“Executives are hired on experience and fired on personality.” This well known phrase in the executive search business sums up years of collective experience and the prevailing findings from executive derailment research. The good news is that there are ways to predict and avoid hiring a poor fit as well as being alert to and addressing early warning signs of problems.
Estimates of the financial cost of a single failed manager range from $1,000,000 to 2,700,000. This figure does not include golden parachutes; losses related to intellectual capital, the good will of the firm’s reputation, unmet business opportunities and goals; damage to employee productivity and effectiveness; or the cost to the external environment, as seen in recent failures of financial institutions and auto makers. The average rate of senior manager and executive failure from nine independent research studies is 47% with the majority of these failures taking place following the transition to a new role. The most prevalent cause is not lack of technical skills or business acumen but personality factors. The shadow side of the executive’s personality, not typically detected during the interview process, shows up later as the inability to build a team, the trail of injured direct reports who become less effective and productive, failure to address performance problems, poor judgment and bad decisions.
What is Personality and Why Does it Matter?
Personality is the enduring pattern of thoughts, feelings, attitudes and behaviors that determine how an individual perceives and interacts with people and the environment as illustrated in the following vignette. On Christmas Eve the father of two young boys puts into the first son’s stocking a fine gold watch, and into the second son’s stocking he puts a pile of horse manure. The next morning, the first boy comes to his father and says glumly, “Dad, I just don’t know what I’ll do with this watch. It’s so fragile. It could break.” The second boy runs to his father exclaiming, “Daddy! Daddy! Santa left me a pony. Now all I have to do is find it!” Imagine each of the brothers as CEO of your company. It is easy to predict how differently each would perceive the world around him, create a different working environment and focus on different outcomes.
Finding solutions to business problems can be exciting and creative or stressful and limiting. The tone and the nature of the process and ultimate solutions are to a large extent determined by the leader’s perspective. If the pile of manure indicates there is a horse nearby, then the team is deployed on an exciting adventure to find the horse. If, however, that same pile means someone is “messing” with us, then the team is deployed with a sense of paranoia on a mission to find and destroy the bad guys.
The Link Between Personality and Fit
Determining whether a potential leader is a good fit depends on many factors, including the culture, values and life stage of the hiring company company. The management literature identifies behaviors typical of executives who succeed versus those who fail. The psychological literature explains the personality factors associated with these behaviors and personality assessments measure the relative presence or absence of these factors for a given individual. Information from personality and other types of assessments, such as those identifying the candidate’s values, are compared with a company’s culture, values and life stage to determine who among the candidates will be a good fit and who will not.
Personality Factors and Executive Failure
Failed leaders tend to be overly abrasive, ambitious, aggressive, and/or untrusting. They often hire the wrong people and surround themselves with “yes men.” The biggest derailer is lack of awareness. With awareness a person can address their issues, without it they become the leading character in their own version of The Emperor’s New Clothes. Such people have inflated self-evaluations. What others may not see is that this sense of self is fragile and easily threatened. What others do observe is that these people tend to lose their composure. Behind the scenes is a threat to their fragile sense of self. They are defensive about mistakes and rarely learn from cases of faulty thinking and related actions.4 (). They often seek and need approval and adoration. On the flip-side, they have difficulty with dissenting views. They are well-defended but susceptible to severe hurt when something negative does get through. When this happens they tend to become suspicious of others. Fear of losing control and being hurt can quickly result in abrasive or threatening behaviors, micromanagement, and cutting people off. People of this personality type tend to surround themselves with those who agree. They don’t hear challenges, so faulty thinking and decisions go unchecked.
Smart companies can use the research on personality traits predictive of executive success and failure to avoid costly hiring mistakes. Well validated psychological assessments such as the 16 PF and the Hogan assess positive and negative personality factors, as well as the underlying self-awareness that allows executive to address the down sides of their leadership, or in its absence prevents them from doing so. Both instruments have been widely used to assess executive candidates and the development needs of those already in such roles. An over view of each appears below.
Personality Assessments: Hogan and 16PF
Both the Hogan Personality Inventory and the 16PF are well-researched and have been widely used for at least 30 years. The Hogan was designed for the business environment and is backed by research with more than 4000 subjects. Reports indicate the individual’s level of risk for 10 factors associated with leadership derailment. A description of the behavioral and leadership implications for each factor, based on the person’s score, is also included in the report. An example follows:
Factor name/description: Excitable – Overly enthusiastic and easily disappointed
Risk Level: High
Behavioral Implications: Intense energetic, volatile and sometimes explosive; may quit when frustrated; Yells when angry; Overreacts to criticism; Understands when others are stressed
Leadership/Organizational Implications: Intensity energy have positive impact, but tendency toward emotional display can erode credibility, your ability to coach and be effective as part of a team. Your moodiness makes you unpredictable and hard to read. Others notice that you become discouraged and may give up when things don’t work out
Several other factors of the Hogan are:
- Cautious – Overly worried about being criticized
- Reserved – Lacking interest in or awareness of others
- Diligent – Conscientious, perfectionist, and hard to please
The Hogan Leadership Values Profile is used to assess the fit between the candidate and the hiring company’s culture. It identifies an individual’s core values, goals and activities that are most meaningful. Factors such as recognition, power, security, and affiliation are included. The values, goals and activities identified in this assessment are what drives the person and he/she will be happiest and most successful in roles that encourage their expression. The report includes leadership and organizational implications, along with environmental fit for each of the factors as exemplified below.
Factor name & description – Power. Desire for challenge, to make things happen, make a difference, beat the competition, and succeed
Score – High
Leadership implications – You evaluate yourself in terms of accomplishments and work hard to achieve goals. You may be impatient with others who lack your drive and focus. Ensure you focus more on external versus internal competition to benefit the whole organization.
Organizational Implications – You enjoy being in authority and control and give people tough assignments. You promote an environment where people are expected to take on challenging assignments, be industrious, show results, beat the competition, and drive things to completion.
Environmental Fit – You are most satisfied when performance, productivity and achievement allow you to make a difference. If you cannot leave your mark you will not enjoy working for the organization. You also want to be able to pursue objectives in a persistent and strategic manner.
The 16 PF is the most widely used assessment of normal personality and has been in existence for over 40 years. It examines 16 facets of personality ranging from warmth, reasoning, and emotional stability to openness to change, tension and perfectionism. These various factors are combined to form the overarching categories of tough-mindedness, extraversion, independence, anxiety, and self-control. Ratings of self-esteem and social skills are also included. The 16 PF indicates the person’s potential for leadership based on how his/her scores compare to scores of the general population of managers.
The 16PF also offers a Human Resource Development Report. It examines 5 domains including leadership, interacting with others, making decisions, initiative, and personal adjustment. Each domain is further subdivided such that the person is rated on various aspects of each domain. For example leadership styles include assertive, facilitative, and permissive; personal adjustment includes anxiety, emotional adjustment, emotional stability, vigilance, apprehension and tension. A sample section from the 16PF Basic Report follows:
Susan is usually socially bold and venturesome and probably prefers to be the focus of attention.
She
- usually is accepting of other people
- tends to trust the behaviors and motives of subordinates.
- tends to be serious and cautious in her dealings with others
- is likely to challenge the status quo and seek novel solutions to problems
- is group-oriented and affiliative
- probably prefers working as a member of a team rather than by herself.
Based on Susan’s personality information, her overall leadership potential is predicted to be average.
Should she be called on to play a leadership role her level of success will likely be the same as that of most people. Her potential for creative functioning is predicted to be high. She probably has the sense of adventure, assertiveness, and orientation toward ideas that are necessary for pursuing creative interests. She shows characteristics somewhat similar to people who invest a lot of time producing novel or original works. Her rate of output in creative endeavors is predicted to be high.
Summary
The high cost of new hire executive failures can be mitigated through the use of psychological assessments to support the current subjective measures involved in such critical hiring decisions. Given the body of research on key personality factors associated with failure, the availability of valid assessments that test for these factors and the psychological expertise required to use and interpret these instruments, the only thing holding companies back is a decision to adopt this high ROI approach.
Germane Coaching & Consulting provides assessment services to corporations and executive search firms. Please contact us for more information.
References
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Hogan, J., Hogan, R. & Kaiser, R.B., Management Derailment: Personality Assessment and Mitigation. Chapter to appear in
Zedock, S.(ed), Handbook of Industrial and Organizational Psychology. Washington D.C., American Psychological Association
Gentry, W. A., & Chappelow, C. (2009). Managerial derailment: Weaknesses that can be fixed. In R. B.Kaiser (Ed.) The perils of accentuating the positive (pp. 97-114). Tulsa, OK: Hogan Press
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Watkins, M. (2003). The first 90 days. Cambridge, MA: Harvard Business School Press
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Lombardo, M. M., & Eichinger, R. W. (2006). The leadership machine (3rd Ed.). Minneapolis: Lominger Limited, Inc.
McCall, M. W. Jr., & Lombardo, M. M. (1983). Off the track: Why and how successful executives get derailed. Technical Report No. 21. Greensboro, NC:, Center for Creative Leadership
Shipper, F., & Dillard, J. (2000). A study of impending derailment and recovery of middle managers across career stages. Human Resource Management, 39, 331-347