What’s the number one priority when working on a deal? According to our latest report on the private equity (PE) industry, it’s value creation. This is a laudable goal—but when 70% of survey respondents say they turn to cost-cutting to achieve it, it’s no wonder that pundits and politicians see value creation as code for downsizing efforts and closing plants. This is unfortunate, especially since PE is often the machine that powers innovation in the US economy.
Upskilling is one way to change the narrative and create value. It’s a new word for a combination of digital tools, automation, education and application techniques that expand employees’ knowledge and skills, making them more flexible and productive. As automation changes the nature of many jobs, many workers may not be ready for what’s next. Digital upskilling can help employees see the benefit of new techniques and put them to use. It’s a logical fit with value creation programs, as it can train the workforce to operate in a modernized production process—while also potentially driving down costs and improving operating results.
Our FS digital upskilling article offers ideas on how to start. Your top priorities should include defining clear goals and working with consistency. Think about what your future workforce needs to be, and then design a program to fit. How you do it is as important as what you do: it’s important for employees to embrace and understand the opportunity that comes with change. PE firms should be transparent, emphasize the benefits and stay the course. If you engage and enlist your employees in driving the strategy, you can create a program that’s a win for employees, for PE portfolio companies and for the economy as a whole.
PE firms are among the largest employers in the world, having many different types of companies in their portfolios. They have a singular opportunity to get economies of scale and consistency across how their workforce to develop critical skills across all their companies. While many automation and workflow tools may apply across all industries, PE firms also have the scale needed to implement sector-specific solutions to strengthen their platforms, and they can use their combined leverage to get preferred pricing and share best practices.
This is an aspirational goal, but it’s certainly achievable. The first step: get a realistic view of how digital technologies will affect today’s jobs in your portfolio companies. Through a targeted set of upskilling and adoption programs, you can create a competitive advantage for your companies and their workers. To get the best results, help your companies find the most effective upskilling opportunities for them. By helping your workforce prepare for the new economy, you can expand the top line as well as bottom line. In the process, PE can demonstrate to the world how value creation offers real sustainable benefits to the American worker and the US economy as a whole.
PwC’s private equity practice includes deals, audit, tax and advisory professionals who use a coordinated approach to help clients—managing fund operations, improving portfolio company performance and providing support throughout deal execution. Visit our main webpage for more information about digital upskilling and other private equity issues.
Deals Partner, Deals Strategy Leader, PwC US
Principal, Private Equity Value Creation Leader, PwC US