In response to requests for advice from college and graduate students, I’ve blogged in the past about skill sets worth acquiring for those interested in starting a career in impact investment and social enterprise. Today’s post tackles a different issue: what skill sets am I trying to build for myself and cultivate in others when I’m staffing and/or structuring impact investment funds and facilities.
While I was Chief Investment Officer at ACCION International, my portfolio grew from one fully-invested equity fund and a couple of languishing guarantee funds into three dynamic and groundbreaking equity funds and one revamped guarantee fund. Along the way we added 16 staff members embedded in ACCION offices on four continents and grew our outreach from 1 million people to 7 million. It goes without saying that job descriptions, professional development plans and an understanding of what skills were needed to exercise fiduciary responsibility while meeting a unique value-added challenge were high on my priority list.
Many employment candidates came to us with solid financial sector skills, although usually not in early stage equity or guarantees, while others brought social sector and development experience to the table. Our challenge came from needing both skill sets – and needing them to come together in each and every individual on the team. Given our global, multi-sector engagement with microfinance institutions and social entrepreneurs, we also knew that creating value and generating multiple bottom-line returns meant adding and growing team skills as quickly and effectively as possible.
The five skill sets outlined below correspond to strengths we looked for when hiring – and also when conducting due diligence on potential fund managers for Gateway MIV, a catalytic investor for new funds such as Lok Capital, one of the first microfinance equity funds in India and Leapfrog, a pioneering microinsurance fund. Within each of the five skill sets, my team and I defined what level of skill we expected at each stage in an investment manager’s career, from analyst upward. We also wrestled with how to manage and develop staff when high skill levels in some functions are matched with more nascent skills in others. End result was a matrix of job titles and primary, secondary and tertiary skill sets that made it easier for us to understand our existing human capital assets and hire in a way that would best leverage those assets to achieve our investment goals.
So what are these five skill sets?
1. Technical: Specialized knowledge bases, including, but not limited to social sectors (health, housing, education, etc), technology and systems, operations. The greater the breadth and depth of knowledge, the better the chances of finding & exploiting hidden synergies and opportunities.
2. Tactical: Think of tactical skills as the “how” response to a technical challenge. What financial instruments has an individual used and how creative were the structures and deals? How well do these skills translate? An equity analyst used to widely-covered and analyzed US stocks might find due diligence on early stage emerging markets social enterprises to be a completely new experience. Fundraising is another important tactical skill to keep in the mix.
3. Strategic: My definition of strategy covers values, vision and empathy. The ability to explore and assess the potential rewards or consequences of a given action or investment is a critical skill for investment managers. When problem-solving, how many alternatives does a person typically generate, or do they tend to see a single “right” answer based on precedent? Creativity, curiosity and healthy understanding of risk (in all its forms) play a role in effective strategy development. It may require time and direct interaction to understand a person’s strategic competence, and not everyone is strategically inclined. We’ve all known brilliant analysts without a strategic bone in their bodies: this is worth thinking about when you’re designing individual career development plans!
4. Communications & Management: I think of this skill set as a continuum of relationship and leadership building. As an analyst, your ability to crunch numbers, write and deliver clear arguments for or against an investment may be what matters most. By the time you’ve matured into a senior investment officer, manager or director, the ability to inspire and motivate others is likely a higher priority.
5. Geographic: Don’t let the name lull you into complacency. Geographic skills include cultural understanding, languages, field experience and even academic background. While you always have the option of deploying excellent technicians and tacticians without any of this “geographic” expertise, I guarantee that understanding local language, culture and history contribute to better performance outcomes.
One Planet, in collaboration with Dr. K.C. Soares of Smith Soares Associates will be releasing an original Research Paper on Human Capital and Organization Development Practices for Impact Investment in early 2012. Subscribe to TMITM now and make sure not to miss this!
Spread the word! #ImpInv needs to think about human capital at home, not just for social enterprises and portfolio companies. If these thoughts and skill sets make sense to you, please share this post on Twitter, LinkedIn or Facebook. You can also leave thoughts and comments here. Please do!
Lauren Burnhill, @LaurenOPV