What should be our Stakeholder Selection Criteria?
Posted on October 9th, 2009 by Paul McArdle – 3 Comments.
This week I was interested to read an article in the AFR titled “Picking leaders the brainy way”. For internal staff, the PDFed article is in eLibrary.
This was of particular interest to me, as I know that this is a challenge that we have struggled with over the past 10 years. Hence, we’re keen to improve at it, as much as we can (and, by extension, if you can help us do so, we’d like to hear from you).
Note that this is not to say that we have a bad bunch of employees currently – just that we’ve had to do a bit of “getting the right people on the bus” in the past, and probably will have to do more in future.
Main Points from the Article
The article has been written, it seems, to promote a new book titled “Great People Decisions: Why they matter so much, why they are so hard, and how you can master them” by Claudio Fernandez-Araoz (who’s a partner of executive Recruitment firm, Egon Zehnder).
Given my note above, and our commitment to life-long learning (and alliteration), it should come as no surprise that this is one more book added to our monthly Amazon shopping cart, and for which a book review will emerge on this blog some time later…
[PS 20th Dec - have read the book and posted a review of it onto the blog here]
Some selected quotes from the article that I thought were relevant to us, and aligned with what I had been thinking already:
1) “People’s perceptions of themselves also change depending on the feedback they get form others” (or, in shorthand, if you are told your useless at something often enough, you will begin to believe it and hence it will become a self-fulfilling prophecy).
2) As a result, “personality tests should be used and interpreted with a grain of salt” and “personality profiling is of limited use … we systematically overestimate how things are affecting us now, or will affect us in future” – which is a point I made when we all did a Myers-Briggs test internally, out of curiosity.
3) “Not only are people bad at self-assessment, they are appalling at assessing others”
4) “there is a big difference between what people think they will do and what they actually do”.
The article seems to imply that there are two better ways in which selection decisions can be made:
1) The tried-and-true approach of interviews and reference checks (implying, I would assume, that they are done very well – which is definitely an area we can improve in).
2) The use of functional magnetic resonance imaging (FMRI) to see how the brain actually works in a subject when they are stimulated with various challenges. Not plausible for us…
Not much useful detail is provided of either (though this is understandable, as it’s only a short one).
The article is more valuable in telling us what NOT to do, rather than explaining the details of what we SHOULD be doing.
.
Narrowing it down to 3 qualities
Perhaps the final word should be left to Warren Buffett, who is quoted in “The Speed of Trust” (p59) as noting the following:
I look for three things in hiring people.
1) The first is personal integrity,
2) the second is intelligence, and
3) the third is a high energy level.But, if you don’t have the first, the other two will kill you.
That narrows it down to 3 things to look for (and is along the lines of the old chestnut = “hire for attitude, train for aptitude”) – but how do we ensure that we attract people with these 3 qualities?
.
PS – Applies to more than just employees?
We’re a small business and, as such, we rely on our shareholders for being more than just being a “Ms/Mr Money Bags”.
As such, I believe these qualities are also what we need to be looking for in shareholders who will become involved with the company, at least for the foreseeable future.
Whilst many find it a thorny subject and still others spend hours of their time criticizing psychometric testing in the press, there is little doubt that both behavioural profiling (eg personality or temperament profiling) and skils and abilities tests (such as maths and language tests) are valid techniques to predict the likely value of a candidate for employment.
Studies have shown that the average enployment interview is only 0.15 predictive, ie 15% likely to choose the right candidate! The same studies found that personality profiling alone is 0.42 predictive and skills and abilities tests designed to indicate general mental ability 0.52. When used together with a structured behavioural inteview and proper reference checking, the combination of data gathered can easily be over 65% likely to result in choosing the right person. (Source: Hunter & Hunter, 1984, Schmitt, 1984, Thacker & Cattaneo, 1987, Smith, 1988)
None of the usual selection techniques are perfect but, by adding other elements to the standard unstructured interview, we are more than four times more likely to get it right. Personality profiling is a key element in this mix.
Hogan, Hogan and Roberts, after an exhaustive review, conclude that: Well constructed measures of normal personality are valid predictors of performance in virtually all occupations,
they do not result in adverse impact for job applicants or minority groups; and
using well developed personality measures for pre-employment screening is a way to promote social justice and increase organisational productivity. (Source - R. Hogan, J. Hogan and BW Roberts, ‘Personality measurement and employment decisions’, American Psychologist, vol. 51, no. 5, 1996, p. 469).
Reference to Jim Collins text ‘From Good to Great’ clearly show the importance of ‘getting the right people on the bus’. Collins found that the successful companies in his Good to Great study spent considerably more time and effort in selecting employees than the less productive comparison group. Many of the companies in the study use the ‘toolbox’ approach to interviewing with personality profiling and mental ability being consistent features of their approach.
RE Hicks, a well respected Senior Lecturer in Management and Psychology, Queensland University of Technology has stated:
“I believe the more successful organisations in the future in Australia are likely to be those who among other approaches make considered and effective use of psychological tests, questionnaires and procedures in staff selection, allocation and development.”
(Source Asia Pacific Human Resource Manager, Vol. 29, No. 1, Autumn 1991,)
The best conclusion we can draw from this is , that whilst psychological testing may never be 100% accurate, it is far more predictive than a standard interview. Sure, we should never use it in isolation to decide who to hire and who not to; it’s a tool to provide us with a focus in interview; a way of finding out information the candidate wouldn’t volunteer in interview. In short, a method that reduces the risk significantly.
With the cost of getting it wrong estimated in a recent salary survey by The Australian Institute of Management at between one and two years salary, wouldn’t we be negligent not to use all the tools at our disposal?
There are plent of articles available on our website if you’d like further background just visit
http://www.rogersgroup.com.au/Resources/articles.htm
and see how effective others have found it!
Martyn Rogers, Managing Director, The Rogers Group. http://www.rogersgroup.com.au 9th October 2009
You certainly read some interesting articles Paul! This is one that i would agree with wholeheartedly. Finding the right people to add to your team in any capacity comes down to more than just a technical skill or ability. The right attitude, outlook, and team dynamic are essentail to building a core group of people aligned to a particular goal or outcome, and these qualities can’t always be quantifiably measured! Motivation is a key component as to whether or not a particular person will perform, and this often changes depending on many different individual circumstances. In my experience, when hiring there are three things to consider:
1) Can they do the job?
2) Will they do the job?
3) Will they do the job with us?
Many times the things that have made someone a high performer in previous roles will have little standing in your own situation.
[...] Back in October I mentioned that this book was referenced in an article written for the Fin Review about “picking leaders the brain…. [...]