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In her ten years at the helm of recruiting at The Carlyle Group, Lori Sabet has filled 700 new positions and helped the company grow from a $6 billion concern to an $86 billion behemoth. Sabet sat down with FINS to discuss morale after layoffs, keeping people motivated when paychecks shrink and why Carlyle is no longer looking to Uncle Sam for qualified candidates.

Kyle Stock: Where is headcount growth at the firm now?
Lori Sabet: There's really two types of hiring that we're doing -- opportunistic, meaning the areas of the firm where we think we can enhance or develop [talent], let's say at the senior levels. And, I would say, from a strategic approach, where we're investing in an area and where we plan on seeing a return rather quickly.

KS: Any particular part of the world or type of business?
LS: From a geographic perspective, Asia. Across the board in Asia. From an investment class, probably more in our fixed-income.

KS: How many folks do you have in Asia now?
LS: Including Japan, about 200.

KS: Do you hire a lot from the bulge brackets?
LS: No. Again, it's very targeted recruiting. In the past when we were growing out or raising our funds, many of those guys came from the bulge brackets.

We may recruit from the bulge brackets now for managerial leadership type of senior-level roles, but for our deal professionals it's more from operating companies or boutiques where people are looking for a change.

There's not a lot of hiring on the deal side. We are doing more in what we call our investor services, our back-office side.

KS: You have a reputation for hiring from the government. How does that skill-set in particular make sense for you?
LS: There are very few [employees] who fit that bill. In the early days, we saw the benefits of how someone who understood how government worked could benefit the firm. But in the beginning of this century, we shifted away from people who had experience in government to people who had experience in operations, with the goal of bringing more value-add to the transactions. So, it's almost nil these days.

KS: You probably see some candidates with government backgrounds just as a function of where you are located.
LS: A lot of what I call cold-call resumes come through, but it's not an area that we focus on at all.

KS: What is the No. 1 thing a person interested in working for Carlyle could do to better their chances?
LS: It's tough. You almost have to step back to pre-MBA. If they spent a couple of years at a private-equity shop before the MBA, that seems to kind of put someone ahead of the curve, again because we're looking for that individual who's looking to source deals, lead deals and exit deals.

In our two-year associate program, we're not just recruiting for those two years, we're recruiting for individuals who will then come back to the firm. We can't obviously hire all of them back from business school, but we're hoping to make a long-term investment in them, so it's almost a grassroots effort to grow these individuals up within the firm.

It's not so much how good their modeling skills are; we're going to assume that out of 15, they all have pretty good modeling skills. But it's the interpersonal skills, the savvy, the research -- an individual who is looking at different sectors and bringing ideas forward.

KS: Can you talk about your strategies to find talent?
LS: Focusing on the buyout, our long-term investment is the two-year associate program.

At a more senior level we primarily work through search firms. We want to see the entire market. It's great when employees refer people -- we think good talent attracts good talent -- but we also want to map an entire market -- it may be from the bulge bracket; it may be from an operating side; it may be from consulting.

We want to see the entire pool that's out there.

KS: You work with a number of search firms?
LS: We work with a number. In some spaces like real estate, we may go with one of the boutiques. Buyout, we might go with one of the more global firms. Generally, we might invite a few firms in to bid for the business. Nothing is ever taken for granted by them or us.

KS: How have your strategies changed in light of the crisis?
LS: The big difference is we're not recruiting as much anymore. We were just recruiting so much over the last four or five years. The strategy now is, instead of going out and saying 'We need to start a FIG fund or an infrastructure fund,' it's more 'Where are there pockets within the firm that we need to strengthen or upgrade the talent that is there.' So it's more that strategic, opportunistic hiring. There are definitely more candidates out there, but it might even take longer to find that top talent, because there are so many candidates.

KS: What's the No. 1 thing a person at Carlyle can do to increase his or her chances of getting noticed and moving up?
LS: I think it's individuals who break out of the typical mold.

Everyone here has a very strong skill-set. They're great at modeling. They're great at analytics. But at those junior levels, researching industries, generating ideas, getting out and getting to know other people within the firm is all really important. Getting involved in things beyond your day-to-day, whether that be recruiting for two-year associates or different training programs.

The No. 1 thing is just believing and acting upon the 'One Carlyle' initiative -- helping out when someone raises their hand.

KS: Carlyle had a 10% staff cut last year. How is morale?
LS: We spend a lot of time talking about morale at all different levels. And we decided that after the [layoffs], we needed to talk to the employees more and tell them what's going on. People were scared; some were thinking there was going to be another round.

Chris Ullman* did a great job of organizing town-hall meetings where people could submit questions and started an [internal] blog where people could submit questions. We also have more partner meetings than we used to.

Our turnover is relatively quite low and I don't think it's because people settle. It's because they believe in [Carlyle] and they want to be here.

*VP of corporate communications

KS: Any change in the compensation structure in light of the crisis? Are you offering different incentives?
LS: The distribution of the incentives has changed. The carry is not paying out at the rates that it was. And, at the same time, last year the cash went down. As a result of the downsizing and taking the opportunity to streamline the firm and how we do things and in light of the performance of our funds, I'm hopeful that the numbers will look better this year than they did last year.

The carry is what it is right now; there aren't a lot of exits.

You have to believe in the private-equity model of compensation to be in private equity. Four or five years ago, the compensation on the carry side was significantly higher than what it is right now. If people don't believe in it or cannot invest for the long term, this is the time when you will see them start to leave.

KS: What advice would you have for someone looking to get into private equity?
LS: Make sure you're not getting into it because it's the flavor of the day. Make sure that you're willing to commit for the long-term. Holding a deal previously could have been two to four years; now we're looking at over five years. Also, understand that you don't find deals sitting in your office. You're going to be on the road a lot, so make sure that's the lifestyle that you want.

KS: Would you say Carlyle is more Richard Branson or Jack Welch?
LS: I would say we are a combination of the positives of both. [laughing]

KS: Blackberry or iPhone?
LS: Total Blackberry.

KS: Anything else you would like to add?
LS: It's really important right now for firms to be thinking beyond the next three to six months when it comes to their employees.

I feel very strongly that how firms are treating and taking care of their employees during this time is going to predict how those employees are going to treat their firms when this market turns. And when it turns there will be a lot of opportunity for people to go to other firms.

If there's ever a time when culture can be affected, it is now.

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