1 September 2006 Dr Justin Menkes
Across industry, almost every successful CEO identifies the same challenge: finding people with great business acumen. Essentially, CEOs are looking for individuals with the right combination of mental agility and people skills, writes leadership expert Dr Justin Menkes.
Pat Russo, CEO of Lucent Technologies, once said that, "Often during a talent search I'm asked what I'm looking for and my response always includes clear thinkers – people who can distil everything down to the right point. They can be very hard to find, but if you get yourself a team of clear thinkers, the possibilities are endless."
With such a huge demand and limited supply, complaints about the scarcity of such people are a familiar refrain.
Dick Parsons, CEO of Time Warner, notes that "truly insightful people that can really get to the right place are quite rare. There is a continuum, but the talented ones are very tough to find. Many executives have trouble dealing with complexity. They get lost in data and are unable to pull back and see what's really important."
CRITICAL TALENT MASS
What makes this shortage even more critical is the sheer number of people with superior business acumen needed by every business. It is not enough to simply hire one or two exceptional people and expect them to take a company where it needs to go. Everyone's performance is enhanced or limited by the quality of the talent surrounding them.
To achieve top results, a company must create an environment where a sufficient number of equally sharp individuals are brought together to push each other to new heights. Unfortunately, very few companies are ever able to build this critical mass of talent.
"When it comes to hiring enough people to fill 500 openings, the vast majority of them are inevitably not going to be 'A' players," says Steven Kaufman, senior lecturer at Harvard Business School and former CEO of Arrow Electronics.
"And this is how you begin your slide into mediocrity. The problem is that these less-skilled employees exist in such large numbers, and are in so many different parts of the company, that they start to have a lot of influence over the core behaviour of your organisation."
WHY CURRENT SYSTEMS ARE FAILING
While current best-practice assessment tools do provide some valuable information, they are not capable of telling us if an individual is the clear thinker we are seeking.
In other words, they fail to tell us whether someone has the intelligence necessary to filter out extraneous issues and make good decisions.
For instance, 360º feedback and reference-checking systems are used by more than 95% of global companies. While both of these methods can provide valuable insights about an individual, they share the same shortcoming - research has shown these evaluations to be unreliable measures of an individual's intelligence.
THE BIG INTERVIEW
Another commonly used assessment tool is the competency interview, which includes questions about a person's experiences performing certain activities – such as managing deadlines or resolving conflicts. Over the past 30 years this form of interview has become the accepted best practice for benchmarking managers, explaining an impressive 25–30% of the variation in performance between candidates.
However, recently published large-scale studies in the US and EU have demonstrated that these evaluations, like 360º feedback and reference checks, are unreliable measures of intelligence.
While all of the methods mentioned above are useful, their inability to measure how intelligent someone is renders them incomplete. To date, there has been only one widely accepted assessment of intelligence: the common IQ test. And while research has shown IQ tests to be indisputably powerful predictors of success, these exams fail to evaluate whether an individual possesses the skills needed to make good business decisions.
This should not be surprising, since IQ tests were originally designed to predict scholastic aptitude and their focus is almost entirely on testing school skills such as spatial reasoning, arithmetic and vocabulary.
Because of the academic scope of the exam, many individuals are classified as 'geniuses' despite lacking fundamental practical skills, such as the ability to identify flawed assumptions or recognise the underlying agendas of other people. By reinventing and adapting the best features of IQ tests we can create an evaluation more suited to a business setting.
MEASURING EXECUTIVE INTELLIGENCE
So how do we adapt intelligence testing to assess an individual's level of business acumen? The first step is to figure out what we need to measure. Just as educational institutions focus IQ tests on the skills that predict academic success, we must create measures that zero in on the cognitive skills that determine business aptitude.
For instance, while we frequently hear how essential it is for someone to 'think outside the box', what actually determines one's facility for doing so? In other words, what skills make someone a creative thinker?
Typically, creative thinkers can view the same issue from multiple perspectives. They are able to define a particular problem in several different ways, anticipate likely obstacles and identify sensible options for overcoming those obstacles.
We often say that someone has exceptional political or social savvy, but what exactly does that mean? What specific cognitive skills allow that person to handle interpersonal situations so effectively?
Typically, socially skilled people are exceptional at recognising underlying agendas, gauging how these agendas may conflict with one another, and anticipating the probable effects and likely unintended consequences of a chosen course of action. They understand how those involved are likely to react, and they weigh this information appropriately in their response.
Executives must be able to recognise their own mistakes and minimise the costs of these errors. But what enables someone to be self-aware and adaptive?
Generally such people are highly sensitive to the cues that suggest that they are making a mistake. They seek out and encourage constructive criticism and use it to make appropriate adjustments to their plans of action. When they blunder, they are quick to see their mistake and change course to correct the problem.
By focusing on the business skills that determine success, intelligence tests can be created that are tailored to a managerial population. Most of us recognise that there is no one single 'magic bullet' methodology when it comes to evaluating a job candidate, and intelligence tests are no different.
Like competency interviews, executive intelligence tests predict about 25%–30% of the variance in performance between candidates.
But because both methodologies (competency interviews and executive intelligence tests) measure totally different skills, when combined the two approaches offer a much more complete understanding of a candidate's potential – yielding predictive accuracy of around 50%–60%.
By employing a multi-method approach, interviewing methods can now achieve a whole new level of assessment accuracy and better identify those clear thinkers that businesses so desperately need.