Who Can Lead?

Who Can Lead?

Talent assessments uncover seemingly hidden leadership abilities and limitations that don’t show up in interviews or past performance. But often, those qualities are hiding in plain sight. Here’s how companies use assessments to hire, promote, and develop leaders—and find their own blind spots.

True story: Two longtime employees are candidates for the same promotion to a senior role in the company. Both have equally impressive track records. Both are well liked. The executive team has “a heck of a time trying to figure out which one is the right one to put into that senior position,” says David Ahlers, vice president of human resources and corporate communications for Graco, Inc.

“Until we did the assessment,” he says.

The assessment was a talent assessment, for which Minneapolis-based Graco, a maker of pumps and fluid handling systems, hired an outside consultant. After testing the two candidates, comparing their results to benchmarks, doing in-depth interviews to understand their behavioral tendencies, and running them through a simulation of a day on the new job, the conundrum of which one to promote disappeared. One person clearly had more “intellectual horsepower” to take on complex, strategic thinking, Ahlers says, and more emotional intelligence for building relationships key to success in the new role.

Both candidates looked good through the lens of their past performance and current responsibilities, Ahlers explains. “What the outside firm allowed us to do was to see the person through a more senior lens.”

‘We Have Data’

Talent assessment firms say there’s nothing magical about seeing that sharp differentiation emerge. Instead, there’s something empirical.

Just as data amassed over decades are now analyzed to discover what produces the best health outcomes or retail sales, data also are changing the field of human resources—a term that itself has come to sound a little antiquated and plodding. By contrast, Leslie Millikan at Valspar Corporation is director of “global talent management and organizational effectiveness.”

Talent assessments “provide really meaningful data on things like personality, cognitive ability, work habits, and career interests,” Millikan says. Valspar uses assessments for hiring, leadership development, and succession planning. “We talk about what kinds of opportunities people need . . . strategic business challenges, immersion experiences, assignments in other countries, things that really stretch people.”

When Korn Ferry, a global executive recruiting firm, bought PDI Ninth House, a Minneapolis-based talent management consultancy, for an estimated $80 million to $95 million in December, part of what Korn Ferry paid for was data.

“We’ve seen and have data on better than 100,000 leaders through all those different kinds of tools” that talent assessment relies on, says Bruce Sevy, director of leadership assessment products for PDI Ninth House.

Assessment tools include interviews with a psychologist and business simulations known as “inbox exercises” that put candidates into difficult post-hire or post- promotion role-playing scenarios facing prickly customers and competitive colleagues. To assess internal candidates, there are also surveys of coworkers—those who report to, work alongside, and manage the person—known as 360-degree feedback.

Beyond that, there are hundreds, if not thousands, of specialized psychometric tests available, though they tend to fall into two categories: those that measure cognitive abilities and those that measure personality traits. A talent assessment provider will benchmark a person’s results against the results of past test subjects and sometimes against their job performance. Those kinds of data have been gathered by generations of researchers in industrial psychology, the field that gave birth to talent assessment. PDI Ninth House cofounder Lowell Hellervik and MDA Leadership Consulting founder Sandra Davis are just a couple of the prominent names in talent assessment to come out of the psychology program at the University of Minnesota.

“We know what average scores look like and what good scores look like,” PDI’s Sevy says. “And how we know they’re good is we’ve done decades of research of following up with organizations, looking at to what extent does somebody who has these attributes actually work more effectively on the job—get up to speed faster, stay longer, get promoted more, run more profitable business units, have higher top-line sales, have fewer quality issues.”

Own the Talent

Organizations don’t go knocking at the doors of talent assessment consultants because those businesses lack hiring experience. In fact, the opposite seems to be true. Graco was a global company some 70 years into its growth when it started working with PDI Ninth House, MDA Leadership Consulting, and SKS Consulting Psychologists, all locally based, about six years ago. Ahlers says that under the “data-based, fact-based” leadership of then-new CEO Patrick McHale, Graco for the first time took inventory of the leadership talent it had inhouse, and also began using assessments for hiring from outside.

“We’ve become much more serious about bringing data to the conversation,” Ahlers says. The company’s hiring and promotion process is more strategic as a result. “The CEO owns the talent in this company and owns the development for the first two layers of leadership and management closest to his office,” Ahlers says. Graco adheres to a leadership model that says 70 percent of development occurs on the job, 20 percent through interaction with colleagues, and 10 percent through reading and classroom training. “If 70 percent of your development is going to come from the jobs you’re doing, then by definition, you’ve got to have somebody thinking about . . . what jobs will give you that development. We spend a lot of time on that.”

That sort of maturing insight on a company’s part and maturing capacity for self-improvement are what Sharon Sackett, vice president of talent assessment for MDA Leadership Consulting, calls “talent acumen.”

Up the Ladder: How the Requirements of ‘Leadership’ Change

Everyone’s career begins with “some kind of individual contributor role,” says Bruce Sevy of PDI Ninth House. If we prove ourselves in that capacity, we might earn advancement to new roles, where—contrary to conventional wisdom—our past performance doesn’t always predict our ability to deliver future results.

Here’s how Sevy says the demands of leadership change as we move up the corporate ladder.

Individual contributors: Reliable, dependable doers, with good job-specific skills (accounting, engineering, retail sales) and good interpersonal skills.

Supervisors: Teach others to do the job and help them solve task-specific problems; able to give people feedback and hold them accountable.

Managers: Supervise the supervisors; they’re still focused on a specific part of the company (the accounting or engineering department, for example), but not on the technical work itself. Problem solving centers on people and their performance.

Executives: Integrate the work of others across functions (accounting, engineering, operations, sales) and make those functions fulfill a business strategy; drive that strategy into the marketplace.

“We love to talk about talent acumen and just how well [clients] are being mindful of what they have, what they don’t have, and what is the talent they need,” she says. “We think our clients get much smarter around those things as they use assessment.” Marilee Hedberg, vice president of human resources for Scholarship America, says the 55-year-old Minneapolis nonprofit hires differently since launching a new strategic plan in 2011. Scholarship America manages and awards private scholarship funds. Under its new plan, it wants to give more sustained support to students rather than one-year scholarships and also raise the organization’s national profile.

Hedberg uses talent assessment in hiring and says “there’s more of a forward looking approach now: What do we need in leaders in order to achieve our strategic goals?” She works with Steve Salmi, founder of Corporate Psychologists, LLC, in Bloomington and is beginning to work with MDA Leadership Consulting as well. Because of Salmi’s long relationships with some of Scholarship America’s current leaders, Hedberg says, “he knows what we’re looking for, to not only blend with the culture and the work style of the existing leadership, but also to build out the diversity of the group.”

In health care, talent assessment and development have traditionally gotten short shrift, says David Brumbaugh, vice president of human resources for Children’s Hospitals and Clinics of Minnesota.

“People tend to come up through the ranks,” he says. “They may know how to process a time card or do a budget, but leading and managing people, doing strategic thinking, project or program management—those are not things that they get usually in their educational training, their clinical training.”

Reform is making health care organizations more keenly aware of the talent they need. Children’s turns 90 next year, but it’s only in the past three years or so that the private nonprofit has worked in a focused way on leadership development, in part with help from PDI Ninth House.

“Most hospitals have not been what I’ll call ‘population health managers,’ but that’s the way things are going,” Brumbaugh says. “That has real implications for the competencies and skill set of leadership and other employees.”

‘Rife with Cognitive Bias’

What organization doesn’t feel that its business and industry are changing, and that it has to raise the bar on performance?

“Bringing somebody on board, you used to say, ‘Well, we can give them a year to kind of get up to speed.’ Now they have a couple months,” Salmi says. “Accelerating that process, that’s what a good [talent] assessment should help you do.”

“If we know the organization well”—a department isn’t as cohesive as it should be, acquisitions are in the offing—“we can really predict some of the situations that the leader will face,” says Jason Ortmeier, MDA’s vice president of leadership development. Combining that with predictive data about a new leader’s behavior tendencies, it’s possible to smooth the way for that person, creating a plan for how the leader and the organization will handle certain situations “differently than they might naturally. It could be creating structure where there isn’t any structure. It could be putting more focus on increased communication with a couple of key people.”

But wait a minute. Aren’t you the one who already knows your own organization best? What about your gut feelings about a candidate and how he’ll fit in? What about your ability to look someone in the eye, talk with her, and know whether she “gets” your business and will get the job done?

Talent assessment is a valuable piece of evaluating prospective leaders, HR professionals say, but it’s not the whole picture. Millikan says the tests are tools; “they should never direct a decision or a process, but they should inform it.” Ahlers says talent assessment is “just another data point—but it’s a pretty important data point.” In other words, your own interview with a candidate and your own impressions still matter a great deal. But here’s why Ahlers suggests that you don’t give them too much weight, either:

Should New Leaders Fit the Culture or Change It?

The too-assertive behavior that forced her client out of one job was not assertive enough to win placement at a company across town, says Trudy Canine, a career management consultant whose firm Pathfinder is in Minneapolis. It’s an example, she says, of how an organization’s culture looms large in its search for leadership talent.

Culture “is probably 50 percent of the equation,” says Sharon Sackett at MDA Leadership Consulting. But that doesn’t always mean looking for someone who’s a smooth fit.

“I’ve seen clients get enamored with somebody whom they see as really familiar,” Sackett says. “But maybe they’re too much the same as what you already have and they’re not going to help you evolve the business.”

Rather than simply matching the candidate to the culture, the goal is really to be aware of the culture, of how it needs to change or doesn’t, and how the organization might need to adapt to get the benefit of a new leader’s skills, says MDA’s Jason Ortmeier.

With one client, he says, “we talked about the fact that this [new] leader was like an organ that the organization needed, but, as in most organ transplants, the organization was likely to reject that person because they were different.” They developed a plan up front, “especially for the onboarding process,” Ortmeier says, to make sure the group valued what the new leader brought to the table.

The tricky thing about culture is that sometimes there’s more than one within a company. “There’s kind of the ‘public’ values and then the day-to-day expressed values” represented by the workings of the organization, says Steve Salmi of Corporate Psychologists, LLC. “We try to understand both.”

The difference isn’t necessarily a bad thing, he emphasizes. It might be between the current state of the company and a future, even-better state that it aspires to. “Where it’s a problem,” he says, “is where the internal, day-to-day working values are much more dysfunctional.” That tends to show up in a lack of communication and transparency within the organization, along with high turnover.

“What [people] see versus what is said is so incongruent that at some point, people don’t want to be a part of that incongruence,” Salmi explains. “They start looking for other jobs.”

By contrast, he says, intentional cultures that are aligned with business goals and positive values tend to be talent “magnets.”

“As an HR person, I’ve been doing interviews for 30 years, but I’ve learned that a skilled interviewee can influence me erroneously, which is where the tests really come in handy, because you can’t game the tests.”

Job candidates naturally want to put their best foot forward. They can overpromise, then underdeliver needed competency, even when they don’t mean to. They might sincerely believe they have skills they don’t have. Or they might not fully understand what it will take to do the new job. Leading means different things at different levels (see page 76), and it can be tough for anyone to project himself into the day-to-day realities of a future role.

At the same time, employers can pull the wool over their own eyes. “The hiring and promoting process is just rife with cognitive bias,” Salmi says. Groupthink is a problem, and on a solo basis, “people tend to very quickly make a determination of whether somebody is going to be a good fit or not, and then they look for evidence that reinforces that.”

Sevy says there’s a bias toward the familiar: “We look for people who are just like us, and that doesn’t always map onto being a successful leader.” Ask any freewheeling, risk-taking entrepreneur who eventually found that what her company needed was a methodical, systematic operator.

What Are You Looking For?

By far the most fundamental problem businesses create for themselves in seeking leadership talent is not defining the specific talents they need; it means there’s nothing to weigh an interview against. Later on, it can mean that a key hire goes south and business results follow.

Insider knowledge of the organization—its culture, its business strategy, whether it needs leadership for innovation, turnaround, or growth—has to drive the talent assessment process, Millikan believes. What are the competencies that would make a leader successful at a particular place and time, she asks? “If we don’t really know what success looks like, then we’re probably rather randomly selecting leaders who sometimes might bring value and other times might really miss the mark.”

“Many times, we’ve said, ‘Geez, the managers aren’t doing what we want them to do.’ Well, have we stopped to identify what we want them to do?” Brumbaugh asks.

The answer now is increasingly yes, he says. Children’s Hospitals and Clinics has defined the competencies and skills it needs and is “building a discipline around leadership development.” He sees the results, as people who have been through Children’s talent assessment and development programs rise to senior leadership roles: greater speed in decision making, better-quality decisions, and more collaboration and alignment among parts of the organization.

Having a partner, PDI Ninth House, that lives outside of Children’s own systems has made it easier to change the status quo: “They can keep you honest,” Brumbaugh says. But expect talent assessment and development to take some soul-searching, he says. “It really is a challenge for senior leadership to look in the mirror and say, ‘What is it that we need and want, and does it look like me, or does it look like something else?’”

Denise Logeland is a freelance writer and editor living in Minneapolis and a regular contributor to Twin Cities Business.