Q&A: Know Your Crew

Posted by Hogan Assessments on Wed, Nov 30, 2016

KYC.pngIn August, Know Your Crew and Hogan X formed a partnership to advance and revolutionize team building. In combining Know Your Crew’s platform that improves team dynamics with Hogan’s decades of research and team analytics, both organizations aim to maximize their strengths to improve the global workforce.

Still in the product development stage of the new partnership, we caught up with Know Your Crew co-founder and CEO Alison Bloom-Feshbach and Dave Winsborough, the head of Hogan X, for latest news on the partnership and what the future holds for team building.

Q: Since the announcement of the partnership in Summer 2016, how have things progressed from a product development standpoint?

Dave: Know Your Crew and Hogan X developed a short version of our personality tools that is being coded on the Know Your Crew platform right now. When released, it will provide individual team members with a snapshot of how they show up at work and in teams.

Alison: Integrating Hogan’s personality tools into Know Your Crew makes the product an even more powerful driver of strong team dynamics; the goal is to make personality insights easily digestible and quickly actionable. For example, we’re working on an algorithm that will pair personality data with Know Your Crew data to serve up personalized tips to help improve interactions with teammates.

Q: Because of the steady rise of remote teams in the workforce, how can Know Your Crew and Hogan X differentiate from the competition in the team building space?

Alison: Know Your Crew does more than help teams build relationships! Our analytics measure team fitness: how well teammates know each other and how easy it is for them to step into each other’s shoes. We also make it easy for managers to understand the team experience – and take action to improve it.

Dave: That’s easy – there is no one doing what Know Your Crew is! They are truly the world leaders at automated team building. Companies who want to improve team dynamics and performance at scale should use Know Your Crew.

Q: Both Know Your Crew and Hogan X bring different strengths to the table. Can you discuss the mutual benefits each company offers the other?

Alison: Know Your Crew uses gamification to increase awareness of individual and shared preferences, habits, and needs. Understanding the interaction between different personalities is critical to making sense of team relationships – and Hogan’s team personality analytics offer a uniquely rigorous framework for predicting how teams operate at their best and at their most stressed.

Dave: We built the Hogan Team Report to identify the team strengths and weakness in terms of five roles that determine effectiveness: results, relationships, processes, ideas, and pragmatics. Plus, it shows the extent to which team member values match and predicts the issues team members may face with each other. Integrated into the Know Your Crew platform, that’s a powerful tool.

Q: Many HR and talent management experts say that effective leaders are able to build and maintain a high-performing team. In your experience, how have leaders embraced that philosophy?

Alison: The best leaders are obsessed with the individuals who make up their teams. They energize and excite their people and it’s contagious! When leaders show genuine interest in connecting with and engaging their teams, teammates are compelled to do the same. Unfortunately, many young managers lack the tools and training to model this type of behavior.

Dave: It’s a fail from the X perspective. Too few leaders grasp that their role is to help the team be successful, not do the job themselves. Too frequently they are out of touch with the team’s condition, and we can absolutely help that.

Q: From a historical perspective, teams have played a huge role in shaping society. Can you elaborate as to why that’s the case?

Dave: Simple. Humans evolved as group living animals. Cooperation at the level of a family, a tribe, or a band of warriors helped that group compete against predators, the environment, or even other tribes. Working effectively together is the adaptation that catapulted humanity’s progress forward. In the modern world of sports or business, nothing has changed – we need to cooperate in teams to achieve and win.

Alison: There are numerous studies to back that up! People who have strong social connections live longer, happier lives. And of course this is true in the workplace as well. There’s a good reason why seed-stage venture capitalists say the founding team is even more important than the product!

Q: What does the future of team building look like to you?

Alison: It looks data-driven – and reaches across time zones, languages, and cultures.

Dave: A lot like Know Your Crew.

 

Topics: hogan X

Hogan case study: The case of the colorful leadership team

Posted by Hogan Assessments on Tue, Nov 29, 2016

When the GeneBank (fictional company) board of directors demanded its new CEO double the global supplier of dairy and beef genetics’ revenue to $1 billion, the first thing he did was develop a new executive team.

This was a dramatic shift, and required new skills in acquisition, global marketing, data science, and logistics. The team would also have to lead a deeply skeptical, science-based organization into a future with much higher expectations.

The new team was goal driven, competitive, and ambitious. The organization felt as if it had received a huge shot of energy. Targets were increased, standards were raised, and individuals held accountable (and non-performers exited). The team was exciting to be around and made strong efforts to connect with each other and the wider organization

At the same time, three other behaviors emerged that caused frustration and resentment. Although driven and focused, the team didn't listen well to the rest of the organization, spending its time in broadcast mode. Secondly, goals stacked on goals as they emerged from the long, tough meetings of the top team, and little attention paid to sequencing or resourcing. Finally, the team was distractible, and the strategy began to accumulate pet projects.

This case study is a perfect example of a team with strong shared derailers. Derailers, or dark-side personality characteristics, are traits that under normal circumstances could be considered strengths—being ambitious, competitive, or outgoing, for example. Under increased stress or pressure, however, those same qualities can turn into behaviors that strain relationships and cause interpersonal rifts that can hinder team performance.

If too many members of the team share the same derailers, they can become team derailers. In this case, the executive team had a distinctive, shared dark side risk of being colorful - the tendency to be dramatic, attention-seeking, and easily bored.

Understanding the team’s shared derailers will help you understand how conflict is likely to play out, and help you guard against team-killing behaviors. To learn more about managing shared derailers and how personality affects team performance, download our ebook, The Secret to Successful Teams: Conflict.

Topics: teams

The MVPI Turns One Million

Posted by Hogan Assessments on Thu, Nov 10, 2016

An individual’s values and preferences hold important implications for vocational success, satisfaction, and person-organization fit. Recognizing this fact, Hogan was the first to assess motives and interests in an organizational context, launching the Motives, Values, Preferences Inventory (MVPI) in 1996. Two years later, we were the first test publisher to develop a web-based assessment platform. After we fully integrated the system to score MVPI results for personnel selection and employee development in 2001, our online platform became the most popular way to complete the MVPI. The assessment is available in over 40 languages worldwide and recently hit a new milestone. In September 2016 we administered the one millionth MVPI assessment on our core platform. Put another way, we’ve administered the MVPI using just this one platform to more people than the entire population of Dallas, Texas.

Looking Back

As the popularity of the Internet and the success of our online business grew, so did MVPI usage. In 2001 we used our platform to administer the MVPI about 550 times. By contrast, in 2015 that number was over 127,000. It took us over 6 years to administer the MVPI to 100,000 people, but since 2013 we’ve done at least that many each year and every year without exception the numbers have grown.

MVPI.png

Looking Ahead

2016 usage to date (September 29, 2016) suggests we will continue to surpass marks set in previous years. At the current rate of growth, we should cross the 2 million mark sometime during the fall of 2020. Furthermore, with the advent of Hogan X and our ever-growing list of clients, partners, and global distributors, we plan to hit that number even sooner.

The Bottom Line

The MVPI remains a global leader in assessing core values and motives in normal working adults. Organizations recognize this fact as evidenced by continuous demand for the MVPI over the last 15 years despite national and international economic market conditions. More importantly, the demand for this assessment has only increased over that time, and existing data suggest that those trends will continue in the coming years. When global organizations want to hire people who fit with their organizational culture, develop talented employees, build great leaders, and impact the bottom line, they ask for the MVPI.

Topics: MVPI

Why do companies still struggle with self-directed work teams in 2016?

Posted by Hogan Assessments on Thu, Oct 27, 2016

For those unfamiliar with the concept of self-directed work teams, it’s a shift away from a typical top-down organizational structure, where one or a group of leaders set strategic direction and comes up with solutions to problems, then delegate tasks. In lieu of a traditional organizational structure, many companies are flattening their hierarchies and decentralizing power, making every employee a “stakeholder” with ownership in the company and the ability to work whenever and however he or she sees fit. These companies rely on small, self-managing teams tasked with solving specific problems.

Although SDWTs have been around for decades, they’ve been made famous in recent years by companies like Valve, the software and gaming company that produced the landmark “Half Life” series of first-person shooter games, and Zappos, which lost 14% of its workforce to a voluntary buyout during the final phases of its transformation to full-blown self-management last year.

And it’s not only cutting-edge companies who are ditching traditional hierarchies in favor of a team-based structure. Deloitte’s “Global Human Capital Trends Report 2016”, which reports the findings from a survey of more than 7,000 business leaders in 130 countries, showed more than 80% of respondents were either currently restructuring their organization or had recently completed the process to place more emphasis on teams. SDWTs have become so en vogue that even some of the most staunchly conservative organizations are getting in on the trend—The Cleveland Clinic recently reorganized its medical staff into teams focused on particular treatment areas, and General Stanley McChrystal described in his book Team of Teams how the army’s hierarchy hindered operations early in Iraq.

But as many organizations are finding out, the promise of SDWTs is often met with crushing disappointment and organizational turmoil as teams succumb to apathy, indecision, infighting, or any number of other dysfunctions and organizational goals go unmet.

“I have no question that when you have a team, the possibility exists that it will generate magic, producing something extraordinary, a collective creation of previously unimagined quality or beauty,” the late J. Richard Hackman said in an interview with the Harvard Business Review. “But don’t count on it. Research consistently shows that teams underperform, despite all the extra resources they have.”

Why do SDWTs so rarely live up to their promise? One of the answers is in the way teams are organized.

Functional versus psychological roles

People have two roles within a team: functional and psychological. Functional roles are determined by a person’s position, title, or hard skills. If I were assembling a team to launch a new web app, for instance, it would make sense to have members who were skilled in design, web development, and user experience, as well as a manager whose job it was to make decisions, set priorities, delegate tasks, and report progress up the chain.

Psychological roles are informal roles which people naturally gravitate to based on their personalities. When individuals are formed into a team and given a task, there are five psychological roles to which people naturally gravitate: results, relationships, process, innovation, and pragmatism.

  • Results is the natural leader of the group whose function is to communicate the team’s vision, organize work, evaluate outcomes and hold team members accountable for their contributions.
  • Relationships is more concerned with maintaining concord and cooperation within the team.
  • Innovation is critical for coming up with out-of-the-box, creative solutions to problems.
  • Pragmatism is practical and can be argumentative. He or she promotes realistic approaches to problems.
  • Process is concerned with implementation, and tends to be reliable and organized, and careful to follow rules.

A team with the right balance of people in results, relationships, innovation, process, and pragmatism roles will ensure diversity of viewpoints and work well together.

Organizations like Zappos and Valve are able to create high-performing teams because they allow employees to move fluidly between teams until they find one for which both their functional roles and psychological roles are a natural fit. The problem most traditional organizations is management organizes SDWTs based on members’ functional roles, which means the team’s psychological roles are typically out of balance.

This insight leaves large organizations wishing to implement SDWTs with two options: (1) allow employees to spend time moving from project to project until they find a team on which they naturally fit, or (2) use a tool like the Hogan Team Report to identify gaps and and balance teams’ psychological roles.

To learn more about how balancing psychological roles can help boost team performance, check out our latest ebook, The Secret to Successful Teams: Conflict.

Topics: teams, teamwork

The Dark-Side of Personality: A Cross-Cultural Perspective

Posted by Michael Sanger on Thu, Oct 20, 2016

Everyone around the world derails, or shows their dark side, at some point in a career. That is, people from all walks of life inevitably demonstrate behaviors and reactions that end up getting in the way of leadership, relationships, and/or performance at one time or another. But why do self-aware, educated professionals who know their stress-induced conduct is counterproductive act in such ways across the globe?
 
Freud summed it up with his “life sucks, deal with [your neuroses]” perspective, postulating that the conditioning for our nerve-wracked outlook starts from birth. You never see a newborn come out laughing, do you? It’s cold, it’s bright, it’s foreign; and Sigmund believed that experience sticks with you, leaving residual trauma lodged somewhere in your subconscious. And even if you don’t buy into his unproven hypotheses, think about that baby’s likely favorite word a couple of years later: “No”. Why do they say that all the time? They’re testing boundaries; they’re testing limits; they’re making sense of their world; and all the while they’re being instructed how to act. Many times, these instructions counter their natural inclinations. They adapt and experiment with ways to get their way.
 
This two-year-old eventually grows, and enters primary school. There she or he faces new authority figures (teachers), peers (classmates) and a more complex society. The child continues her or his attempts to resolve feelings of inadequacy caused by humiliation, injury, and other traumas. This continues to evolve in middle school, high school, and beyond. Every child gets injured, gets called on by the instructor when they don’t know the answer, has to face a bully in the schoolyard; not to mention the fears of rejection that crop up when one becomes a teenager.
 
All of a sudden, sometime during our early twenties—boom—one’s personality, and the associated inclinations, becomes far more concrete. All of those behaviors we’ve been experimenting with to either get our way or resolve feelings of inadequacy become unconscious go-to tools in our repertoire of reactions.
 
Executives are nothing but messed up grown ups dealing with the same psychological issues they’ve been harboring their whole lives. And just like their parents, teachers, and bullies in the schoolyards, their bosses, peers, and subordinates (as well as the stress of the job itself) can make them feel inadequate and emotionally insecure. Thus an almost uncontrollable reaction emerges. So why do they act this way? Partly habit, and partly because it’s worked for them in some way in the past...
 
There are three broad categories of responses from which individuals tend to choose during times of stress. The first two are well known: Fight (confrontation) versus flight (distancing). But what is less talked about is becoming the bully’s friend or embracing the stress (acquiescence, or false compliance). Freud considered these reactions hysteria, anxiety, and obsessive compulsion. Famed psychoanalyst Karen Horney classified them into moving against, moving away or moving toward behaviors.  
 
Research has shown that leaders’ communication style and ways of demonstrating drive are influenced by the geographical region in which they operate. In the same vein, some cultures tolerate certain derailing characteristics in their managerial ranks more than others. Depending on the context, one’s dark-side tendencies may be a taboo weakness or, in contrast, may somehow avoid violating existing collective understanding of how an acceptable leader should act.
 
For example, when organizations emphasize rank, emerging leaders tend to develop unique coping skills. It is a leader’s job to implement mandates from above with lower-level employees. If overused, this strength can lead to a kiss up/kick down leadership style, characterized by excessive deference or sudden attention to detail when reporting up, and issuing fiery directives or refusing to compromise when commanding subordinates. This behavior set is tolerated more in certain countries, such as Turkey, India, Serbia, Greece, Kenya, and Mainland China, Hong Kong, and South Korea. Leaders from organizations operating in these locations tend to be diligent and dutiful with their bosses but intense and dominating with their reports. Although this behavior set is not demonstrated to such extremes by organizational leaders from countries like the US, UK and Australia, these same tendencies are found to be the least interfering with success across jobs in these locations.
 
In other parts of the world, it is more acceptable for leaders to become cynical or even covertly resistant under stress. These reactions usually occur when the individual is forced to pursue an objective or carry out a task without being won over or in the absence of sound rationale. Leaders with this style are more widely accepted in New Zealand, Indonesia, and Malaysia, where it doesn’t seem to impede their advancement.
 
Thus, it is imperative to study what country or regionally specific dark-side tendencies are more-or-less tolerated during promotion to executive positions. These data inform us on a country’s leadership emergence factors and clue us in to what the working population admires, sees as distasteful, and/or seeks to emulate. Furthermore, understanding the cultural differences will help stakeholders ask the right questions and make the right decision. Dark-side behaviors don’t always become obvious until the person is in a new, complex and stressful situation. Assessing early can help you identify these tendencies before making a promotion decision.

Topics: cultural differences

Who Dare Speak Truth to Power?

Posted by Hogan Assessments on Tue, Oct 18, 2016

Truth_to_powerHow organizations can encourage influential partnerships by guest blogger Gillian Hyde, Chief Psychologist, Psychological Consultancy Ltd.

Leaders - from presidents and CEOs to principals and primary school head teachers - exert power over people’s lives. Significant aspects of their personality - such as self-confidence, charm, being visionary or simply a strong communicator - are often the ingredients that elevated them to their influential positions. Yet almost every forceful character in a managerial or leadership position will have downsides to their personality. A go-getting, optimistic leader is likely to be arrogant at times and may be overbearing or even too forceful. Similarly, a wildly imaginative and innovative type will probably display a sprinkling of eccentricity and possibly a hint of vagueness from time to time. 

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As leaders scale the career ladder and acquire more power and influence, the impact of these overplayed strengths becomes more far-reaching. At the same time, their behaviors are likely to gain momentum, turning more excessive and unfettered because of a lack of counterbalancing forces. Colleagues and peers have less influence, and this constrains their ability to challenge the leader through honest discussion, debate, criticism, or advice. “Nobody speaks truth to power,” says Geoff Trickey, Managing Director at Psychological Consultancy Ltd. “No one tells you you’re a fool or that’s a stupid idea. You’re beginning to feel indestructible so at that point the dark side is just lurking around the corner. It’s been creeping up on you as you’ve moved up the building.”

Stemming the tide

So how widespread is the issue? Research suggests that as much as 85% of the UK population has at least one potentially derailing personality characteristic, with over a quarter possessing four or more. These dark side qualities typically become apparent during novel or stressful periods, or when an individual feels relaxed, or invulnerable. Given the prevalence of these characteristics, the question then is what can organizations do to cur

b excessive behavior amongst their leaders and minimize the risk of them derailing?

There are numerous tools and interventions available to help leaders today, providing important insights into the impact of their behavior. Assessing extreme personality characteristics, for example, helps individuals to increase awareness of their blind-spots and potentially counterproductive behaviors. It can provide early-warning signals, flagging areas they should pay attention to and, in the process, start preparing them for feedback on these behaviors. Further feedback is also available through 360 degree surveys, which provide leaders with rich insights into colleagues’ opinions of them and highlight ways in which they could improve in their attitudes, behavior, and performance. Casting the net more widely, employee engagement surveys show how enchanted or otherwise employees are about the organization, its culture, and processes.

These tools have been demonstrated to have a significant impact. But is it possible to go a step further, creating a role for someone to provide regular feedback and ensure that information gleaned from these assessments and surveys creates a change in a leader’s everyday behavior?

Influential partnerships

One solution is to help leaders to create sustainable influential partnerships. History and literature are peppered with examples of the court jester or fool, who dared to ‘speak truth to power’. Today, a more common example of an influential partnership is likely to be a ‘trusted aide’. This person could be a spouse or partner, a work colleague, or a ‘tough-talking’ executive coach. Crucially, it needs to be someone who is not in competition or engaged in a power struggle with the leader and who can speak up without fear of recrimination.

To be successful, an influential partnership must possess certain key qualities. For example, the partner must have the complete trust of the leader and have the leader’s best interests at heart. Additionally, they mustn’t compete for power and they should try to be present as much as possible so they are well-versed in the issues and sensitivities surrounding the leader. Perhaps most importantly, though, is the need for them to be given free rein to speak the truth. Having knowledge of the leaders’ dark side tendencies, they must be able to flag up when the counterproductive behaviors are in evidence and be candid with their feedback, even if it is not what the leader wants to hear.   

Organizations require diverse personalities and leaders often need counterbalancing forces to moderate and mediate their behaviors. By raising awareness of dark side tendencies and creating influential partnerships, organizations can help leaders to curb their more extreme counterproductive behaviors and avoid the potential pitfalls to derailment. Ultimately, these relationships could benefit the leader, their employees, and the health of the organization.   

Topics: leadership, distributor

Does Seeming Trustworthy Require Trusting Others?

Posted by Hogan Assessments on Thu, Oct 13, 2016

Trust_THUMB_200_v3-1.jpgIntegrity is an essential quality for leaders. In a Hogan survey of more than 1,000 people, 81% identified trustworthiness as one of the qualities of their best boss, and research ties trust in their leaders to business outcomes like employee engagement, satisfaction, and productivity.

Although you might assume (and your assumption would join the assertions of hundreds of business writers) that in order to gain your employee’s trust, the first step would be becoming more trusting of others, a recent study showed that may not be the case.

In a large meta-analysis of personality and leader performance, Dr. Jeff Foster, Hogan vice president of science, and Dr. Blaine Gaddis, senior manager of product research, found that no significant correlation between scores on the Hogan Development Survey (HDS) scale and ratings of trustworthiness by peers and subordinates.

“In other words, whether or not you actually trust others doesn’t have a significant impact on whether or not other people trust you, at least up to a point,” Gaddis said. “Obviously if you constantly seem paranoid, your followers aren’t going to trust you as much, but the effect isn’t even close to what we see for other HDS scales like Mischievous, Bold, Colorful, or Imaginative.”

And that’s a good thing—because although it sounds horribly cynical, trust may be best in moderation.

Clearly, it’s healthy to exercise a certain amount of skepticism. Trust someone excessively and you risk being naive. On the one hand, between subordinates lying to get ahead or colleagues jockeying for the same promotion, there are plenty of people around you that may be telling you half-truths. On the other hand, if you’re completely unable or unwilling to trust others, you won’t be able to build and maintain relationships.

“This much is pretty intuitive, but it's something we often forget to keep in balance,” wrote Hogan CEO Dr. Tomas Chamorro-Premuzic. “Extreme skepticism may seem to some like an intellectual strength, but it can be as handicapping as unconditional trust. Leaders who are highly skeptical, for instance, may have trouble engaging their teams and wind up demoralizing them instead. Few things are more tiring than having to demonstrate or prove everything to someone who then still fails to believe us.”

To read more about how your personality affects how trustworthy you seem, download our complimentary ebook,4 Ways to Build Trust.

Topics: trust

Meet metaBeratung in Dusseldorf, Zurich and Munich

Posted by Hogan Assessments on Tue, Sep 27, 2016

metalogo.pngmetaBeratung, our Hogan Distributor in Germany, Switzerland and Austria is featuring three interesting client events in October/November. HR Executives from Vossloh (rail technology), Erste Bank Group (banking) and Mondi (packaging & paper) will share useful insights on how the Hogan Assessments add value to their ongoing talent selection and development programs. The first event will be held in Düsseldorf, October 4 starting at 5pm: Christina Karschti, Head of Organizational Management and Training will talk about Vossloh’s leadership team and how they went from topmanager to become a cultural change ambassador. She will share insights of a 14-day offsite teaming event.

Coming up next is Zurich, October 20 where Mag. Natalia Corrales-Diez, Alternative Investment Fund Manager, will show how Erste Bank Group, the oldest credit institution in Austria, is using Hogan Assessments in talent mapping: ‘for best students’ as well as ‘career with kids’ are two innovative investment funds the bank has set-up to financially support these target groups. How the Hogan Assessments help keeping the credit failure rate low? Come and join metaBeratung for this session at Steigenberger Bellerive au Lac, Zurich.

Last but not least, it’s Munich: November 16, Ulrike Rams, Head of Talent Management Europe & International will be showing how Hogan Assessments add value to development centers of their national high potential program. Join her and the metaBeratung team at 5pm at Louis Hotel, Munich.

If you have any further questions with regard to the events or would like to register, please contact nicole.neubauer@metaberatung.de

How Private Equity Firms Hire CEOs

Posted by Hogan Assessments on Thu, Sep 22, 2016

equity.jpgFounder and Chairman of Green Peak Partners, J.P. Flaum, recently conducted a research study with Jeffrey Cohn of DHR International to determine how successful private equity firms avoid the extremely costly mistake of a bad CEO selection.  After collecting data from the managing partners of 32 PE firms, the authors concluded that (1) experience is overrated, (2) leadership is about building high performing teams, (3) urgency is as important as empathy, (4) perseverance is a key attribute, and (5) trustworthiness is critical.
 
The following article first appeared in the June 2016 issue of Harvard Business Review.

 

Corporate boards often say that succession planning is their top priority, but at publicly traded companies, directors rarely get to turn that planning into action: The average CEO tenure at S&P 500 firms is nearly 10 years. That’s in sharp contrast to the private equity world. PE firms hold investments in dozens of companies, and after making an investment, they nearly always replace the CEO. As a result, although a typical public company director might help hire a CEO a few times in a career, veteran PE executives hire multiple CEOs each year and many dozens over the course of a career, giving them a far greater ability to observe trends and learn from successes and mistakes.

To tap this expertise, Jeffrey Cohn, of the executive search firm DHR International, and J.P Flaum, of the consulting firm Green Peak Partners, surveyed and interviewed the managing partners of 32 private equity firms (including Blackstone, Carlyle, KKR, and Silver Lake) about their CEO search process and how it has changed over time. Among the surprises: Executives said they’ve learned to pay less attention to attributes such as track record and experience, the criteria typically most prized by recruiters, and to give more weight to softer skills. “There’s a big difference in philosophy, economics, and process” between PE firms and public company boards, Cohn says. “The private equity firms have a lot more skin in the game—so they feel the burn if they make a bad selection.”

The researchers drew five conclusions:

Experience is overrated.

When filling a CEO position, there’s comfort in hiring someone with prior CEO and industry experience. But the first criterion can dramatically narrow the pool, and the second can yield candidates who are so familiar with the industry that they’re hidebound or likely just to recycle the strategic playbook from their last job. Similarly, overemphasizing quantifiable success in prior positions can be misleading, because results are often a function of “right place/right time” or organizational or team factors rather than one individual. And even within an industry, different competitive positions can demand very different skills—cost cutting versus product innovation versus business model change, for instance. The researchers write, “Past accomplishment and current challenge is rarely an apples-to-apples comparison.” Many of the interviewees said that over the years, they’ve become more open to “nontraditional” candidates who lack degrees from blue-chip schools and haven’t checked the usual boxes in a career progression. One put it this way: “You need someone who can come into a new situation and pick up the fundamentals quickly. A great athlete…is more important than someone with years of experience in an industry.”

Team-building skills are paramount.

Of the 13 attributes included in the survey, the highest ranked was a candidate’s ability to assemble a high-performing team. That makes sense, because many PE investments involve turnarounds in which the new CEO must completely rebuild the C-suite. And, because PE portfolio companies are typically smaller than publicly traded companies, CEOs spend more time in the trenches working alongside subordinates rather than providing autonomy with loose supervision. To avoid leaders who won’t excel at building teams, PE execs say, they watch out for candidates who use “I” too much when talking about accomplishments or who display so much intellectual horsepower that they come across as arrogant, which can inhibit hiring and developing A-level talent. One executive told the researchers, “We ask questions like ‘How many people followed you from your last job to the next one?’ One CEO we interviewed had pulled 31 [former colleagues] into his portfolio company, and it has been a big part of his success.” (See the Spotlight on Managing Teams, in this issue.)

Urgency outranks empathy.

PE firms operate with strict timetables for when a company should be improved and the investment recouped through sale or IPO. (The typical goal is five years.) This ticking clock means that a portfolio company CEO can expect close oversight and faces heightened expectations about the speed with which cost cuts or revenue growth will take place. The researchers write, “Many CEO wannabes will balk at a PE-driven pace, particularly those who have grown accustomed to plusher, more heavily resourced environments.” While this doesn’t mean that a CEO shouldn’t listen to customers or show concern for employees, it does require moving decisively and without regrets. One PE executive said, “I am not down on empathy, but [often] empathy needs to take a back seat to urgency. Some highly empathetic leaders are not able to make the tough personnel decisions that need to be made.”

Resilience is a must.

Parents understand that building resilience in children is important to character; PE types, too, cite it as an important leadership virtue. They’ve become skeptical about candidates who have skipped seamlessly from success to success. “PE firms want to see that a candidate has faced setbacks, made errors, and run adrift—yet lived to fight another day,” according to the researchers’ report. This attribute is especially important because in turnaround situations, leaders are likely to encounter some negative results. “Business plans never go the way you think they will,” one respondent said. “If the CEO does not adapt, you are going to be in trouble.”

Authenticity, translated as candor, is also key.

Like “resilience,” “authenticity” has become so overused that its meaning can be vague. The researchers drilled down and found that PE executives use it to mean candor and a willingness to deliver bad news quickly and honestly. In a public company, sharing negative information is a delicate process—it’s likely to move the stock price—but in a PE company, real-time sharing takes precedence. One interview subject said, “I need my CEOs to have the confidence to be transparent with their PE sponsor—about their team and anything bad that is happening in the business. I hate when they just try to ‘manage up’ or act out of fear.”

A final difference between private equity and public company CEO hiring: PE execs tend to judge very quickly—usually within nine months—whether a new hire is working out. Compared with public company directors, they are quick to engineer a failing CEO’s exit—and when they think back, they often wish they’d moved even more quickly.

 

Image by Tom Redfern

Topics: hiring, CEO

Economists Get It: Personality Predicts Performance

Posted by Hogan Assessments on Fri, Sep 16, 2016

Provided by Guest Blogger, Allison Howell

The financial costs of personnel decisions are well documented. For each poor hiring decision, companies can lose, on average, $25,000-$50,000 - even more if you take into account lost productivity, employee morale, and client relationships. Less well understood, however, is the economic impact of personality differences among good hires.

A newly published working paper by the National Bureau of Economic Research sheds some new light on the topic. This research shows significant links between the personality of CEOs and the financial outcomes of their businesses.

The study authors, from Harvard, Stanford and the University of Chicago, used linguistic analysis, a systematic mapping of words and speaking styles, to identify scores for the Big Five personality traits for over 4500 CEOs.

The Big Five is arguably the most widely accepted taxonomy of personality traits among psychologists; it categorizes personality into degrees of agreeableness, conscientiousness, extraversion, neuroticism, and openness to experience. The linguistic analysis used in this particular study has been established as a reliable method of predicting personality.

As an example, a CEO who is high on the agreeableness scale would display speech patterns that include use of adjectives such as appreciative, considerate, gentle, and trustful. The analysis also looked at the number of words spoken, the presence of qualifiers, and other parts of speech—adverbs and conjunctions.

After the language was mapped to the personality traits, the authors examined the associations between personality traits and the CEOs’ investment and financial choices, and then looked at the connection with the overall performance of the CEOs’ firms.

In terms of the investment and financial choices, this study shows that higher levels of openness are associated with higher R&D intensity, a measure of a company’s spending toward activities aimed at expanding the sector and product knowledge. Openness was also negatively correlated with net leverage, a measure of the company’s debt load. In other words, the more open the CEO, the higher the spending on R&D activities and the lower the net leverage of the company.

Higher degrees of conscientiousness, which refers to a leader’s self-discipline, willingness to follow rules, and cautiousness, were associated with lower levels of growth. In addition, companies led by more extraverted CEOs showed lower returns on assets and lower cash flow.

Although this study warrants replication, the biggest take away is that personality does indeed influence performance - in concrete and measurable ways. Moreover, at the CEO and executive level, personality can affect the overall health of a company. In other words, personality predicts performance.

Topics: personality

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