Selecting the Best Hedge Fund Managers Using CPRI

Bullseye.jpg

For over a decade, I have been recruiting senior managers for some of the world’s most successful hedge funds. Hedge funds are notoriously secretive and selective. Even at funds with a reputation for candor, requests for feedback on why they rejected a particular candidate don't always elicit a clear response.

As a trained behavioral scientist, my mandate was to develop a shared understanding of both the explicit and implicit hiring criteria.

Here is what I found:

  • The most successful hedge fund managers have an exceptional ability to manage in an environment characterized by ambiguity and complexity.

  • Dealing effectively with ambiguity and complexity requires using specific cognitive strategies (ways of thinking).

  • An example of a cognitive strategy is applying a framework to help in analyzing a situation, making sense of the information, and determining an effective course of action.

  • There are many frameworks successful managers can use. 

  • In some way, these typically address elements I call “CPRI” (Context, Process, Results, Implications).

  • To evaluate senior management candidates, ask them to talk about a decision they have made (or hypothetically, may have to make). How do they analyze the context, develop and implement their process, and evaluate the results? How well do they tease out the implications of the results, and what would they do differently based on that information?

  • The highest performing managers will describe a thoughtful, systematic, and integrated approach

The best managers can articulate how they manage in complex, ambiguous environments. Some important aspects of how they think, feel, and act are learnable. How best to foster this learning is a promising area for collaboration.

Originally posted by Paul Edelman on LinkedIn on August 18, 2018.