I spent two years as a probation officer in Southern California. Fascinated with the psychology of criminal behavior, I became a psychologist to learn more about it. I studied delinquency for 15 years before turning to leadership—and the two topics have a lot in common. Consensus exists among researchers regarding the psychology of prison inmates, but little is known about successful criminals. People such as Pablo Escobar and Joaquín Guzmán have little in common with burglars and car thieves. In the movie The Godfather: Part II, when Michael Corleone, the head of a New York crime family, negotiates with Pat Geary, the US senator from Nevada, they appear to have a lot in common. The movie reflects our conventional wisdom, but some real data would be instructive. Recent Aarhus University research on personality in organized crime may provide some answers.

The Research: Personality in Organized Crime

To examine the role of personality in organized crime, Danish researchers Oluf Gøtzsche-Astrup, Bjarke Overgaard, and Lasse Lindekilde tested a sample of 57 verified members of organized criminal groups (e.g., the Hell’s Angels) in Denmark, none of whom were incarcerated, using a comprehensive assessment battery: the Hogan Personality Inventory (HPI), the Hogan Development Survey (HDS), and the Motives, Values, Preferences Inventory (MVPI).¹

These well-validated inventories have been used to assess more than one million managers and executives in some of the best-known corporations in the world. The HPI concerns personality characteristics that are associated with career success, the HDS concerns personality characteristics that tend to damage careers when overused, and the MVPI concerns values and career aspirations.

Research shows that organized criminal groups, like other human collectives, provide a sense of shared social identity and belonging to people who are unable or unwilling to join more mainstream groups. Furthermore, qualitative research on criminal careers points to the role of status attainment in drawing young men into criminal groups. Such groups seem to serve the same psychological functions as other politically extreme organizations and may attract similar individuals. Belonging to extreme groups provides members with a sense of meaning and identity and opportunities for status attainment that might not be available in mainstream society. This is the context in terms of which the assessment data should be interpreted.

The Personality Data: Who Are Gang Members?

The MVPI evaluates values and interests associated with career aspirations. The sample of members of organized Danish criminal groups received high scores for the Security, Hedonism, Commerce, and Power scales, indicating that, as a group, they value money, status, and fun delivered on a predictable basis. In terms of core values, they resemble any group of middle managers or venture capitalists in their desire for “the good life.”

The scales of the HDS concern behavioral tendencies that promote career success at moderate levels but can be dysfunctional when overused. The sample of Danish gang members have high scores for all the HDS scales. I would interpret their overall profile as highly adaptive in the context of their career choice: they are wary and alert for threats and signs of betrayal (cynical and not naïve), and they are willing to act if such threats materialize. In addition, they have good social skills and a colorful interpersonal style. Perhaps the most interesting aspect of their HDS profile are their high scores for Diligent (attention to detail and high standards of performance) and Dutiful (respect for authority). In terms of their action orientation and respect for hierarchy, the sample resembles special forces military or mercenary soldiers. In terms of their interpersonal style, they resemble politicians or venture capitalists.

The MVPI and HDS scores for this sample suggest the group has a lot of career potential that is not being realized in conventional terms. Their scores on the HPI suggest an explanation. The overall HPI profile is low, with the average score at the 28th percentile. By themselves, these low HPI scores would indicate social incompetence, but the HDS shows that the sample has substantial social skill. I interpret the low HPI profile as indicating that the members of the group feel alienated and estranged from the normal roles and rules of mainstream society. They want the same career outcomes—money, status, and fun—but they reject the socially accepted means for attaining those outcomes. Among the socially accepted means they reject is education; they have no interest in education and may lack the talent to pursue it. Finally, the members of this group have adopted a self-presentation style intended to signal their chosen lifestyle, and their rejection of normative social roles and behavior, which are in fact arbitrary.

The Connection to Leadership

People evolved as group-living animals. The three big goals in life concern finding social support, acquiring status, and developing a sense of meaning and purpose. People satisfy these needs through their membership in groups: families, communities, churches, political parties, etc. For many poor working-class boys, membership in an organized crime group is a rational choice. But successful performance in those groups requires many of the same characteristics as successful performance at organizations like Apple or Amazon.

This blog post was authored by Hogan’s founder and president, Robert Hogan, PhD.

Reference

1. Gøtzsche-Astrupa, O., Overgaard, B., & Lindekilde, L. (2022). Vulnerable and dominant: Bright and dark side personality traits and values of individuals in organized crime in Denmark.

C. Northcote Parkinson (1909—1993) was a British naval historian, lecturer, and novelist; he formulated his famous law in an essay in The Economist in 1955. Parkinson’s law was intended to describe the behavior of managers in the British Navy and British government, but it is also a pretty good description of work in most organizations. The July 11^th, 2020 issue of The Economist provides an update of Parkinson’s astute generalization about organizational behavior.

The law itself states: “Work expands so as to fill the time available for its completion.” I think there are three psychological explanations for Parkinson’s law. The first is the human tendency to procrastinate, to put off doing things until the last minute. Procrastination itself has several causes including fear of failure, laziness, and, of course, passive aggression (“Don’t rush me!”). But the point is that procrastination is one way to explain Parkinson’s law. A second explanation for Parkinson’s law is the fact that if people complete a task promptly, they risk being assigned a second, and even more tedious, task. The reverse of this situation is, of course, “If you want to get something done, find a busy person.” A third explanation for Parkinson’s law is “impression management”; most people understand the importance of being seen to be working while at work. In this context, it makes sense to extend the duration of each task. Parkinson pointedly noted that managers help other managers look busy by shuffling papers back and forth for review, commentary, and alignment.

However, when people are working at home, there is a clear temptation for some to figure out the minimum level of effort they can get away with and still get by. There is no need to drag out each task; people can just do their work, spend the rest of the day doing as they please, and then turn in their work just before the deadline. For these people, The Economist suggests rewriting the law as follows: “For the unconcerned, when unobserved, work shrinks to fill the time required.”

For hard-charging people, working at home leads to a different outcome. Wracked by guilt and anxiety, they work even harder than before. For these people, the law reads: “For anxious home workers, work expands to fill all their waking hours.”

But Parkinson was talking about more than procrastination, he was talking about the fact that managers, in order to advance, argue that the size of their workload requires that they hire more people. They evaluate themselves, and they are evaluated, based on the number of their direct reports. But hiring more people doesn’t lead to greater productivity, just a larger payroll. In addition, like everyone else, managers need to appear busy. How does that work out during lockdown? The answer is to organize Zoom meetings. And this leads to a final revision of Parkinson’s law: “In lockdown, Zoom expands to fill all of the manager’s available time.”

The slackers will avoid the Zoom meetings and the hard charging people will attend all of them. Moreover, in order to be noticed at a Zoom meeting, people must be seen and heard, which makes Zoom meetings even longer than normal meetings. And ping-ponging between Zoom meetings is the digital version of the paper shuffling mangers engaged in during Parkinson’s day.

I close with two final points. First, the degree to which people work hard and are productive is a function of their personality not their work location. And second, smart businesspeople are already expressing doubts about the wisdom of working from home.

The quality of people’s lives depends on their careers. The quality of people’s careers depends on the organizations in which their careers are embedded. The success of these organizations depends on their leadership. The effectiveness of the leadership depends on the characteristics of the people in leadership roles. Ultimately then, personality drives leadership, leadership drives organizational performance, and who is in charge matters greatly for the fate of organizations and the people in them.

These statements are true, and we can use this line of reasoning to improve the functioning of any organizational unit, from a football team to a sales team to a military team to a city council. As obvious as this line of reasoning may seem, it is radical news to most business school professors for three reasons. First, until the mid-1990s, academics denied that personality exists, or that it affects occupational performance in any significant ways. However, a series of research studies in the early 1990s showed, for those who believe in data, that people differ in meaningful ways (personality), that these differences can be assessed (personality measurement), and that these differences predict occupational performance. Second, until the early 2000s, academics denied that leadership matters. However, a series of research studies in the early 2000s showed that personality predicts leadership performance, and leadership performance predicts team or organizational performance. The personality of the CEO is the most important determinant of firm financial performance other than the industry sector in which the firm operates. And third, as of today, academics ignore the topic of organizational effectiveness—the term “organizational effectiveness” doesn’t appear in the index of any major research compendium. But clearly Singapore has a better economy than Somalia, and South Korea has a better economy than North Korea; moreover, the differences in their economic performance have a huge impact on the well-being of the residents in those countries.

This argument is so important that it deserves repeating. It goes as follows:

1. Personality is real: people are different, but their differences are consistent across situations, and this allows us to predict their typical behavior.
2. Personality matters: well-validated measures of personality predict every consequential life outcome (i.e., health, marital satisfaction, occupational performance) better than any alternative indicator.
3. Personality predicts leadership performance better than any other alternative indicator, including IQ. But personality doesn’t discriminate: women get the same scores as men; ethnic minorities get the same scores as ethnic majorities. This means good leadership can come from anywhere.
4. Leadership predicts firm performance; good leaders guide profitable enterprises and bad leaders ruin organizations. This is the lesson of James Collins’ book Good to Great.

The next question concerns the personality characteristics of successful leaders. The data suggest that good leaders have most or all of the following seven characteristics.

The first and in many ways the most important characteristic is integrity. People need to know that they can trust their leaders not to betray, deceive, or exploit them. This is so powerful that a team’s ratings for the degree that they trust their leader is a proxy for team or business unit performance. People will not work for leaders they mistrust. Leaders need to take great care to gain and maintain the trust of their subordinates.

The second characteristic is competence—leaders need to know what they are talking about, they need to be well-grounded in the business at hand. Competence inspires trust, but more practically, staff need to be able to ask their managers for advice in solving the problems that come up constantly. In athletics, the team captain is often the best player on the team, and the best athletic managers know more about their sports than their rival managers.

The third characteristic is good judgment—subordinates need to know that their leaders will take them in the right direction. In the Vietnam War, a surprising number of newly minted US officers were killed by their own troops precisely because the troops thought their officers would get them killed.

The fourth characteristic is vision—leaders need to be able to explain to their staff why they are doing what they are doing and why it matters. A recent DDI survey of several thousand HR managers reported that 70% of the HR managers thought the leadership of their organization lacked any vision.

The fifth essential characteristic is ambition—wanting to be in charge and to outperform rival organizations.  Ambition concerns enjoying competition, wanting to win, being persistent and resilient in the face of defeat, and never being satisfied with or complacent about current levels of performance. Leaders without ambition are empty suits.

The sixth characteristic concerns “the dark side” of personality. Dark-side characteristics are strengths that, when overused, turn into problems. Passion and intensity can turn into bullying and tantrums, a keen work ethic can turn into micro-management, self-confidence can turn into arrogance and the inability to learn from experience. These tendencies are almost impossible to detect during interviews. Left unchecked they will cause leaders to fail—because they destroy trust.

The final characteristic is “global mindedness.” This characteristic is important if an organization is operating on the world stage. It is a personality syndrome that includes: being curious about other cultures and life styles; being tolerant of those other ways of living; and being able to adapt to strange circumstances while remaining focused on one’s competitive goals.

These are the essential ingredients of leadership. Needless to say, no one person has all these characteristics, every potential and existing leader has challenges as defined by these seven characteristics. But this profile provides a template against which people can compare their performance and determine how to improve it—providing they have the requisite ambition. People can only improve their performance if they understand their performance limitations.

Leadership is one of the most important topics in human affairs. When good leaders are in place, institutions and their incumbents thrive; when bad leaders are in place, institutions fail and the incumbents suffer accordingly. The core task of leadership is to build high performing teams; leader behaviors that disrupt this process inevitably lead to failed enterprises. The data show that four leader behaviors are key to building a team or successful collective effort:

– Integrity: Leaders must be trustworthy. Subordinates need to know that leaders keep their word, don’t exploit resources, don’t play favorites, and treat their staff with respect. The dark-side tendencies that lead to managerial derailment mostly concern leader unpredictability, which erodes trust.

– Competence: Leaders need to understand the business at the level of the shop floor. This is easy when leaders come up through the ranks (e.g., in the military). But beginning sometime in the 1970s, the idea took hold that there are formal principles of business (which can be learned in MBA programs) that apply universally, and that if one understands these principles, then one doesn’t need to master the details of the business at a more granular level. I believe this view is dangerously wrong, and it almost guarantees managerial failure.

– Judgment: Judgment has to do with the quality of a leader’s decision making, and that, in turn concerns being able to recognize when they have made bad decisions and then changing them. Bad leaders, when confronted with evidence that their decisions were wrong, tend to double down—e.g., send more troops to Iraq.

-Vision: Making a case for the importance of what the group is doing. As Peter Drucker noted, if the only reason you are in business is to make money, then you should quit. Greed is not an appealing vision for many people.

With these precepts in mind, let us consider the case of Edward S. Lampert, the brilliant hedge fund manager who recently drove Sears, the iconic American retailer, into bankruptcy. Lampert is unusually bright and ambitious. He graduated from Yale in 1984, summa cum laude and Phi Beta Kappa, with a degree in Economics. He then joined Goldman Sachs and worked directly with Robert Rubin as an arbitrage trader. Encouraged by his success at Goldman Sachs, he left in 1988 to launch his own hedge fund, ESL Investments. He was again very successful; he started his hedge fund with $29 million and quickly made hundreds of millions of dollars for himself and his backers. He made big bets in Honeywell, IBM, AutoZone, and AutoNation. Before and after making his investments, Mr. Lampert and his team would visit stores, talk to managers, check back rooms for inventory levels—they were known for outworking their competitors. With mountains of cash on hand, Mr. Lampert took control of K-Mart, accumulated a controlling share of Sears, and in 2005, he merged the two, installed himself as chairman, and took an active role in management. I listened to this story on National Public Radio in 2005—while driving by my local K-Mart store—and the experts were pessimistic, saying that Lampert was a financial wizard who knew nothing about running a retail empire. At ESL Lampert had 35 employees, at Sears he had 300,000 employees.

Sears was the Amazon of its day; it transformed shopping in America by shipping its goods to every part of the country. Under Lampert, it crashed fast: In 2007, Sears’ stock market value was $30 billion; on October 17, 2018, its value was $.069 billion. In 2007, revenues were $50.7 billion; in 2017 revenues were $16.7 billion. In 2007, Sears operated 3,418 stores; in August of 2018, Sears operated 866 stores. The reasons for this rapid decline seem pretty clear, and there are four of them. The first problem concerns the way Lampert treated his employees. He, for example, institutionalized absentee leadership. He only occasionally visited Sears headquarters; he preferred to meet with his top management team via conference calls from ESL’s headquarters in Florida. Although most retail executives visit their stores weekly, Lampert asked his executives to meet with their store managers via Skype—because it was more efficient. In addition, Lampert was widely criticized for “shredding” employees during management meetings, and he burned through 3 CEOs in eight years before installing himself as CEO. He split the business into a large number of competing divisions, believing that competition between them would increase profits. The result was massive internal rivalry and falling sales. Lampert’s management style was deeply problematic because it created internal divisions, rivalries, and mistrust.

The second problem concerns the fact that Lampert knew very little about Sears’s core business. As Whitney Tilson, a prominent investor and hedge fund operator said in the Wall Street Journal: “What on earth does he know about running a retailer? It’s exhibit A of hedge fund hubris. This is a case study I will teach in my seminars for years.” Lampert cut back on TV and newspaper advertising and started email marketing, which was cheaper—but Sears’s customers were much less likely to read the email marketing and business declined accordingly. Lampert then cut back on purchasing goods for his stores in order to avoid marking down items at season’s end; as a result, many departments had empty shelves causing customers to conclude that Sears was going out of business. He refused to invest in the maintenance of his stores, allowing them to become dingy and shoddy. Rather than offering discounts, he raised prices. In addition, Lampert didn’t understand Sears’s customer base. At one management meeting, Lampert suggested that Sears should model its customer service after Hermes, the French luxury goods provider; he said his suggestion was intended to provide a “…deeper notion of what it is to serve people.”

The third problem concerns Lampert’s judgment. He was correct in his view that the Amazon model was the future of retailing. But a vision is nothing without implementation and the way to transform a huge bargain-priced retail operation into a just-in-time logistics company is not obvious. Lampert maintains his vision even today, insisting that with his vision, Sears will become leaner and more profitable: The Wall Street Journal article on the fall of Sears is titled: “Fund star stands by Sears Bet.” Good judgment doesn’t involve making the right bet, it involves changing the bet when the data indicate that the bet was wrong. Lampert appears to be quite stubborn and incapable of admitting he has made a mistake.

Finally, there is the nature of Lampert’s vision for Sears. For Lampert, Sears was a pure financial play, an investment designed to make him even wealthier. The result: working for Lampert would be like working for Louis XIV—the only reward would be the fact that one has a job, and having a job is better than not having a job. This of course creates an alienated work force accompanied by high absenteeism, high turnover, low productivity, and poor customer service ratings. Lampert wanted to compete with Amazon; Amazon’s vision is one of providing superior customer service, something at which they clearly excel.

Lampert was right that the long-term prospects for the big U.S. retailers (JC. Penny, Target, Walmart, Sears) are uncertain because they are caught between trying to compete with Amazon on price, convenience, and customer service and compete with high-end retailers who have better stores and products. And the data indicate that Amazon’s business model is steadily gaining popularity across the board. In addition, Sears had been declining for years: its stores were poorly maintained, it lost its focus and moved into insurance, property, and auto repair, and it closed its mail order business, which was its original competitive advantage. Sears has remained in a slow death spiral, and unless its leadership changes, the company could collapse entirely.

The existing paradigm in the business world holds that successful CEOs are ambitious, result-oriented, individualistic, and, above all, charismatic. The rise of agency theory, or the notion that incentivizing managers should improve shareholder returns, put greater emphasis on the need to hire leaders that appear leader-like. Unfortunately, conventional wisdom of what a leader looks like is, quite simply, incorrect.

Charisma is a very attractive characteristic in a leader. Yet, when promoted, these individuals create chaos and ruin for their organizations. Humility, rather, is a much better indicator of leadership success. Jim Collins, renowned author of Good to Great, conducted extensive research on organizational success. His work clearly demonstrated that companies led by modest managers consistently outperformed their competitors, and tended to be the dominant players in their sectors. Moreover, humble leaders tend to stay at their organizations longer than their arrogant counterparts, and their companies continue to perform well even after they leave because humble leaders often ensure a succession plan before they depart.

The Problem with Charisma

Organizations tend to be good at identifying people who “look” like leaders. Individuals who seem confident, bright, charismatic, interesting, and politically savvy tend to get earmarked for promotion. Personality assessments show that charismatic leaders rank highly on measurements of self-confidence (Bold), dramatic flair (Colorful), readiness to test the limits (Mischievous), and expansive visionary thinking (Imaginative). These leaders know what it takes to get ahead and get noticed, and they strategically cater to individuals and audiences who can offer them power, influence, status, or access to resources. While these individuals are highly interpersonally savvy and excellent self-promoters, they lack basic leadership and management skills.

Although some charisma can be beneficial, it often leads to lower levels of leadership effectiveness. One possible explanation is that highly charismatic leaders may be more strategically ambitious but less effective at the day-to-day operations. Emergent (read: charismatic) leaders, or individuals who stand out from the crowd, get promoted because they spend their time politicking and networking – trying to please their bosses by managing up rather than being concerned with those working under them.

Emergent leaders also create a culture of competition, ambition, and narcissism. Leaders like people like themselves, so senior leaders are more likely to choose successors who best reflect the status quo. Of course, competition and ambition can be positive qualities in the business world, but not if it comes at the expense of actual hard work.

Humility Breeds Effectiveness

Whereas charismatic leaders tend to focus on personal advancement, humble leaders tend to focus on team performance and guiding their employees. Effective leaders are more modest; they are willing to admit mistakes, share credit, and learn from others. Higher levels of humility also lead to higher rates of employee engagement, more job satisfaction, and lower rates of turnover. To be clear, humility does not imply the absence of ego or ambition. Rather, humble leaders are better able to channel their ambition back into the organization, rather than use it for personal gain.

Humility is broadly defined as 1) self-awareness, 2) appreciating others’ strengths and contribution, and 3) openness to new ideas and feedback regarding one’s performance. Leaders who are humble have a better grasp on organizational needs and make better informed decisions about task performance. They are also better able to ask for help than their charismatic counterparts. What’s more is that humble leaders help to foster a culture of development with their employees by legitimizing learning and personal development. Humility also encourages cultures of openness, trust, and recognition, which are important precursors to success.

Dig Deeper to Identify Humble Leaders

The challenge in hiring and developing strong leaders is in their identification. Charismatic, or highly emergent, leaders easily stand out from the crowd and their likability masks more important characteristics of performance. Humble, and typically more effective, leaders may fly under the radar and be passed over for hiring or promoting. Building selection and development programs that overcome personal biases and focus on objective indicators of success can help identify these low flyers. Organizations can benefit from the use of psychometric testing and 360 evaluation to counteract political factors by developing a data-driven approach that ensures organizations recognize and promote those who will be effective and humble leaders.

This article was originally published in Talent Economy.

I find it annoying that Economics is regarded as a more advanced discipline than Psychology. For example, there is a Nobel Prize in Economics but not in Psychology; this is odd because the field of “behavioral economics” is nothing more than applied cognitive psychology. Several years ago, I started reading The Economist magazine in order to understand what the economists have to say about how to organize human affairs. The big question in economics concerns identifying the policies that are best suited to develop national economies. Therefore, if Economics is a useful discipline, then economists should have something to say about how to grow an economy. If they do, then we can take their (very important) message to sub-Saharan Africa, Cuba, or Venezuela.

The April 14^th, 2018 issue of The Economist contains a startling admission: professional economists have no clue about how to promote economic development; specifically, economists have no idea why rich countries became rich in the first place. The problem is, economists study “structural factors” (e.g., tax policy, access to capital, property rights legislation)—objective features of government that can be quantified—and this is the wrong place to look for answers.Consequently, economists have no serious advice for poor countries—or anyone else.

The Economist magazine goes on to note that the most promising approach to understanding economic development is to study “…the ways in which culture and politics constrain economics…” This is because economic development depends on “…decisions about economic governance taken by…leaders, which will in turn be influenced by social and geo-political forces that economists scarcely understand and generally ignore.”

Three observations come immediately to mind. First, it seems to me that the challenge of developing a successful business is much the same as developing a successful economy although on a much smaller scale. Second, there is some consensus among psychologists about how to develop a successful business, and organizational psychology is all about how leaders make decisions regarding the economic governance of their businesses in response to the social and geo-political forces that economists generally ignore. And third, there are important differences in leadership effectiveness, which translate into important differences in organizational effectiveness. Specifically, leadership drives organizations, some leaders are better than others, and some organizations outperform others. Crucially, we can also evaluate leadership potential with our well-validated assessments—something economists cannot do.

It seems obvious that economic development depends on effective leadership. Effective leaders create cultures and build teams to implement plans and strategies that allow their organizations to outperform their competition. Some leaders do this better than others—and some cultures and visions produce better results than others. I know very little about leadership in post-WWII South Korea, Taiwan, or Hong Kong—all of which have developed successful economies—but Deng Xiaoping (1904-1997) in China and Lee Kuan Yew (1923-2015) in Singapore were largely responsible for the economic development of their countries through the plans, practices, and procedures they were able to implement.

As for the industrial revolution that made Western Europe and the northeastern United States rich, Hopper and Hopper (The Puritan Gift, 2009) suggest that a relatively coherent set of values (a particular culture) was the key to their rapid economic development. That is, the ruling elites in Western Europe and the New England colonies shared a set of values that, in conjunction with the development of new technology, were the key to their economic development. I would add that the potential leaders of the industrial revolution inherited productive cultures rather than (as is the case today) having to create them. The values that defined these cultures included being committed to a higher purpose, seeing financial success as a sign of progress toward realizing that purpose, and practicing a leadership style that minimized hierarchy, encouraged individual initiative, and persuaded people to work together.

But my point is, psychologists understand leadership and how effective leadership creates organizations that can outperform their competition. People innately respond to effective leadership because, as group living animals, they unconsciously understand that what is good for their group is good for them. That is to say, I believe psychologists know more about economic development than the economists. The problem concerns translating this knowledge into action—i.e., finding effective leaders who are dedicated to the common good rather than to self-enrichment.

Culture can best be defined in terms of the values that guide the behavior and decision making of a social unit—a team, a family, a business, etc. Culture is not vague and touchy-feely; cultures can be easily and reliably assessed using any number of commercially available survey instruments. Cultures have real, concrete behavioral consequences, and they directly influence the performance of business organizations. As Peter Drucker, the founder of modern management practices, observed: “Culture eats strategy for breakfast.” That is, no matter what strategy a company might adopt, the culture will enable or prevent that strategy from being implemented.

A concrete example might help. Several years ago, we were contacted by a newly opened, high end hotel in London because it was struggling financially. We assessed the top management team using our measure of values and found the following. On the one hand, the top management team had very high scores on the Customer Service, Aesthetics, and Hedonism scales, which meant that they cared deeply about quality, style, and providing a superb and enjoyable customer experience; these values are perfect for hospitality. On the other hand, the top management team scored low on the Power and Commerce scales—which meant that no one cared about making money or beating the competition—and this explained their poor financial performance.  

There are four points about values that are worth noting. First, when people join organizations, they bring their own values with them, and the degree to which their values align with the values of the culture powerfully affects their subsequent performance. As Clarke Murphy, the CEO of Russell Reynolds Associates, observes, “We hire for talent but we fire for fit.” No matter how talented people might be, if their values are inconsistent with the culture of their organization, they will not succeed.

Second, the culture of an organization reflects the values of the executive team. On the one hand, the executives will largely share values—and those who don’t share the values of this team will leave. The values of the executives indicate the kinds of behaviors that are paid attention to and rewarded or punished accordingly. Over time, this process creates cultural homogeneity (Professor Ben Schneider calls this Attraction, Selection, Attrition–ASA). But no matter the terminology, culture is driven from the values of the people at the top.

Third, values are largely unconscious. People rarely reflect on their values because they are part of “the world taken for granted;” values are to people much like water is to fish—values are just part of the environment in which we operate. External feedback is usually needed to become aware of our values and our workplace culture.

Fourth, not all values are equally valuable. For example, some values like greed and selfishness create dysfunction in the groups and businesses where they exist; dysfunctional cultures seldom realize lasting success.

Finally, all successful teams share essentially the same values; these include tolerance, fitting in with the team, loyalty, hard work, a commitment to excellence, and an intense desire to beat the competition.

I am obsessed with the topic of leadership. Organizations need leaders to make key decisions, anticipate and manage changing market trends, and set strategic vision. When competent leadership prevails, people and companies prosper. Bad leadership almost always creates disengaged workers, corporate chicanery, and, eventually, business failure.

The problem with most leadership competency models is they fail to distinguish between successful managers—people who are rapidly promoted in their organizations, and effective managers—people whose subordinates are committed and whose organizational units perform well. If we distinguish between these groups and review of the leadership literature from the perspective of team effectiveness we find six useful generalizations.

1. What followers want from their leaders

The first concerns the characteristics that people want to see in their leaders. Kouzes and Posner (2010) devised a simple paradigm for studying this: ask people to describe the best and the worst managers they have ever had using a standardized format. This research reveals that people evaluate leaders in terms of four broad categories:

1. Integrity – Followers want to know that the people in charge won’t take advantage of their positions – won’t lie, steal, play favorites, or betray their subordinates.
2. Judgment – The success or failure of organizations depends on decision-making. Some leaders make better decisions than others.
3. Competence – Good leaders seem to know what they are talking about, to be competent in the team’s business. Subordinates see leaders who lack business acumen as empty suits, and are unwilling to follow them.
4. Vision – Good leaders can explain how their mission fits into the larger scheme of things. This vision clarifies roles, goals, and the way forward, thereby facilitating team performance.

These four themes emerge in descending order—integrity is the most important attribute and vision is the least important—but all four are crucial components of leaders’ reputations. Conversely, leaders who lack integrity, good judgment, competence, and vision will surely fail.

2. Personality predicts leadership

The second lesson concerns personality and leadership. The data are clear: personality is the best single predictor of leader performance that we have. For example, Jim Collins published a milestone study of 11 Fortune 1000 companies which had 15 years of below average performance, followed by a transition year, and then 15 years of performance substantially above their industry average. Collins found that, in each case, a new CEO had turned the company around and that these 11 highly effective CEOs combined extreme personal humility with a fierce and relentless drive to win.  This contrasts with their high profile, publicity-seeking counterparts in poorer performing companies. Personality is important in both cases, and we can also say good-bye to the view that CEOs need charisma to be effective.

3. Leadership drives engagement; engagement drives performance

The third lesson concerns leadership and employee engagement. Engagement is “…a persistent psychological state associated with behaviors that are beneficial to an organization” (Macey & Schneider, 2008). In major separate studies, Huselid (1995) and Harter, Schmidt, and Hayes (2002) show that: (a) managers’ behavior predicts employee engagement; and (b) employee engagement predicts business-unit performance. Engagement is a function of how people are treated by managers. Specifically, the quality of the relationship between leaders and followers creates engagement.

4. Leaders drive financial performance

The fourth lesson concerns the financial consequences of good and bad leadership. Collins’ research shows that well-led companies are more profitable than those with average leadership. Although the estimates vary from 14% (Joyce, Nohria, & Roberson, 2003) to 29% (Mackey, 2008) to 38% (Hambrick & Quigley, 2013) to 40% (Day & Lord, 1989), several studies conclude that CEOs account for a significant proportion of the variance in the financial performance of large organizations.

5. There are more bad leaders than good ones

The fifth lesson concerns managerial incompetence. In another milestone paper, Bentz (1967; 1985) reported on a 30-year study of managers at Sears. He found that the failure rate for managers to be substantially higher than anyone expected. How many bad managers are there? Hogan, et al., (2011) identified 12 published estimates of the frequency of management failure, which range from 30% to 67%, with an average of about 50%. Note that these estimates concern the number of managers who are actually fired. I believe that about two-thirds of existing managers are ineffective, but fewer than half will be caught because they are good at internal politics. The misery that bad managers create for their staff has moral consequences; about 75% of working adults say the most stressful aspect of their jobs is their immediate boss (Hogan, 2007, p. 106).

6. Bad managers lead from the dark side

Finally, bad managerial behavior originates in the dark side of personality (Hogan & Hogan, 2001). As Bentz (1967) noted, most managers fail for the same reasons: emotional immaturity, arrogance, micro-management, dishonesty, indecisiveness, poor communications, etc. Hogan and Hogan (2001) proposed a taxonomy of the most common counter-productive managerial behaviors. Although the behavior patterns are different, they have the same effect on employees—they erode trust, increase stress, and degrade performance.

The foregoing discussion leads to the question, “What is the profile of an ideal leader?” I start with Peter Drucker’s observation that leadership is really about followership, that leadership should be understood in the context of what the followers expect from their leaders. The points presented above suggest that followers want to see six characteristics in their leaders – integrity, good judgment, competence, vision, humility, and fierce ambition for collective success, and those characteristics provide a guide to an optimal assessment profile.

The personality assessment industry gets a lot of criticism, and rightfully so. The vast majority of assessment providers care little about validity. At Hogan, we’ve spent 30 years building a reputation based on providing valid assessments that are proven to predict workplace performance.

One frequent question we get from skeptics is “are your assessments biased?” Although our competitors dance around this question or answer it dishonestly, we proudly admit that our assessments are biased.

First, we are biased toward data over intuition and toward data-based decision making.  

Second, we are biased toward equal opportunity in hiring and promotion: if a woman or a minority is more talented than a white male candidate, then the talented person should get the job regardless of internal politics. 

Third, we are biased toward revising our standard recommendations if new data shows our standard recommendations are wrong—that is, we are biased toward admitting our mistakes. 

And fourth, we assume that people are fundamentally irrational and that getting them to behave rationally is a constant struggle. Specifically, people tend to choose actions that lead to short term payoffs but are contrary to their own long term best interests.              

And yes, our assessments reflect these biases.

My experience and lots of data indicate that people are not very good at predicting the future. Rather than speculate on potential HR challenges, I would like to discuss an existing challenge that, if it went away, would represent significant progress.

The Nature of the Challenge

If we think about the history of the world since the end of the last ice age (13,000 years ago), we will see steady improvement in the quality of human life. Advances in agriculture have made food more plentiful, clothes have become more functional, transportation has become more efficient, communication has expanded its reach, public health has improved, and life has become easier. There have been costs, of course, primarily to the environment and other living species forced to cohabit with humans, but the lot of common humanity has been transformed in ways that would be unimaginable 13,000 years ago.

How can we explain this improvement in our living conditions? It is probably not due to improved practices in HR. The transformations are the result of steady incremental improvements in technology created by clever, practical people who like working with things. The first big leap forward was learning to use fire, which allowed many new food products to be cooked and consumed. Then people learned to put edges on rocks to be used as cutting tools. Four thousand years ago, people living on the Black Sea learned how to smelt gold — a surprisingly complex and tedious process. Early engineers figured out how to make wheels, and early horse whisperers put horses in front of carts. It is easy to think that this accumulation of technical knowledge led to human progress.

These improvements in technology were cultural not individual; groups of craftsmen shared observations and techniques and built upon one another’s accomplishments. Culture itself depends on certain assumptions: (1) the external world is real; (2) truth depends on: (a) observations that can be repeated (this kind of wood burns quickly, that kind burns slowly); or (b) what reliable observers tell you they have seen. Progress also depends on believing that the world is real and not something we invented to amuse ourselves.

During the last 50 years, the definition of truth has changed in popular culture. There are three sources of this change. First, stimulated by the work of Michel Foucault (1926-1984), many people began to argue that what authorities claim as scientific knowledge is political and serves the interests of powerful economic interests (e.g., climate change is a politically inspired hoax). Second, as society becomes more litigious, people increasingly think like lawyers, and for lawyers, there is no objective truth, there are just more or less convincing stories to be told. Third, as politics intrudes ever farther into everyday life, people increasingly believe the world is composed of “alternative facts” and we are free to pick and choose those that best suit our purposes.

So what we see on a massive scale is radical relativism, where truth depends on one’s perspective and agenda. If taken seriously, this will lead to the end of scientific progress. But what does it have to do with the future of HR? These trends call into question important “facts” on which productive HR processes depend.

First, human nature is rooted in biology, and it changes very slowly. Specifically, this means human motivation changes very slowly. Because leadership involves dealing with human motives, this means the principles of leadership change very slowly — e.g., what Napoleon Bonaparte knew is still valid today. Unless, of course, knowledge is politically inspired ideology.

Second, much of what HR does concerns talent identification. At its base, talent identification is a special case of personnel selection. There is one right way and many wrong ways to do talent identification. The most popular and the worst from an empirical perspective is human judgment based on interviews. The most defensible method from a legal and moral perspective is well-validated psychological assessment — a well-established process whose principles have remained unchanged for 100 years. In my view, the big challenge for HR over the next five years concerns remembering the hard earned lessons of the past. To the degree that HR pursues unvalidated gamified assessment methods and forgets the lessons of the past, true meritocracy will suffer and internal politics will drive talent identification.

This article originally appeared in the May issue of Human Resource Executive.