by Adam Piore, Portfolio.com
Career content provided by Portfolio.com: To answer that question, companies are relying more and more on psychological assessments to help them identify tomorrow's chief executives.
What if the board of Sunbeam could have gazed into the psyche of "Chainsaw Al" Dunlap before they hired him? Could they have predicted that he would alienate his entire senior management and drive the company into the ground? Was WorldCom's Bernie Ebbers destined for disaster? Could anyone have suspected that Enron's Kenneth Lay and his staff would enrich themselves while leaving their employees destitute?
Absolutely, say psychological testers like Robert Hogan, former chair of the psychology department at University of Tulsa and co-editor of "Personality Psychology in the Workplace," a book often referred to as the bible of the assessment industry. Hogan believes that Dunlap, Ebbers, and Lay were handicapped by what industrial psychologists call derailers -- fatal flaws in their personalities such as narcissism, rigidity, and aggression that are sure to wreak managerial havoc.
Lookout for Fatal Flaws
Hogan makes a living from finding such personality flaws. His firm, Hogan Assessment Systems, has sold his assessment tools to most of the companies in the Fortune 500, including Dell, PepsiCo, Bank of America, and Cisco. Since 1989, says Hogan, his business has grown at an annual rate of 30 to 40 percent.
With a spate of corporate scandals, as well as top executives' being pressured to reduce management turnover, corporate America is rethinking how it approaches hiring, training, and promoting its leaders, beginning with its C.E.O's. In recent years, a vast industry has sprung up in support of that effort, offering everything from psychological profiles to real-world simulations aimed at weeding out managers who choke under pressure. Though there is no accurate measure of the industry's size, according to some estimates there are currently as many as 2,500 such organizations of varying degrees of legitimacy, up from just a handful a little more than a decade ago.
Of course, performance, intelligence, and personality profiling isn't exactly new. Roughly 3,000 years ago, China gave civil service candidates intelligence tests. During World War II, the U.S. Office of Strategic Services, which later morphed into the Central Intelligence Agency, subjected its agents to psychological screening. It wasn't until the early 1990s, though, that psychologists finally reached a consensus on the traits that constitute personality. They termed them the Big Five: self-esteem, social potency (leadership), charm, integrity, and creativity (imagination).
New Assessment Techniques
Once these qualities were named, an entire industry grew up around creating the tools for assessing them. The scandals at Enron and WorldCom -- along with a growing overall awareness that management turnover is costly and increasingly common -- prompted more and more firms to take advantage of the new techniques. The repertoire among so-called talent management companies ranges from Hogan's "dark side" test to what's generally known as the 360, in which superiors, subordinates, and peers fill out anonymous questionnaires about a given manager. Costlier alternatives include elaborate "assessment centers," where potential leaders actually run a simulated office for a day, receiving distracting emails, phone calls, subordinate complaints, and real-time crises.
Then there is Myers-Briggs, perhaps the best known psychological test, and Development Dimensions International (DDI), a business assessment firm whose clients include Citibank, Microsoft, and Phillip Morris. One of the largest companies in the field, DDI has seen its value soar over the past five years. Doug Reynolds, vice president of assessment technology for DDI, estimates their management assessment sector's revenue to be $80 million last year. "We now have assessment centers around the world, and each center can test 10 to 15 executives at a time," Reynolds says. "There's been a tipping point where [companies] are understanding that they should use actual data to make decisions about people. If you rely only on your gut, you make a classic mistake."
Of course, screening can't predict all potential problems. One of DDI's clients, JetBlue, is still reeling from a recent series of public relations disasters when storms caused thousands of passengers to be stranded in airports or trapped on planes that were unable to take off for hours at a time. David Neeleman, JetBlue's founder and C.E.O. since 1998, stepped down recently. He will remain chairman, though, and denies the move is related to recent company problems.
Even so, JetBlue continues to tout its friendly workforce and to use the latest assessment techniques to help preserve it. When interviewing for management positions, JetBlue uses DDI's behavioral diagnostic questions to evaluate whether candidates will exhibit and promote the five qualities essential to the corporate culture -- "safety, caring, integrity, fun, and passion," according to Vincent Stabile, JetBlue's senior vice president of people. "We want to know whether or not those five values come naturally to that individual," says Stabile. "We're looking to see that an individual has the skills and experience for the job and can fit into our culture in a good way."
Bring in the Coaches
But JetBlue isn't just focusing on hiring and promotion. Like a growing number of other companies, it also uses personality assessments to develop the best and the brightest. Two years ago, the organization began using the Myers-Briggs test in its leadership training course, combined with a 360: Following the exam, managers sit down with coaches and put together development plans to work on their weaknesses. "There's much more of a focus on individual performance and psychology, on understanding how you can help them to become better leaders. People are understanding that it can have a tremendous impact," says Stabile.
Dell also uses diagnostics in their training. They give future leaders the 360 exam and then evaluate them on 20 to 25 competencies ranging from financial and business acumen to dealing with ambiguity, says Amy King, a company spokeswoman. "Then we identify opportunities to help them develop the skills and experience to get them on the right track," she says.
Had Dunlap, Ebbers, and Lay been subjected to such an exhaustive examination, corporate America might be a very different place. Then again, without them, the psychological testing industry may never have grown into the healthy business it is today.
Portfolio.com. Copyright 2007 Conde Nast Inc. All rights reserved. Use of this site constitutes acceptance of our User Agreement and Privacy Policy.
Career content provided by Portfolio.com: To answer that question, companies are relying more and more on psychological assessments to help them identify tomorrow's chief executives.
What if the board of Sunbeam could have gazed into the psyche of "Chainsaw Al" Dunlap before they hired him? Could they have predicted that he would alienate his entire senior management and drive the company into the ground? Was WorldCom's Bernie Ebbers destined for disaster? Could anyone have suspected that Enron's Kenneth Lay and his staff would enrich themselves while leaving their employees destitute?
Absolutely, say psychological testers like Robert Hogan, former chair of the psychology department at University of Tulsa and co-editor of "Personality Psychology in the Workplace," a book often referred to as the bible of the assessment industry. Hogan believes that Dunlap, Ebbers, and Lay were handicapped by what industrial psychologists call derailers -- fatal flaws in their personalities such as narcissism, rigidity, and aggression that are sure to wreak managerial havoc.
Lookout for Fatal Flaws
Hogan makes a living from finding such personality flaws. His firm, Hogan Assessment Systems, has sold his assessment tools to most of the companies in the Fortune 500, including Dell, PepsiCo, Bank of America, and Cisco. Since 1989, says Hogan, his business has grown at an annual rate of 30 to 40 percent.
With a spate of corporate scandals, as well as top executives' being pressured to reduce management turnover, corporate America is rethinking how it approaches hiring, training, and promoting its leaders, beginning with its C.E.O's. In recent years, a vast industry has sprung up in support of that effort, offering everything from psychological profiles to real-world simulations aimed at weeding out managers who choke under pressure. Though there is no accurate measure of the industry's size, according to some estimates there are currently as many as 2,500 such organizations of varying degrees of legitimacy, up from just a handful a little more than a decade ago.
Of course, performance, intelligence, and personality profiling isn't exactly new. Roughly 3,000 years ago, China gave civil service candidates intelligence tests. During World War II, the U.S. Office of Strategic Services, which later morphed into the Central Intelligence Agency, subjected its agents to psychological screening. It wasn't until the early 1990s, though, that psychologists finally reached a consensus on the traits that constitute personality. They termed them the Big Five: self-esteem, social potency (leadership), charm, integrity, and creativity (imagination).
New Assessment Techniques
Once these qualities were named, an entire industry grew up around creating the tools for assessing them. The scandals at Enron and WorldCom -- along with a growing overall awareness that management turnover is costly and increasingly common -- prompted more and more firms to take advantage of the new techniques. The repertoire among so-called talent management companies ranges from Hogan's "dark side" test to what's generally known as the 360, in which superiors, subordinates, and peers fill out anonymous questionnaires about a given manager. Costlier alternatives include elaborate "assessment centers," where potential leaders actually run a simulated office for a day, receiving distracting emails, phone calls, subordinate complaints, and real-time crises.
Then there is Myers-Briggs, perhaps the best known psychological test, and Development Dimensions International (DDI), a business assessment firm whose clients include Citibank, Microsoft, and Phillip Morris. One of the largest companies in the field, DDI has seen its value soar over the past five years. Doug Reynolds, vice president of assessment technology for DDI, estimates their management assessment sector's revenue to be $80 million last year. "We now have assessment centers around the world, and each center can test 10 to 15 executives at a time," Reynolds says. "There's been a tipping point where [companies] are understanding that they should use actual data to make decisions about people. If you rely only on your gut, you make a classic mistake."
Of course, screening can't predict all potential problems. One of DDI's clients, JetBlue, is still reeling from a recent series of public relations disasters when storms caused thousands of passengers to be stranded in airports or trapped on planes that were unable to take off for hours at a time. David Neeleman, JetBlue's founder and C.E.O. since 1998, stepped down recently. He will remain chairman, though, and denies the move is related to recent company problems.
Even so, JetBlue continues to tout its friendly workforce and to use the latest assessment techniques to help preserve it. When interviewing for management positions, JetBlue uses DDI's behavioral diagnostic questions to evaluate whether candidates will exhibit and promote the five qualities essential to the corporate culture -- "safety, caring, integrity, fun, and passion," according to Vincent Stabile, JetBlue's senior vice president of people. "We want to know whether or not those five values come naturally to that individual," says Stabile. "We're looking to see that an individual has the skills and experience for the job and can fit into our culture in a good way."
Bring in the Coaches
But JetBlue isn't just focusing on hiring and promotion. Like a growing number of other companies, it also uses personality assessments to develop the best and the brightest. Two years ago, the organization began using the Myers-Briggs test in its leadership training course, combined with a 360: Following the exam, managers sit down with coaches and put together development plans to work on their weaknesses. "There's much more of a focus on individual performance and psychology, on understanding how you can help them to become better leaders. People are understanding that it can have a tremendous impact," says Stabile.
Dell also uses diagnostics in their training. They give future leaders the 360 exam and then evaluate them on 20 to 25 competencies ranging from financial and business acumen to dealing with ambiguity, says Amy King, a company spokeswoman. "Then we identify opportunities to help them develop the skills and experience to get them on the right track," she says.
Had Dunlap, Ebbers, and Lay been subjected to such an exhaustive examination, corporate America might be a very different place. Then again, without them, the psychological testing industry may never have grown into the healthy business it is today.
Portfolio.com. Copyright 2007 Conde Nast Inc. All rights reserved. Use of this site constitutes acceptance of our User Agreement and Privacy Policy.
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