Business literature typically characterizes the people at the top of organizations in remarkably positive terms. Senior executives are described as visionary, acute, charismatic, decisive, creative, etc.—i.e., as being substantially more talented than the average person. They are also usually described as being well motivated, as caring about their staff, their colleagues, their organizations, and their shareholders. The reality is somewhat less flattering.

With regard to the talent level of senior executives, there are no reputable data to support the claim that they are more capable than a group of younger but equally well educated managers. The data do indicate, however, that, as one ascends the corporate hierarchy, the demands of jobs change, and the data show that derailment is a function of an inability to make the needed adjustments to changing job demands. We can conclude that the senior people in most organizations differ from their younger colleagues primarily in terms of age and political experience, and little else. But what about the claim that the senior people are better motivated than the rest of us? The example of Sprint Nextel, a telecommunications company headquartered in Overland Park, Kansas is instructive.

Daniel R. Hesse, who formerly ran the wireless business at AT & T, became CEO of Sprint Nextel in December, 2007. Consider the situation he faced and with which he is valiantly trying to cope. First, the management team that he inherited had participated in the merger of Sprint with Nextel, a merger that is charitably described as “ill fated” because the two corporate cultures were so poorly aligned. Second, the same management team presided over a massive defection of customers; at 2.5 percent, Sprint’s client churn is the highest in the industry; in the first quarter of 2008, 1.1 million of Sprint Nextel’s 59.3 million customers defected to other companies. They left because they were tired of surly customer service and lackluster cell phones.

At his first meeting with his senior management team, Mr. Hesse asked the group who was responsible for customer service and no one raised a hand. At his next meeting he asked senior managers how they had arrived at their earnings projections and the response was blank stares. Mr. Hesse has moved quickly to put some accountability in place for his senior managers, but that is not the point. The situation he encountered is actually quite common, the reason the situation is common is important, and has to do with the secret life of organizations.

The fundamental dynamic in every organization is the individual search for power. It is a Darwinian process, which means some people are more successful at it than others, and they rise to the top. Perhaps the most important single challenge for top managers is to try to persuade their staff to spend less time trying to advance their careers and more time trying to enhance the performance of the organization that employs them. This is a challenge for two reasons. On the one hand, American culture, with its symbiotic ties to capitalism, is inherently individualistic and typically misreads Adam Smith’s concept of the “invisible hand”. Many people (who should actually know better) believe Adam Smith argued that if each person pursues his/her self-interest, the general welfare will take care of itself. Smith had no illusions about the rapacious tendencies of capitalism; he understood that, left to their own devices, most people will behave badly. Smith also understood how hard it is to get people to understand that their welfare is tied to the welfare of the collective.

On the other hand, managers are usually evaluated and promoted based on how much their boss likes them. They are rarely evaluated and promoted based on their contribution to the maintenance of the entire organization, or to the team for whose performance they are responsible. And this was exactly what was going on at Sprint Nextel before Daniel Hesse arrived. His challenge is to damp down the individualistic excesses of his managers and find leaders who are willing to think about and work for the good of the organization rather than trying to enhance their personal careers. His biggest asset in this process is his own stature as a role model.

We’ve enjoyed a lot of positive feedback lately regarding our Hogan Development Survey marketing campaign, which features a number of different animals that “personify” the 11 derailer scales measured by the assessment. These potentially-derailing characteristics aren’t necessarily bad (in fact, they can be very *good* depending on your line of work), so we developed a method of presenting them that makes the concept a bit more accessible, and actually injects some fun into the realm of “strategic self awareness.”

From the print ads associated with this campaign:

Every leader has personality traits that threaten his or her success. The Hogan Development Survey is the only business-related assessment that measures performance risks that impede work relationships, hinder productivity and limit overall career potential. The HDS provides valuable feedback for strategic self-awareness, which is the key to overcoming these tendencies and achieving success in the workplace.

We discuss the HDS in depth on our website, so be sure to read more about it and tell us… Which animal are you?

Why is it that bad management seems such a universal issue? It seems that anyone who’s knocked around any number of “underling” positions in any industry can relate to tales of incompetent, inefficient and often sadistic management. And if this is indeed the case, why does poor management continue to be such a pervasive problem in modern business organizations? Granted, it’s fascinating to observe high-profile cases of epic managerial failure (Ken Lay, John Z. DeLorean, “Chainsaw Al” Dunlap), but what made these guys into the forces of destruction they became? And what are the implications of flawed personality in regard to tangible factors like corporate efficiency levels and profit margins? The following piece puts some hard numbers to some difficult questions.

The vast body of leadership research that has accumulated over the past 100 years leads to two very different conclusions. On the one hand, many people believe that there is little consensus in the research literature regarding the principles of good management. For example, Hamel (2008) argues that the modern study of management is stagnant and out of date, and Khurana (2008) argues that efforts to create a science of management have failed. In an effort to provide guidance to practitioners, Kramer (2008) reviews the leadership literature and concludes that it is “…a strange mixture of alchemy, romantic idealism, and reason”, and concludes that the lack of consistent, actionable findings disposes some business people “…to wash their hands of the whole subject, talent shortage or no talent shortage.”

On the other hand, Bloom and Van Reenen (2007) studied the performance of 732 manufacturing firms in the United States, Great Britain, France, and Germany and found that their financial performance was related to the extent to which the companies followed “well-established management practices” in the areas of shop floor operations, performance management, and talent management. The more profitable companies enhanced operations through continuous improvement, set clear performance goals, monitored, reviewed, and discussed performance, and aligned incentives with performance. Bloom and Van Reenen subsequently replicated their findings using an additional 3268 firms, including a large sample from Asia. Four of their conclusions are worth noting. First, there are in fact well established principles of management. Second, companies that use these principles make more money. Third, senior leadership determines the degree to which established management practices are used. And finally, the best run companies are multi-nationals, the worst run companies are government agencies, non-profits, and companies managed by second generation family members.

The economic literature clearly shows that: (a) there are principles of good management that enhance organizational performance; and (b) some managers use these principles while others do not. However, Kramer (2008) and other critics are also right—there is little consensus in the psychological literature regarding the characteristics of good managers—cf. Hogan, 2007, pp. 106-109. In contrast, however, psychological research on managerial incompetence does converge, and psychologists have a lot to say about the characteristics of bad managers. Across studies, organizational level, and industry sector, the data show that failed managers have poor interpersonal skills, don’t learn from their mistakes, adapt poorly to change, and lack self-awareness—among other problems. This research is important for both economic and moral reasons.

When managers fail, it costs time and resources to recruit, select, and on-board new ones. There are also hidden costs associated with “golden parachutes”, missed business objectives, and destroyed employee morale. Lombardo reports that two Fortune 500 organizations approached the Center for Creative Leadership in 1985 for advice on preventing leadership failure (cited in Lombardo, Ruderman, & McCauley, 1988). These organizations estimated the cost of a failed executive was $500,000. Adjusted for inflation, that figure is almost one million dollars in 2008. Similarly, a poll of senior Human Resource executives estimated the cost of derailment to be between $750,000 and $1,500,000 per senior manager (DeVries & Kaiser, 2003). These costs will only grow as the talent pool shrinks (Frank, Finnegan, & Taylor, 2004)

Moral considerations also underscore the importance of managerial incompetence. Specifically, bad leadership causes great misery to those subject to it (Hogan & Kaiser, 2005). The National Institute for Occupational Safety and Health (NIOSH), a division of the Centers for Disease Control, itself a division of the National Institutes of Health, published a report in 1999 (NIOSH, 1999) containing some alarming data. For example, 40% of workers nationwide report that their jobs are either very or extremely stressful, and NIOSH concludes that problems at work are more strongly associated with health complaints than any other life stressor, including finances and family problems. Consider next that organizational climate surveys routinely show that about 75 percent of working adults report that the most stressful aspect of their job is their immediate boss (Hogan, 2007, p. 106). Bad managers are a major health hazard that imposes enormous medical costs on society, and the problem of bad management should be taken seriously for moral as well as financial reasons.

What is the base rate of managerial incompetence? In an informal internet survey of 245 employed adults, Curphy asked: (1) how many bosses have you worked for? And (2) how many of those bosses would you be willing to work for again? Respondents were only willing to work for 34% of their former bosses (Curphy, 2008). These results parallel those reported by Shipper and Wilson (1992) using actual organizational data. Table 1 contains ten published estimates of the base rate of managerial failure, which range from 30 to 67 percent with an average of about 50 percent. We suggest that two thirds of existing managers are insufferable and that 50% will ultimately fail.

Today’s post is excerpted from the essay “Personality Theory and Positive Psychology” by Robert Hogan and Michael J. Benson.

The term “strategic self-awareness” is a favorite of Dr. Hogan, and one that’s used frequently around our office in regard to the over-arching goal of the assessment process. It stands to reason that if your goal is to get along and get ahead, especially in the workplace, it’s critical that you have a firm grasp on your strengths and weaknesses from a personality standpoint. So how do we go about becoming strategically self-aware? The following text provides a good overview of the process. It may also be the first psychological text to use the phrase “flicking boogers.”

The mainstream (and dominant) intrapsychic tradition of personality psychology defines self-knowledge in terms of becoming aware of thoughts and emotions (and strengths) that were formerly unconscious. This is sometimes popularly expressed as getting in touch with one’s emotions, strengths (or even one’s “inner child”). This definition of self-awareness is the cornerstone of traditional psychotherapy, and it would be difficult to overstate how influential it has been. In our view, it is also incorrect, and it takes the process of guided individual development in the wrong direction.

Socrates’ maxim was “know thyself;” he also famously maintained that the unexamined life is not worth living. However, Socrates and the ancient Greeks meant something very specific by self-knowledge. They were a practical people and they defined self-knowledge in terms of understanding the limits of one’s performance capabilities—i.e., knowing one’s strengths and shortcomings vis-?-vis one’s competitors in various activities. This is a sensible way to think about self-awareness; we refer to it as strategic self-awareness because it is information that can be used to shape and direct one’s career. There are two components of strategic self awareness: (1) understanding one’s limitations and strengths; and (2) and understanding how they compare with those of others. The second part is what distinguishes self-awareness from strategic self-awareness. We would like to note three points about this model of self-awareness.

First, strategic self-awareness cannot be gained in vacuo or through introspection. Strategic self-awareness depends on performance-based feedback using some sort of systematic assessment process. If people want to improve their golf games, they will consult a golf pro who asks them to hit some balls, perhaps video-tape their performance, then offers feedback. If they want to improve their tennis game, they will do the same thing. But what should they do if they want to improve their life (or career) games? They will need feedback on their habitual ways of dealing with other people—i.e., the interpersonal moves they typically employ in their efforts to both get along and get ahead.

Second, for career success, people need feedback in the five performance areas mentioned above: their talent level in various performance domains, the degree to which they can be coached, their ability to function as part of a team, their sportsmanship, and their ability to perform under pressure. For example, well developed multi-rater tools (360-degree feedback instruments) that contain evaluations from different perspectives can provide insight regarding current performance. The information can then be used to devise a plan to expand their capabilities (add new skills), expand their capacity (improve existing skills), or find ways to compensate for shortcomings.

Third, we believe feedback should be framed in terms of three categories as follows: (a) Keep doing—continue doing whatever a person is doing correctly; (b) Stop doing—eliminate troublesome or counterproductive performance characteristics (interrupting, cheating, lying, farting, flicking boogers, etc.); (c) Start doing—acquire new behaviors that will enhance their performance.

The following Robert Hogan commentary appeared on the Hogan Assessments Website in March 2007. It’s a good summary of of why we (Hogan) do what we do, and I’d be curious to know the perception of the relationship between personality and career success from people *outside* the realm of I/O psychology. If you’re currently searching for employees (or even an employer), how much does personality matter to you?

Why does personality matter? To answer this question, we need to resolve two prior issues:

1. What is personality?
2. Who wants to know why personality matters?

The answer to the question, “What is personality?” is that there are two answers. There is what we call “personality from the inside” and there is what we call “personality from the outside”. Personality from the inside concerns your view of you, it concerns the person you think you are—it concerns your hopes, your dreams, your values, your goals, your aspirations, your fears, and the things you think you need to do to realize your goals and avoid your fears. We refer to personality from the inside as your identity.

Personality from the outside concerns our view of you, the person we think you are, and we refer to this as your reputation. It concerns the things we need to know in order to be able to deal with you effectively. So, there is the you that you know, personality from the inside, or your identity. Then there is the you that we know, personality from the outside, or your reputation. These two forms of personality are different in very important ways.

Consider the you that you know—your identity. Freud would say that it is hardly worth knowing—because you made it up. Everyone has to be someone, and you are the hero or heroine in your own life’s drama, but that doesn’t mean that your identity is necessarily closely related to reality. The way people think about and describe themselves is only modestly related to how others describe them—people don’t really know themselves all that well. Even worse, about 100 years of research on identity shows that it is very hard—almost impossible—to study in a rigorous and empirical way. As a result, we psychologists don’t know very much about identity that is interesting or useful.

Consider the you that we know—your reputation. Reputation is quite interesting for several reasons. First, the best predictor of future behavior is past behavior; your reputation reflects your past behavior, therefore your reputation is the best information we have regarding what you are likely to do in the future. Second, reputations are easy to study—we need only ask other people to describe you. And third, there is a well-defined and widely accepted taxonomy of reputations that has been used to study occupational performance, and as a result, we psychologists know a lot about the kinds of people who do well or poorly in different kinds of jobs. That is, we know a lot about the links between reputation and occupational performance.

As for the question of who wants to know why personality matters, it matters to two categories of people: (a) people who are interested in their own career development; and (b) potential employers. People who are interested in their own career development need to know about their own strengths and shortcomings relative to the demands of various occupations.

More precisely, people who want to approach the topic of career development in a strategic manner will want to know:

1) how their strengths match the demands of various careers; and

(2) how other people will perceive them during job interviews and while working.

Personality matters to potential employers in at least three ways. First, they need to know what kind of employee you will be—will you be cranky, difficult, and hard to manage or will you be a world-class organizational citizen? Second, they need to know if your personality fits the demands of the job for which you are applying—do you have the drive to succeed in sales, the social skills to succeed in customer service, the good judgment to succeed as a manager? And third, they need to know if your values (your identity) are consistent with the corporate culture—it doesn’t matter how talented you are, if your values are inconsistent with the corporate culture, you will not succeed in that organization.

The bottom line is that personality matters to individuals because self-understanding allows a person to be strategic about his/her career choices and career development. Personality matters to employers because knowledge about a job applicant’s personality allows them to be strategic about the hiring process.

Ronald Reagan was fond of saying, “He governs best who governs least.” I am a lifetime liberal but on this point, I largely agree with the former President and conservative icon. Several years ago, on a commercial flight to somewhere, I was sitting next to a talkative retired aeronautical engineer. In the course of his monologue, he noted that he had been Ronald Reagan’s boss in World War II. They ran a logistic operation for the Army in the western Pacific (Reagan had bad eyes and had received a deferment from combat assignments). I asked him about Reagan’s performance, and he said Reagan was the best natural manager he had ever seen. I then pointed out that, inside the Washington beltway, Reagan was frequently criticized for his “hands off” leadership style, and the engineer snapped, “That’s because he knows what he is doing.” He then pointed out that everyone agreed that Reagan’s transition into the White House had been the smoothest in recorded memory—more so even that of the compulsively organized Navy Nuclear Engineer Jimmy Carter—and this testified to Reagan’s skill as a manager.

I believe the fundamental dynamic in every organization is the individual search for power (those who don’t seek power don’t contribute to the dynamics). This inevitably leads to what Gordon Curphy calls “projects for promotion;” ambitious managers, eager to advance their careers, invent leadership initiatives—not to solve problems but to make a point about their leadership talent. In this way, much energy and sometimes blood and treasure are expended for the sake of someone’s legacy. I think people mostly want to be left alone to do their jobs and live their lives. Leadership is probably relevant in times of crisis and when organizations are confronted with internal or external threats.

Vast amounts of money and effort are spent each year studying, evaluating, and training leadership, which reflects the perceived importance of the topic. Nonetheless, it’s worth asking if all this effort is justified, just to keep the process honest. In extreme and statistically infrequent cases (e.g., corrupt CEOs and heads of state), bad leadership can cause terrible problems for many people. But in the typical case (e.g., a middle manager), is leadership important, and if so, how, and in what ways?

From a conceptual perspective, one can argue that the importance of leadership is overblown. Three considerations support this view. First, in hunter-gatherer societies, which are proxies for the original social organization of humans, there are no leaders. Hunter gatherer groups are utterly democratic, they use distributed decision making, and if one person tries to exert authority over the others, that person will be quickly sanctioned. If he (and it is always a he) persists in trying to rule, he will be terminated. Thus, we evolved in leaderless societies and, in ordinary circumstances, we may find leadership alienating at a deep psychological level.

Second, various researchers estimate that the base rate of incompetent management in corporate America (and no doubt around the world) is 65% to 75%. Based on these numbers, if leadership were truly important, most organizations should fail; the fact that they don’t fail suggests that factors other than leadership explain their performance. Third, anyone who has conducted job analyses in organizations, or worked in one, knows that employees expend a lot of effort trying to avoid their managers. I once interviewed the star salesman for a very large logistics firm. In dismay, he confided to me that he hated it when his sales manager came around. As he put it, “I can’t wait for him to leave so that I can get back to making money for the company and for me.”

The case for minimal leadership is even stronger from an empirical perspective. Pragmatic considerations suggest that I/O psychology should focus on business unit performance. Specifically, priority should be assigned to those factors that will have the largest impact on team effectiveness and ultimately the fabled bottom line. The research literature suggests that leadership style impacts staff morale, and that staff morale then predicts business unit performance, so the effects of leadership on organizational performance are mediated by staff morale. Leadership style reliably correlates about .30 with staff morale. However, staff members’ own scores on Big Five measures of Adjustment or Core Self Evaluations correlate above .50 with staff morale. This suggests that although leadership style affects staff morale, it is not the most important determinant of morale. The conclusion seems straightforward: the best way to enhance staff morale, and therefore business unit performance, is to hire staff with high scores for Adjustment or Core Self Evaluations. Leadership is a secondary consideration.

In Herzberg’s (1966) pioneering study of the determinants of employee motivation, he concluded that it is important to distinguish between motivator factors and hygiene factors. Motivator factors actually improve performance. Hygiene factors only serve to demotivate people. Removing hygiene factors removes sources of dissatisfaction, but removing them does not actually enhance performance. The data suggest that leadership is a hygiene factor—bad leadership alienates employees, whereas good leadership doesn’t improve performance, it just doesn’t impede it. Consequently, leadership interventions should focus on weeding out the bad ones and worry less about the characteristics of good ones.

Welcome to “The Science of Personality,” an informal repository of information and commentary related to industrial/occupational psychology.

Much of the content is the work of Dr. Robert Hogan, founder of Hogan Assessment Systems and an international authority on personality assessment, leadership, and organizational effectiveness.

As such, Dr. Hogan offers keen insight into the goings-on within the the I/O psych community, as well as a host of other related topics in his pursuit of strategic self-awareness and “educating the whole person.”

We invite you to explore a range of topics in the days to come, and to engage in ongoing dialogue related to personality and its role in the world of business and corporate society.