How To Avoid HF Hiring Mistakes

Date: Wednesday, March 12, 2008
Author: Hedge Fund Daily

There’s more to hiring a hedge fund manager than just the right experience or an impressive track record. According to consultant SpencerStuart, problems arise especially when a professional is making the move from a traditional fund to a hedge fund. So to avoid making costly and painful staff errors, SpencerStuart recommends "clearly defining the role and agreeing on a set of shared expectations." Both the potential employee and the heads of the HF should consider whether the person represents "a good culture and personality fit." To begin with, hedge funds are structured differently. "The resources available in a startup or small hedge funds are going to be less than what many successful executives are used to. A senior leader in a hedge fund won’t have a v.p., an associate and analyst working for him or her. They need to be willing to roll up their sleeves." one HF leader told SpencerStuart. Best, he adds, is to "recruit people who have proven ability to do this and who will not complain about it." There are also differences between hedge funds themselves. One firm may have an open investment committee with a lot of "honest, back and forth dialogue," reports SS, quoting a HF manager. "Some people can’t handle that." And it’s hard to tell from just a few meetings. As one hedgie put it: "When considering whether to bring on talent, we constantly balance internal talent development with the need to bring in outside perspectives." He said they have had trouble with people who "bring the big firm personality with them – they are too political, too rigid or don’t work out well with peers."