The Performance Improvement Blog

Un-Intelligence Testing

HR departments are not being very smart about intelligence testing. Apparently, the use of intelligence testing in hiring and promotion is increasing without much thought to accuracy. The latest issue of HR Magazine has an article by Martha J. Frase in which she writes, “Evidence is accumulating that mental ability is the best way to measure predicted job performance.” This trend troubles me because organizations run the risk of hiring the wrong people, missing the right people, and alienating everyone. I have no doubt that for many jobs there is a strong relationship between mental ability and job performance. The question is, “Do we have a useful way of measuring the kinds of mental abilities that affect performance on a particular job?” The answer is, “No.” The most commonly used and rigorously developed intelligence tests are, from a psychometric and statistical standpoint, valid and reliable. But from a practical, workplace standpoint they are lousy predictors of performance. At best, a test score accounts for less than a third of the variation in any performance score. A standard intelligence test might be the best single predictor of performance, but other factors explain more of an individual’s performance than do intelligence tests. Other individual characteristics such as previous job performance, attitude, interpersonal skills, aspects of personality, etc., are probably of equal or greater importance.

We also have to ask,”What do we mean by intelligence?” There are many intelligences so one has to decide which ones to measure. The APA 1996 Intelligence Task Force Report says:

It is widely agreed that standardized tests do not sample all forms of intelligence. Obvious examples include creativity, wisdom, practical sense and social sensitivity; there are surely others. Despite the importance of these abilities we know very little about them: how they develop, what factors influence that development, how they are related to more traditional measures.

Something else that makes me nervous about the use of intelligence tests is that many examiners do not have adequate skill to administer, interpret, and explain the results to the person being tested. To do this well requires a high level of psychometric and counseling ability. The scores need to be understood in context and along with other information about the employee’s performance and the scores should be interpreted and explained to the employee and others in a manner that is appropriately respectful of the well-being of the individual. Also, there are ethical issues related to confidentiality and long-term record keeping that have not been adequately resolved.

Testing is popular because it appears scientific, it is much easier to use than the other indicators that are available, and at this point we do not have a better single measure. We would like to believe that an intelligence test score can make the hiring and promotion decision for us. But the truth is that it’s not adequate. I believe the best indicator of future job performance is still a combination of past job performance and attitude toward the specific job and co-workers. This is harder to gauge but worth the effort.

What Do Apple Stores and Las Vegas Casinos Have in Common?

In my November 12th blog post, I quoted the investigative reporter Alex Frankel who in comparing his employment in Apple stores versus other companies, said, “Apple treated us like adults.” This comment came to my mind today while reading about the impressive success of Apple stores during a very tough year for other retailers. I also read that Las Vegas Strip casinos have had a phenomenal year. They have had a nearly 20% increase in revenue in October compared to the same month last year. This is while the rest of the casino industry has lost ground.

The explanations offered for the success of Apple are quite different than those being offered for the success of the casinos, but I would argue that it is probably the same reasons. Sure, the value of other currencies against the dollar plays a part in making Las Vegas attractive to wealthy visitors from other countries, but the customer experience is just as important in gaming and hospitality as it is in retail, maybe more so. MGM MIRAGE, the owner of 10 properties on the Strip, has made the quality of the customer experience a priority. Not only has it created attractive hotel, restaurant, and gambling environments, it is investing heavily in training its employees to treat each other and its customers with respect and to be responsive to the needs of all customers. Vegas and Apple have tremendous global competition. Yes, they have high quality, competitive products but they also know that they must invest in training and developing employees who can deliver a high quality service.

Ivory Silos

It has taken the threat of global warming to get professors from different academic disciplines to talk to each other seriously about solutions (See New York Times article: A Threat So Big, Academics Try Collaboration by Claudia H. Deutsch). University centers, which are safe zones for cooperation among university departments that have historically been at war, are being created at institutions across the U.S. Academic centers as a place for interdisciplinary study is not a new idea in higher education, but the size and resources of these new centers and their focus on environmental issues is worth noting. They are an attempt to break down the academic silos that have persisted in universities for the past 150 years.

The workplace silos in corporations mirror the divisions that faculty and students experience in the university. One of the biggest concerns I hear from my clients in businesses today is the need to break down these silos and get product engineers, economists, marketers, sales people, IT people, and manufacturing engineers to all work together and stop “tossing the product over the wall.” This structural roadblock to innovation and market-place success is being addressed through new approaches to organizational structure, teamwork, and organizational learning. However, until the academy changes, new employees will continue to bring their disciplinary biases with them to the workplace, which reinforce the current barriers to finding sustainable solutions in business and to the most vexing problems of society.

Health care, public education, poverty, crime, employment, are all problems that need an interdisciplinary approach. Solutions to these problems are not likely to be found in the academy. The culture of the university continues to reward individual contributions to narrow problems at the edges of inquiry in a single discipline. It is still very difficult for interdisciplinary groups to get funding, to be published, and to enjoy recognition from one’s peers, which are the rewards of academia. I applaud the centers that have been created to bring chemical engineers, MBA’s, and political scientists together to study the complex problems of drinking water and alternative fuels. But where are the educators, architects, artists, lawyers, social workers, psychologists, sociologists, and others? Why aren’t they at the table? In the university, as well as in corporations, it is still about maintaining tradition rather than about achieving solutions.

Predicting the Unpredictable

BNET posted “The Biggest Management Challenges in 2008”, which are predictions from Harvard Business faculty. They flag the usual suspects: technology, green business, global economics, volatility in the markets, social networking via the Web, and soft skills (I hate that term!). But underlying all of these challenges is the challenge of managing learning. Nobody can deal with the rapid pace of change in technology, economics, and political-social demands of society and nobody can deal with the unpredictability of change without continuous learning. So I submitted the following comment to BNET:

Learning is one of the biggest management challenges. All other challenges can only be dealt with effectively if people, from the C-level to the front-line, know what they need to know and know how to know what they need to know. With the prospect of information being available when, where, and in the form it is needed, the challenge will be to facilitate and support learning (technical, social, financial, etc.) that achieves important business results.

I know, an enormous amount of information is literally at our fingertips. The problem is that much of this information has not been edited or vetted, sorted and organized, and employees don’t have a line of sight from what they need to learn to the tactical and strategic goals of the organization. In addition to all of that, the goals keep changing. So employees can’t know what they need to know unless the organization as a whole is helping them do that. This is the challenge for management.

The Precarious Path of Ethical Leadership

Even the gurus of ethical leadership can stray. My last two blog posts have mentioned Bill George's new book, True North. George, former CEO of medical device maker Medtronic and professor in the Harvard Business School, writes about “authentic leadership” and reports findings from interviews with 125 “authentic leaders”. His own True North Web site states the following:

As the world becomes ever more dangerous and our problems more complex and dire, we long for truly distinguished leaders, men and women who deserve our respect and loyalty. Instead, we have suffered far too much bad leadership in recent years. The business media have exposed one scandal after another—criminally greedy CEOs, boards that do little more than rubber-stamp executive whims, companies willing to trade customers’ lives for profits, and corrupt and partisan political leaders…True North is about a very different kind of leader, the kind that we can be proud to follow. In this ambitious and important book, one of America’s most respected corporate leaders and his talented younger collaborator show that ethically grounded leadership is not only possible, it is often the most effective leadership of all. It is an optimistic message that falls on grateful ears.

I resonate with this notion that truly great leaders find and stay on an ethical path. But this journey is precarious, as it has been for Bill George. During his watch, Medtronic dealt with potentially life threatening product recalls and legal findings that they engaged in patent infringement. I don’t know what George knew and when he knew it; that’s not my concern. What is my concern is the difficulty of people throughout an organization staying on the ethical path and making it known when someone or some project has veered off. It will happen again and again, and we must be ever vigilant. A course in business school or a book on business ethics is not enough. There must be a continuous organization-wide conversation about ethics in everyday decisions. As Edward B. Goldman, health systems attorney for The University of Michigan, has said to me, there are ethical actions that are illegal and there are legal actions that are unethical. Companies might be complying with the law but doing something that is unethical. And what was ethical in the past, given new information, is unethical today. Right and wrong are not static. To know the difference and have the courage to do the right thing takes constant examination of one’s own and the organization’s behavior.

They Forgot What They Learned in Kindergarten

Lapses in ethical behavior at the top have been grabbing the headlines recently. Ruth McCambridge, in the November 2007 issue of the Nonprofit Quarterly online newsletter, addresses the lack of a moral compass for some leaders of large nonprofit organizations. Case in point is American Red Cross whose CEO was asked to leave by their Board because of an affair he was having with someone on staff. This happened after the previous CEO had been embroiled in controversy around the distribution of funds. American Red Cross had been desperate for a leader who would create a strong ethical image in the community. There was little tolerance left in the organization for any deviation from that goal.

Bill George, former CEO of Medtronic and professor in the Harvard Business School, was interviewed by The Wall Street Journal regarding True North, a book about “authentic leadership” that he wrote based on a study he did of 125 leaders from both business and nonprofit sectors. When asked about the definition of an “authentic leader” he said:

They lead with their whole selves – their hearts as well as their heads. They don’t get pulled off course by seductions and pressures. Every leader who has failed, that I’ve seen, has not failed to lead other people, they’ve failed to lead themselves…If [leaders] start to think it’s all about their fame and power and glory, in the end they’re going to do the wrong thing, and they’re going to lose it along the way.

In answer to a question about how to become an authentic leader, George said that leaders must be given opportunities to make mistakes and receive feedback early in their careers. “Good learning organizations allow people to do that – they give them those opportunities, they watch them closely, and then they give them feedback.”

These CEOs should have learned everything they need to know in Kindergarten, but apparently they forgot some of it when they walked into their C-level office suites. I have some sympathy for them because I don’t think the right thing to do is always clear. But that is why everyone, especially CEOs, should be having ongoing conversations with their peers about what is right in different circumstances. Their crime is arrogance, i.e., assuming that because they are on top they are not accountable for their actions and, at the same time, having the ability to rationalize anything that they do. We should expect ethical behavior from our leaders, but the lesson is that we can’t assume that because they made it to the top that they have a clear view of right and wrong. Sometimes grown-ups need to be reminded about what they learned in Kindergarten.

Global Leaders of Global Partners

When we think of performance improvement it is usually in reference to one individual or one team or one organization. But this is too limiting. The most important problems in our society cannot be solved by one organization or even one sector. We need to improve the performance of collaborations among companies, governments, and not-for-profit organizations. Bill George, former CEO of Medtronic and professor in the Harvard Business School, was interviewed recently by The Wall Street Journal regarding True North, a new book he wrote based on a study of 125 leaders from both business and nonprofit sectors. In the interview, he said:

No business organization, even Exxon where I'm on the board, no government, even the United States government, or no non-profit organization, is powerful enough to solve really tough and complex problems like energy and the environment, health care, global poverty, global peace, education. These all require a collaborative approach. I think what we're going to see is leaders who are comfortable dealing in all of those sectors, and know how to bring people together being the most successful in solving tough problems. I think we'll see this globally integrated leader emerging.

Vital Voices Global Partnership, an international non-government organization based in Washington, D.C., is helping to create these kinds of cross-sector partnerships on a global scale. I had the honor of facilitating a workshop at a conference they co-sponsored in Amman, Jordan: “Leveraging Corporate-Community Partnerships for Women’s Progress.” This gave me the opportunity to see first hand how essential partnerships were being formed among corporations (e.g. HSBC Bank), government agencies (e.g., U.S. Department of State), and non-government organizations (e.g., King Hussein Cancer Center) to address some of the most challenging women’s health problems in the Middle East today. But this is going to take a special kind of leadership. We need, as Bill George has highlighted, to prepare leaders who are comfortable in all three sectors and also have the skills and inclination to bring people together and facilitate collaboration to solve society’s problems. Cisco Systems has a leadership development program in which they lend their executives to U.S. nonprofits and NGOs around the world and in so doing help to build the capacity of these leaders to work in different sectors. I hope more companies, government, and non-government organizations, will share their leaders with each other as a way to develop leaders who can help us “…solve the really tough and complex problems...”

End of Bureaucracy 2.0

Gary Hamel, in his two-part blog posting Moving Management Online, accuses traditional management bureaucracies of failing to encourage and nurture creativity and collaboration. He argues that internet tools can turn this around. Hamel identifies five key problems with large bureaucratic organizations: 1) the lower someone is in the hierarchy, the harder it is for that person’s voice to be heard; 2) creativity and innovation are compartmentalized; 3) small, insulated groups of top executives make many poorly-informed decisions; 4) an employee has only one place to go for internal funding of a new idea – to his/her boss; and 5) the time delay between when an executive no longer is contributing to organizational success and when another leader picks up that mantel is much too long. Hamel envisions an internet-driven world in which employees have many avenues for being heard, creativity and innovation can come from anywhere in the organization, executives have the information they need to make good decisions, anybody can seek funding for new ideas from anybody, and authority and leadership are fluid. He writes:

Blogs, podcasts, mash-ups, wikis, folksonomies, opinion markets, discussion boards, and social networks—these technologies have already extended the range of human creativity and collaboration in ways that would have been unimaginable a decade or two ago, and there is much more to come.

While I don’t think the internet is the silver bullet for transformation of traditional bureaucratic, command-and-control management, I do think Hamel offers some intriguing (although untested) ideas. He got me thinking about additional bureaucracy “design flaws”. One flaw in organizations that the Web is beginning to fix is that of making training and development the sole province of a single department. This performance-improvement function has been compartmentalized and siloed much like creativity and innovation. Learning new knowledge, skills, attitudes, and beliefs is relegated to HR or a training unit in most large, bureaucratic organizations. Internet-based tools such as blogs, podcasts, wikis, discussion boards, webinars, and synchronous and asynchronous online courses offer the possibility for learning when and where employees need it. If a shop-floor engineer needs to fix a new robot, why should he/she have to wait for a class or for a hardcopy of the manual? If an executive needs some ideas about conducting a difficult performance review, why should he/she have to wait for a three-day workshop at a business school. Why can’t everyone, on their laptop or PDA, go to a database of best practices and share their learning with an online network of peers who can amplify the learning for each other. The promise of the internet is the democratization of learning, shifting the locus of control of learning from a single department to individual employees and teams.