By Simon Kerr, Publisher of Hedge Fund Insight
Increasingly, large hedge fund groups have to be structured in how they address staffing issues. Nearly a year ago Citi Prime Finance commissioned research for a paper titled “Exploring the Concept and Characteristics of People Alpha” – the result of having surveyed 24 large and medium-sized hedge fund management groups on staffing processes and policies. Hedge Fund Insight ran a short article on its’ release. The research identified four pillars of People Alpha: Talent Acquisition, Talent Retention (The Focus on Culture), Learning & Development, and Performance Management (Measuring a Performing Organization).
Citi’s thought leadership paper is correct in reflecting that that the way hedge funds recruit, retain and develop staff will be an increasing focus of investors in hedge funds. But more significantly it has to be a focus of the management of the medium to large hedge fund management companies. Hedge fund companies are now often expected to survive the retirement of their founders, and in order to secure appropriate exit routes (listing, sharing equity, and M&A) human resource management has to be taken very seriously.
Seeing what the leaders of the industry do is often a motivation for the senior management of other hedge fund management groups. Bridgewater Associates, the world’s largest hedge fund management group, rightly gets a lot of attention as it has been a conspicuous success for a long time. Reams have been written about the unusual culture and ways of working at Bridgewater, particularly since Ray Dalio’s Principles came into the public arena.
Bridgewater stands out for how it works on two of the four pillars of People Alpha given above – Talent Retention (The Focus on Culture), and Learning & Development. At Bridgewater Associates it would be fair to reverse the first label to Focus on Culture (Talent Retention), as the firm gives an extreme amount of attention to firm-wide culture.
An example of the commitment of Bridgewater Associates senior management to these two pillars of People Alpha was seen recently in an advertisement in “Variety”. Yes, “Variety” the entertainment industry newspaper.
The position advertised was for a Media Team Manager (the whole advert is shown below)
The team that the Manager will lead has an interesting remit in the context of Citi’s paper. The advert states (author’s emboldening) that “the team is responsible for facilitating transparency to the firm, providing outstanding audio/video media experiences to employees, and contributing to a variety of training, communications and creative projects through a set of media services and technologies.” The goal of the Media Team Manager role is to “ensure excellent support of Bridgewater’s culture and business needs” through a number of specific tasks. These are:
- Audio and Video capture and production of meetings, training sessions, promotional events, and internal video projects,
- partnering with colleagues across the firm to collaborate on different creative projects related to training or perpetuating the firm’s culture, and
- working with other departments to implement and support new technologies, such as portable devices and software, to evolve the firm’s methods of learning and transparency by empowering users with mobile media.
According to the advert it’s the job of the Core Media Department to “help develop our great people by establishing a truly free and rich flow of information and knowledge.”This is to be achieved “by capturing, packaging and assisting in the distribution of information to create highly leverageable training, to continue to evolve the Bridgewater sense of community and belonging, and to fulfil the firm-wide goal of radical transparency.”
There is no doubting Bridgewater Associates’ commitment to developing and growing an effective business culture. Bridgewater manages around $76bn of capital so has a considerable fee income from which to pay for the infrastructure, both technological and human, that CEO Greg Jansen sees as necessary to support the business. In order to facilitate the sustenance and spread of the firm’s unusual culture of radical transparency across 1,400 staff members, the use of a well resourced Media Team is an industry leading initiative that exemplifies the commitment to developing the human resource of the firm. Bridgewater explicitly claims that its results are a product of its unique culture. Many competitors would like Bridgewater’s returns, but how many are prepared to be as radical in their culture and as committed to human resource development as the industry’s biggest firm?
related articles: Graphic of the Day on People Management in Hedge Funds from Citi (October 2013)