just a decade, private equity was all about financial engineering—cutting costs, restructuring debt, and scaling companies as quickly as possible to hit that profitable exit. But the market has changed, timelines have stretched, and along the way, human capital has come into focus. Between 2018 and 2024, PCG saw private equity firms start to shift their attention, understanding that talented, motivated leaders can drive value that’s more enduring than financial maneuvering alone.
A big part of this shift has been the rise of the Chief Talent Officer in private equity. Back in 2018, only about 30% of the top 300 PE firms (by AUM) had a talent-focused leader on board. Today, almost 80% have appointed a Chief Talent Officer. It’s a role that’s now a staple for firms that understand how crucial it is to align the right people with the right strategy. CTOs are doing more than just filling seats; they’re creating talent strategies, building up leadership, and making sure the right people are in place to support the financial and operational goals of their portfolio companies.
“The evolution of private equity has shown that strong returns are increasingly tied to investments in human capital. The Chief Talent Officer role is proof of this change. Today’s CTO isn’t just filling talent gaps; they’re placing leadership as a core driver of portfolio performance. From my perspective, this job demands a focus on more than skills and metrics—it’s about understanding the cultural fit that leads to lasting success. In the high-stakes world of private capital, the CTO’s expertise in building top-tier, strategically-aligned teams is absolutely essential.” Said Frank Scarpelli, talent expert and Managing Partner of HireWerx & Sparc Partners.
The New Chief Talent Officer
For many PE firms, bringing in a Chief Talent Officer means they’re investing in someone with deep executive search experience to lead talent management. CTOs work closely with executive search firms, navigate leadership transitions, and establish frameworks for talent development. It’s a demanding role, but one that brings huge value by ensuring that C-suite leaders are the right fit, ready to tackle the specific challenges of a PE-backed organization.
With their networks and deep understanding of what makes effective leaders, executive search professionals are critical when firms need to fill leadership roles. They know how to spot those unique qualities in candidates that make a good leader, helping PE firms bring on leaders who won’t just execute a strategy, but will elevate it.
Talent as a Value Driver
Some of the largest private equity firms understood early on how much talent can add to a company’s bottom line. Peter Stavros at KKR, for instance, has been a vocal advocate for employee engagement and empowerment, even at the factory-floor level. It’s not just about filling executive roles—KKR and other big names like Blackstone, TPG, and Bain Capital have put people-first strategies at the heart of their approach. Even mid-market firms are catching on, realizing that smart, strategic talent planning is critical for scaling portfolio companies and hitting growth targets.
Managing Culture: The New Challenge for Operating Partners
Building a culture that resonates across diverse portfolio companies is no small feat. Operating partners, who now manage twice as many companies, need to create a cohesive culture that aligns with each company’s goals yet respects its unique identity. They know that finding the right talent is only part of the equation; the real challenge lies in weaving that talent into the fabric of each organization’s culture. When done right, cultural alignment becomes a powerful engine for growth, supporting shared values and a vision that can carry an organization through every phase of its journey.
“With private equity’s shift toward people and human capital, culture is now at the heart of every successful investment. Strong culture attracts the best talent, fosters innovation, and drives growth.” said Frank Scarpelli, “But it’s a complex challenge—especially for PE firms managing multiple companies. For PE firms, creating a culture that embraces each portfolio company’s uniqueness while aligning with overall goals can become the key to better performance. Operating partners who manage this cultural balance aren’t just securing success for each company; they’re enhancing the overall value PE firms bring to their investors.”
Guide to Finding the Best Candidates and Navigating the Talent Landscape
At the end of the day, finding and keeping the best talent is mission-critical for any portfolio company that wants to achieve fast, scalable growth. By approaching talent acquisition strategically, PE firms ensure their leaders aren’t just prepared for today’s challenges but are ready to tackle what’s next. The growth of the Chief Talent Officer role and the increasing emphasis on culture show just how transformative human capital can be in a PE firm’s quest for sustainable value.
Closing Thoughts
As private equity and private capital continue to elevate talent within their strategies, the Chief Talent Officer and a strong, adaptive culture are emerging as the keys to long-term success. With markets and competition constantly shifting, human capital remains at the center of value creation. The firms that recognize this are the ones that will stay resilient and deliver results for their investors.
