EUROPE - Study reveals positive impact of private equity on employee relations

Material improvements reported post-buyout include: an increase in the real earnings of non-managerial employees in more than half of cases; a rise in availability of occupational pension schemes from 76% to 81% of firms; and an increase in spend on non-managerial employee training in 45% of cases (with a decrease reported in just 3%). Furthermore, employee best practice was seen to improve, with regular team briefings up from 71% of cases to 90% post-acquisition, while the presence of a consultive committee also rose from 50% to 63% of firms. The number of companies with a unionised workforce post-buyout remained static at 71%.

These improvements were largely attributed to the strategies employed by private equity buyers immediately following takeover, with 54% of respondents stating a focus on growth, while a further 42% reported a combined emphasis on growth and restructuring. Investors were also seen to focus their attention on financial and operating performance, while the direct management of employees remained in the hands of the investee business.

In terms of region, the most positive effects were seen in liberal free market economies such as the UK, while heavily regulated economies typically reported that the effect of private equity on employee relations was neutral.

The study is based on quantitative and qualitative interviews with 190 human resource professionals and company executives, conducted throughout the first half of 2008.

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