Senior Associate, HCAP Partners
HCAP Partners is a private equity firm with a double bottom line: generating above market rate returns and improving job quality. The majority of HCAP’s investments are in underserved businesses located in low-to-moderate income areas or employing a majority of staff earning low-to-moderate incomes. HCAP’s strategy is based on the premise that high-quality jobs for all employees are key to the economic wellbeing of a company. This is reflected in HCAP’s Gainful Jobs Approach™, a framework for assessing existing job quality and strengthening quality jobs within portfolio companies. Bhairvee Shavdia has been instrumental in the construction of HCAP’s Gainful Jobs Approach™ and also oversees HCAP’s impact investing initiatives more broadly.
“HCAP believes that higher job quality results in improved financial performance,” says Shavdia. “Increased employee engagement and productivity result in greater output, while a reduction in turnover results in lower recruitment and training costs.”
HCAP provides growth capital ranging from $2 to $10 million to underserved companies in the lower-middle-market segment of the economy. Recognized as an Impact Assets 50 fund for six consecutive years, HCAP has strengthened its impact investing approach to proactively work with company leaders to improve job quality in the areas of economic opportunity and health and wellness. Since 2017, HCAP has facilitated improvements in job quality standards for over 1,800 individuals employed by its portfolio companies.
HCAP’s Gainful Jobs Approach
The Gainful Jobs Approach is an impact framework HCAP uses to measure and improve job quality standards at its portfolio companies. As part of its investment process, HCAP conducts a workplace practices survey to gather data on job quality measures related to economic opportunity (e.g., pay, opportunities for advancement, wealth building programs) and health and wellness (e.g., paid sick days, wellness initiatives). Based on findings, HCAP works with senior management at each portfolio company to develop a customized plan for improving job quality during the tenure of its investment.
All businesses in HCAP’s current fund are required to participate in its Gainful Jobs Approach. From initial conversations with prospective investees, HCAP shares examples of the positive impacts of quality jobs on business outcomes. The firm includes legal language in its funding documentation about compliance with the Gainful Jobs Approach including expectations for job quality, and requires businesses to develop a roadmap for improving job quality prior to funding.
“Rather than prescribing a plan for quality job improvement, we work hand in hand with senior management and step in and provide tools and resources when needed,” says Shavdia. HCAP conducts quarterly check-ins on job quality progress with portfolio businesses and is currently expanding its network of workforce service organizations and benefits providers to assist businesses as they make job quality improvements.
As the firm looks to add 15 to 18 new portfolio companies in the next five years, it is developing a software platform to scale its Gainful Jobs Approach™. HCAP’s longer-term goal for its online platform includes building a scalable, real-time job quality dashboard that provides meaningful data to its portfolio companies. Using the dashboard, company leaders will be able to make informed decisions that improve job quality for their employees, and HCAP will be able to enhance its impact measurement and reporting processes for all stakeholders. Shavdia and her team are also exploring financial incentives, such as a reduction in interest rates, for companies that meet job quality goals.
Tweet High-quality jobs are key to a company’s success. At @hcapllc, #JobQuality Fellow Bhairvee Shavdia works to advance the firm’s double bottom line: generating above market rate returns and improving job quality.
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