The following is a column by Dr. Robert Hogan, that recently appeared in the "2009 Forecast" edition of Human Resources Executive. Dr. Hogan was asked to comment on what he sees as the most significant change affecting the HR community in the future.

By now, everyone is aware of the coming demographic tsunami which will be defined by the retirement of the baby boomer generation. On the one hand, this means that a lot of talent and institutional memory will walk out the doors. On the other hand, the replacement pool—composed of the young, the inexperienced, and the untried—will grow steadily smaller. The generic answer to dealing with this looming problem is called talent retention, and a number of talent retention models are available for commercial consumption.

Talent retention can be broken down into two generic strategies. The first concerns how to retain older workers past their normal retirement date. The second strategy concerns how to attract and retain talented replacements for the retirees. Standard talent retention solutions involve special training, on boarding, compensation, and career pathing packages, all of which are sensible structural solutions. However, what is missing from most talent retention packages is a careful consideration of the human factor. The critical insight comes from the Gallup research, which shows quite clearly that people don’t quit organizations, they quit their immediate bosses. Unless and until talent retention programs take this crucial generalization into account, they will not be effective tools in the coming war for talent.

Research data gathered over the past three decades clearly indicate three conclusions.

• First, the base rate of managerial incompetence in corporate American, in the public and private sector, is between 50% and 65%; slightly more than half of all existing managers will fail in one way or another.
• Second, employees at every level, in every organization, in every geographical region of the country, and in every industry sector report that the worst and most stressful parts of their jobs are their immediate bosses.
• Third, bad bosses are the major cause of absenteeism, poor employee morale, bad customer service, low productivity, and high turnover in every organization.

The conclusion is inescapable: the foundation of any talent retention strategy is good management. Consequently, weeding out or retraining bad managers is the fundamental first step in implementing any talent retention strategy. There is not enough time here to explain why there are so many bad managers employed in corporate America, nor is this the place to describe how to fix them. It is sufficient to say that there is a well-defined taxonomy of bad managers—there are about 11 different types, ranging from people who yell and scream to people who will routinely sacrifice their subordinates to please their superiors. Well-established assessment methods can be used to identify potential or existing bad managers.

Several forward-looking HR programs have taken advantage of these new assessment procedures to hire or promote managers who won’t alienate their talented employees. They also use these procedures to identify incumbent managers with useful technical skills, and coach them regarding ways to ameliorate their more abrasive tendencies. Finding and employing managers who know how to engage their staff is the real key to talent retention.

The following is a column by Dr. Robert Hogan, that recently appeared in the “2009 Forecast” edition of Human Resources Executive. Dr. Hogan was asked to comment on what he sees as the most significant change affecting the HR community in the future.

By now, everyone is aware of the coming demographic tsunami which will be defined by the retirement of the baby boomer generation. On the one hand, this means that a lot of talent and institutional memory will walk out the doors. On the other hand, the replacement pool—composed of the young, the inexperienced, and the untried—will grow steadily smaller. The generic answer to dealing with this looming problem is called talent retention, and a number of talent retention models are available for commercial consumption.

Talent retention can be broken down into two generic strategies. The first concerns how to retain older workers past their normal retirement date. The second strategy concerns how to attract and retain talented replacements for the retirees. Standard talent retention solutions involve special training, on boarding, compensation, and career pathing packages, all of which are sensible structural solutions. However, what is missing from most talent retention packages is a careful consideration of the human factor. The critical insight comes from the Gallup research, which shows quite clearly that people don’t quit organizations, they quit their immediate bosses. Unless and until talent retention programs take this crucial generalization into account, they will not be effective tools in the coming war for talent.

Research data gathered over the past three decades clearly indicate three conclusions.

• First, the base rate of managerial incompetence in corporate American, in the public and private sector, is between 50% and 65%; slightly more than half of all existing managers will fail in one way or another.
• Second, employees at every level, in every organization, in every geographical region of the country, and in every industry sector report that the worst and most stressful parts of their jobs are their immediate bosses.
• Third, bad bosses are the major cause of absenteeism, poor employee morale, bad customer service, low productivity, and high turnover in every organization.

The conclusion is inescapable: the foundation of any talent retention strategy is good management. Consequently, weeding out or retraining bad managers is the fundamental first step in implementing any talent retention strategy. There is not enough time here to explain why there are so many bad managers employed in corporate America, nor is this the place to describe how to fix them. It is sufficient to say that there is a well-defined taxonomy of bad managers—there are about 11 different types, ranging from people who yell and scream to people who will routinely sacrifice their subordinates to please their superiors. Well-established assessment methods can be used to identify potential or existing bad managers.

Several forward-looking HR programs have taken advantage of these new assessment procedures to hire or promote managers who won’t alienate their talented employees. They also use these procedures to identify incumbent managers with useful technical skills, and coach them regarding ways to ameliorate their more abrasive tendencies. Finding and employing managers who know how to engage their staff is the real key to talent retention.

George Bernard Shaw (1856-1950), the Irish-born playwright and novelist, was the only writer to win both the Nobel Prize for Literature and a movie Oscar. Shaw was an ardent socialist who, nonetheless, founded the London School of Economics (LSE)—a hotbed of British capitalist thinking. But most importantly, as an Irishman, Shaw was a gifted and intuitive psychologist, and his most famous play, Pygmalion, contains an important practical lesson for the critics of personality assessment.

The standard criticism of personality assessment is that people can and do “fake” their responses to the items on personality inventories. The concept of faking is deeply problematical in social life. It rests on the assumption that there is a “real” you and that faking involves pretending to be someone other than the real you. In contrast, for social constructionists, there is no “real” you, there is just the you that you have chosen to be; you then use social interaction to tell other people who you are and how you would like to be treated. More specifically, there is the real you, which is the you that you were as a child—an unsocialized horror, then there is the you that, as an adult, you (more or less self-consciously) pretend to be in public—the socialized you. The maturation process involves learning to fake, to hide the real you. In this way, the answers that you provide on a personality questionnaire would reflect the socialized you, not the real you, the unsocialized horror—unless you avoided the maturation process.

In Shaw’s play, the linguist Henry Higgins bets a friend that he can train a cockney flower girl to speak “proper” English and pass her off as English gentility. Higgins selects Eliza Doolittle, and with some effort, trains her to drop her normal way of speaking and, instead, speak “proper” English. Higgins is successful, Eliza Doolittle is transformed, Higgins falls in love with her, and the play ends with her rejecting Higgins and marrying an impoverished English gentleman.

Shaw’s play contains at least three lessons for personality psychology. First, there is no real you, there is just the you that you pretend to be in public. Every social performance is an act. Only people who are na?ve, unsophisticated, or psychologically obtuse insist on being authentically themselves. But as the existentialist philosopher Jean Paul Sartre remarked, “Authenticity is the mark of a person who has been taken in by his own act.”

Second, with some concentration and practice, most people can change their social performances; like Eliza Doolittle, they can learn to fake, except that they are not faking, they are just playing a different role from the one they usually play.

And third, some roles lead to greater social acceptance, popularity, and success than others. People who insist on being rude, opinionated, and abrasive aren’t simply being themselves, they are behaving in a self-defeating manner.

Returning finally to personality assessment, people present themselves differently using the items on personality questionnaires—this is the essence of individual differences—and some of these presentations will lead to better outcomes than others. But no one is faking when they respond; how they present themselves is a choice, whether it is conscious or not.

George Bernard Shaw (1856-1950), the Irish-born playwright and novelist, was the only writer to win both the Nobel Prize for Literature and a movie Oscar. Shaw was an ardent socialist who, nonetheless, founded the London School of Economics (LSE)—a hotbed of British capitalist thinking. But most importantly, as an Irishman, Shaw was a gifted and intuitive psychologist, and his most famous play, Pygmalion, contains an important practical lesson for the critics of personality assessment.

The standard criticism of personality assessment is that people can and do “fake” their responses to the items on personality inventories. The concept of faking is deeply problematical in social life. It rests on the assumption that there is a “real” you and that faking involves pretending to be someone other than the real you. In contrast, for social constructionists, there is no “real” you, there is just the you that you have chosen to be; you then use social interaction to tell other people who you are and how you would like to be treated. More specifically, there is the real you, which is the you that you were as a child—an unsocialized horror, then there is the you that, as an adult, you (more or less self-consciously) pretend to be in public—the socialized you. The maturation process involves learning to fake, to hide the real you. In this way, the answers that you provide on a personality questionnaire would reflect the socialized you, not the real you, the unsocialized horror—unless you avoided the maturation process.

In Shaw’s play, the linguist Henry Higgins bets a friend that he can train a cockney flower girl to speak “proper” English and pass her off as English gentility. Higgins selects Eliza Doolittle, and with some effort, trains her to drop her normal way of speaking and, instead, speak “proper” English. Higgins is successful, Eliza Doolittle is transformed, Higgins falls in love with her, and the play ends with her rejecting Higgins and marrying an impoverished English gentleman.

Shaw’s play contains at least three lessons for personality psychology. First, there is no real you, there is just the you that you pretend to be in public. Every social performance is an act. Only people who are na?ve, unsophisticated, or psychologically obtuse insist on being authentically themselves. But as the existentialist philosopher Jean Paul Sartre remarked, “Authenticity is the mark of a person who has been taken in by his own act.”

Second, with some concentration and practice, most people can change their social performances; like Eliza Doolittle, they can learn to fake, except that they are not faking, they are just playing a different role from the one they usually play.

And third, some roles lead to greater social acceptance, popularity, and success than others. People who insist on being rude, opinionated, and abrasive aren’t simply being themselves, they are behaving in a self-defeating manner.

Returning finally to personality assessment, people present themselves differently using the items on personality questionnaires—this is the essence of individual differences—and some of these presentations will lead to better outcomes than others. But no one is faking when they respond; how they present themselves is a choice, whether it is conscious or not.

Doug Noll interviewed Robert Hogan about the dark side of leadership on Thursday, October 16. Links to the audio segments appear below.

Excerpted from the Doug Noll Show's website:

Defective and dark leadership is the single most pressing problem facing humanity. In Corporate America, over 65 percent of the managers and leaders are incompetent, defective, or badly flawed. A higher percentage exists in government. The costs are staggering and one only has to look at the financial market melt down of the past months to understand the enormity of the problem.

Doug and Robert begin by understanding leadership through the lens of evolutionary psychology. Leadership evolved in humans as a way to come together for a short time to accomplish a common goal. Thus, humans became hard wired genetically to form social, hierarchal groups with leaders in charge. The most effective leaders were humble, supported the group and its goals, and was not self-aggrandizing. With the development of agriculture about 12,000 years ago, Robert describes the rise of the kleptocracy, which persists today. This is a class of leaders that rose to high status through power grabs, political maneuvering, technical competence, and raw luck. Once high leadership status was achieved, this class ahd no difficulty stealing from the groups it was leading. Leadership, as Robert sees it, is the ability to build and maintain a high performing team. Over time, this team will compete well against other like-minded teams.

Segment 1

Segment 2

Segment 3

Segment 4

Doug Noll interviewed Robert Hogan about the dark side of leadership on Thursday, October 16. Links to the audio segments appear below.

Excerpted from the Doug Noll Show‘s website:

Defective and dark leadership is the single most pressing problem facing humanity. In Corporate America, over 65 percent of the managers and leaders are incompetent, defective, or badly flawed. A higher percentage exists in government. The costs are staggering and one only has to look at the financial market melt down of the past months to understand the enormity of the problem.

Doug and Robert begin by understanding leadership through the lens of evolutionary psychology. Leadership evolved in humans as a way to come together for a short time to accomplish a common goal. Thus, humans became hard wired genetically to form social, hierarchal groups with leaders in charge. The most effective leaders were humble, supported the group and its goals, and was not self-aggrandizing. With the development of agriculture about 12,000 years ago, Robert describes the rise of the kleptocracy, which persists today. This is a class of leaders that rose to high status through power grabs, political maneuvering, technical competence, and raw luck. Once high leadership status was achieved, this class ahd no difficulty stealing from the groups it was leading. Leadership, as Robert sees it, is the ability to build and maintain a high performing team. Over time, this team will compete well against other like-minded teams.

Segment 1

Segment 2

Segment 3

Segment 4

People in the world of finance tend not to be very thoughtful about personality—and there are overwhelming data to support this generalization. But personality affects the decisions of financial managers just like everyone else. In addition, the success or failure of every organization is the sum of the decisions that the leaders make on a daily basis. Ultimately, then, the success of an organization depends to a significant degree on the personality of the leaders. Consider the case of Lehman Brothers, a 150 year old Wall Street investment bank with 25,000 employees world wide. It was the fourth largest investment bank in the world, and it declared bankruptcy on September 15th, 2008.

The CEO of Lehman Brothers is Richard Fuld. Starting in the summer of 2007, Fuld made a series of decisions that ultimately doomed his company. As the subprime mortgage business slumped, Fuld decided that money could be made by investing as others retreated, so he “doubled down” on mortgage backed derivatives. As they continued to decline in value, so did Lehman’s holdings. But Fuld seemed not to notice. As Joe Nocera remarks in the New York Times (9/15/08), “And yet, even as they lowered the value of their mortgage-backed securities, firms like Lehman had still priced them too high.” David Einhorn, a hedge fund manager, described Lehman’s mark-to-market pricing as “dishonest”; Nocera called it wishful thinking.

For at least a year, Lehman Brothers needed to sell parts of itself to remain solvent. Over the past several months, a series of interested buyers approached Lehman, but in each case, Fuld thought Lehman was worth more than the price offered. He maintained this position right into bankruptcy.

Why did Richard Fuld make these decisions? What sort of person is he? The question is hard to answer because the only information we have is in the financial press, which is not insightful about psychology. Fuld received a BS from the University of Colorado in 1969 and an MBA from NYU in 1973. He joined Lehman Brothers in 1969 as a commercial paper trader, and Lehman is the only place he has ever worked. He rose rapidly, and has been the CEO since 1993. The Institutional Investor magazine named Fuld the #1 CEO in the industry in 2006. Fuld’s salary in 2007 was $51.7 million dollars and in March, 2008 he received a $22 million dollar bonus for 2007. Over the past five years, Lehman paid him $311.9 million dollars in compensation.

Here are some other facts about Richard Fuld:

• In 1969 his “career” in the Air Force ended when he got into a fist fight with his commanding officer.
• He is known to be a “competitive squash player." As a former competitive squash player, I can say that Fuld must be very competitive.
• His Wall Street nick name is “the Gorilla."
• The Times of London (9-16-08) describes him as “the brawler known as the scariest man on Wall Street.”
• Observers of Fuld’s performance think he began to believe his own press notices, and that the accolades fed his risk taking tendencies.

In terms of the taxonomy provided by the Hogan Development Survey, Richard Fuld seems to be high Reserved and high Bold. Such persons are tough, private, incommunicative, impervious to criticism, combative, overconfident, and unable to admit mistakes or learn from them. They also consistently overestimate their own talent and capabilities and underestimate the challenges that they face. Observers report that, up until the final hours, Fuld thought he could “save” Lehman Brothers.

People in the world of finance tend not to be very thoughtful about personality—and there are overwhelming data to support this generalization. But personality affects the decisions of financial managers just like everyone else. In addition, the success or failure of every organization is the sum of the decisions that the leaders make on a daily basis. Ultimately, then, the success of an organization depends to a significant degree on the personality of the leaders. Consider the case of Lehman Brothers, a 150 year old Wall Street investment bank with 25,000 employees world wide. It was the fourth largest investment bank in the world, and it declared bankruptcy on September 15th, 2008.

The CEO of Lehman Brothers is Richard Fuld. Starting in the summer of 2007, Fuld made a series of decisions that ultimately doomed his company. As the subprime mortgage business slumped, Fuld decided that money could be made by investing as others retreated, so he “doubled down” on mortgage backed derivatives. As they continued to decline in value, so did Lehman’s holdings. But Fuld seemed not to notice. As Joe Nocera remarks in the New York Times (9/15/08), “And yet, even as they lowered the value of their mortgage-backed securities, firms like Lehman had still priced them too high.” David Einhorn, a hedge fund manager, described Lehman’s mark-to-market pricing as “dishonest”; Nocera called it wishful thinking.

For at least a year, Lehman Brothers needed to sell parts of itself to remain solvent. Over the past several months, a series of interested buyers approached Lehman, but in each case, Fuld thought Lehman was worth more than the price offered. He maintained this position right into bankruptcy.

Why did Richard Fuld make these decisions? What sort of person is he? The question is hard to answer because the only information we have is in the financial press, which is not insightful about psychology. Fuld received a BS from the University of Colorado in 1969 and an MBA from NYU in 1973. He joined Lehman Brothers in 1969 as a commercial paper trader, and Lehman is the only place he has ever worked. He rose rapidly, and has been the CEO since 1993. The Institutional Investor magazine named Fuld the #1 CEO in the industry in 2006. Fuld’s salary in 2007 was $51.7 million dollars and in March, 2008 he received a $22 million dollar bonus for 2007. Over the past five years, Lehman paid him $311.9 million dollars in compensation.

Here are some other facts about Richard Fuld:

• In 1969 his “career” in the Air Force ended when he got into a fist fight with his commanding officer.
• He is known to be a “competitive squash player.” As a former competitive squash player, I can say that Fuld must be very competitive.
• His Wall Street nick name is “the Gorilla.”
• The Times of London (9-16-08) describes him as “the brawler known as the scariest man on Wall Street.”
• Observers of Fuld’s performance think he began to believe his own press notices, and that the accolades fed his risk taking tendencies.

In terms of the taxonomy provided by the Hogan Development Survey, Richard Fuld seems to be high Reserved and high Bold. Such persons are tough, private, incommunicative, impervious to criticism, combative, overconfident, and unable to admit mistakes or learn from them. They also consistently overestimate their own talent and capabilities and underestimate the challenges that they face. Observers report that, up until the final hours, Fuld thought he could “save” Lehman Brothers.

In this cover story from Canadian publication Advisor's Edge, Dr. Robert Hogan discusses the validity of personality assessment in the selection process, as well as his pioneering role in the history of personality testing.

Dr. Robert Hogan, an international authority on personality assessment, recalls facing stiff resistance from academics and lawyers when he and his wife pioneered personality testing in the United States in the early ’70s. “The furor was like Galileo saying the earth revolves around the sun. It was a big career risk.”

Read the full text of the article by downloading the PDF here.

In this cover story from Canadian publication Advisor’s Edge, Dr. Robert Hogan discusses the validity of personality assessment in the selection process, as well as his pioneering role in the history of personality testing.

Dr. Robert Hogan, an international authority on personality assessment, recalls facing stiff resistance from academics and lawyers when he and his wife pioneered personality testing in the United States in the early ’70s. “The furor was like Galileo saying the earth revolves around the sun. It was a big career risk.”

Read the full text of the article by downloading the PDF here.