THE JOURNAL OF PEOPLE + STRATEGY
In First Person: Sandra Ozola
February 23, 2021
Resiliency Is the Key to High Performance
Sandra OzolaSandraOzola is Global Head of Human Capital at KKR & Co. L.P., a global investment firm. Ozola talked with People + Strategy Executive Editor David Reimer about the changes in work processes due to COVID-19, conversations around racial justice and how to identify high potentials.
This article was published in print in the Winter 2021 Issue of the Journal of HR People + Strategy.
P+S: 2020 was quite a year. Can you share your predictions about the long-term impact of the pandemic on the workplace?
Sandra Ozola: It’s been interesting to see how the industry and our firm are transforming. This reset has made us fundamentally question the lessons that we want to take with us in the future and the old orthodoxies that we need to leave behind.
Two areas we have spent a lot of time on include travel and some of the more formal aspects of our culture that were automatically abandoned during COVID-19. We went from everyone wearing suits to everyone seeing each other in a different light, background and wardrobe.
I’m having video calls with my peers from all the major private equity and asset management firms where we’re putting some of these ways of operating on the table and debating and sharing information.
As it relates to lessons learned during COVID-19, we put together a design team of about 15 high-potentials globally to figure out how we should think about the future of work and our offices. We picked two co-captains to lead this group. One is the former head of mergers and acquisitions and corporate development at Cisco, who joined our firm in mid-March and has not spent one day in a KKR office. The other is a managing director who works on our real estate team and is following closely the best thinking about the future of the office. She’s been at KKR for a longer period of time, so she has that cultural context about what would work and what wouldn’t work.
Culturally and contextually, we are an apprenticeship culture. Most of the investors learn from other investors. We don’t run big training programs. People learn in the field, so presence and connectivity are important. These are considerations as you look at the purpose of the office. How do you strengthen these cultural connections? How do you create that environment for learning, including observing senior investors in meetings, observing management teams in boardrooms, and learning how to develop an investment thesis from your senior colleagues?
They’re also looking at travel, and there’s a real opportunity to reevaluate where and how people are spending their time. If you look at the deal pipeline and the investments we have made in the last five or six months while working remotely, we’ve deployed a lot of capital across all of our investment strategies. Many of these deals were based on relationships that were formed over the last two or three years. We had already connected with the owners, knew management or even broken bread with them a few times, and done an on-site visit of the factory. As we think about that, we are conscious of how we need to think creatively about the risks if travel doesn’t open in a meaningful way. We want to make sure business development remains robust.
P+S: Are you seeing any silver linings of new ways that your company is operating in response to the pandemic?
Ozola: Definitely. We raised $4 billion of capital in six weeks, all done remotely, which typically would have taken a year or two and multiple flights and meetings with limited partners. Our founders and our co-presidents would say that the firm has come together in a more connected way than ever before, and it started with daily calls with all our teams around the world to share their insights on what’s happening in each country, in each industry, where are we struggling, and where the real opportunities lie.
After three months, we moved these calls to once a week, but that level of communication has been phenomenal.
P+S: We’re living in this moment of heightened awareness of systemic racism in this country. What’s been the conversation inside KKR?
Ozola: One initiative that is going well is our “KKR conversations.” These are conversations internally where we are forming groups of people to come and share their personal stories, ask questions and develop more awareness around the topic. But KKR Co-Founder, Co-Chairman and Co-CEO Henry Kravis is also bringing in highly accomplished external speakers.
We’re also looking at processes within our portfolio companies. Supply chain is a good example. As they are thinking about procurement efforts, is there an opportunity to engage with minority-backed entrepreneurs or companies? We are driving that conversation in every single company that we own. KKR recently did a public equity offering, and we invited nine minority-backed brokerage firms to be our partners in this deal. We’ve never done this before.
Even before the race-equality issue gained more attention this year, one of our targets for the Americas private equity portfolio companies is to have two diverse board members at each of our companies. We achieved this goal recently. There is still much to be done, but these are just a few examples of how the firm very quickly zoomed in on some of these opportunities.
P+S: Conversations about race can be uncomfortable. How are you starting them inside KKR?
Ozola: We are telling people to be vulnerable and to listen. I would say that listening is quickly becoming the number one critical skill for everybody. Don’t assume you know all the answers and don’t assume that your truth is the right truth. We’re trying to create that level of vulnerability and then see where the conversation takes you, and not to be overly scripted because that feels very staged. It’s not perfect, and I don’t think it can ever be perfect, but it’s been touching to hear some of the feedback from these conversations.
P+S: How is your role likely to evolve in the future, not just for you personally but for the broader function?
Ozola: In the last five years, it is becoming both a science and art, given how much innovation is coming into the human capital and talent management realm, with cognitive psychology, the neuroscience approach to leadership, innovation and assessment, and the whole science of biases and behavioral economics. Not every organization is embracing it, but I would say the ones who are not are going to be left behind.
That does require a deep level of curiosity, of constant learning, and educating ourselves. The biggest issue I have with our function is that we keep recycling the same old ways of doing things and we think it’s going to bring a differentiated result.
We also have to recognize that demographic shifts mean that you will have three or four generations working at the same firm. You have to figure out different programs that are going to work for each one of them.
P+S: What are the X factors that you’re looking for in your high potentials, and has it changed in light of 2020?
Ozola: Fundamentally it hasn’t changed from what it was before this year. We’re still looking for people who demonstrate a huge amount of drive, raw intellect, passion for investing, intellectual curiosity and high levels of collaboration. A few years ago, we deconstructed our best investors and we wanted to understand what makes them so exceptionally good. And that included KKR Co-Founders, Co-Chairmen and Co-CEOs George Roberts and Henry Kravis, and we hired a team of business psychologists who came in to help us analyze our top investors.
We looked at multiple things. We looked at their track records and conducted four-hour interviews with each one of them, including asking about their childhoods, the decisions they made in their career and how they made the decisions, and the choices they made in life. We analyzed their Hogan profiles. We analyzed their 360-feedback reports and then tried to narrow down the core characteristics, qualities and capabilities that make them exceptional.
At the base of the pyramid, IQ is important for the analytical and technical rigor to be able to drive to the right investment analysis very quickly. Then it progresses to more EQ characteristics. An interesting discovery was that 98 percent of the people had one common trait, which was resiliency and the ability to deal with adversity.
They had some or several life events that helped them develop that muscle—from a house burning down or their family going bankrupt or a parent dying. Every single one of them had a formative event in their lives, which meant that they are not running away from the metaphorical fires. Instead, they are running toward the fires and doing the right thing.
Then when you go higher in your investing career, relationships, judgment and the ability to inspire teams are important. None of these are surprising but it was good to get that data behind what matters at each level and then figuring out how to assess for it. I would say that drive, resiliency and intellectual curiosity would be the top three.
P+S: Share about your background. You have to have those qualities yourself to do the kind of job you’re doing. Where does that come from?
Ozola: I grew up in the former Soviet Union. I’m Latvian by nationality, and all of my formative and schooling years were under the Soviet regime. A lot of the resiliency comes from sports. I played handball on the Latvian national team.
P+S: How did you get into this field?
Ozola: I started my career in marketing in Latvia and doing a lot of translating because not many people could speak English at that time. We were taken over by a Scandinavian bank, and the new CEO came to me and said she wanted me to be the head of HR. I said, “You’re crazy. I have no idea what HR does.” I didn’t even know the department existed. She said, “Don’t worry about it, you’ll learn.” And she was right.