Testing Just One Part of Hiring Process

I’ve taken a few personality tests. One was on how I negotiate and I thought the results didn’t really reflect how I go through that process. But everyone else thought the test had totally pegged me. When I took the Myers-Briggs Type Indicator it pretty much nailed my personality.

I thought about these tests when I read a discussion on www.wsj.com on the percentage of companies that use some sort of tests during the hiring process. Nearly 20 percent of employers use personality tests in the hiring or promotion process, according to a survey done in 2011 by the Society for Human Resource Management of 495 human resource managers.

When you get to hiring for and promoting into top positions, the amount of testing and assessments of candidates understandably goes way up. According to an article in the Wall Street Journal, “Employers Put Executive Job Candidates to the Test,” 72 percent of the 516 companies polled used assessments to make decisions on promoting executives, more than double three years ago.

These assessments can include psychological interviews, role-playing and simulations. For example, candidates may be told to pretend they are dealing with a frustrated customer who starts yelling at them.

Not surprisingly, Google has identified the qualities and skills it desires in people who fill their top positions and has created an algorithm to predict each candidate’s success.

While I do think these tests have some validity, I believe they should be treated as just one indicator of whether a person can handle a high-level position. Testing should be just part of the process.

A key part of the process for me is just spending time with the person and getting to know him or her. After being in the turnaround business for more than 30 years, I’ve done a lot of hiring and firing. Luckily, one of the skills I’ve developed along the way is the ability to read people, a skill that is useful in just about every area of life.

It’s a skill that the legendary coach Bear Bryant had, according to people who worked with him. Bruce Arians, the Cardinals head coach, was his assistant for two years and called him “a master of personnel, of people.” It’s undoubtedly one of the skills that helped him win 323 games as coach of the University of Alabama football team.

(I also adhere to one of his hiring policies. “I don’t hire anybody not brighter than I am,” he said. “If they’re not smarter than me, I don’t need them.”)

If you want to improve your ability to read people and learn more about them than what they are telling you, here are a few questions to ask from an article by Anthony K. Tjan on the Harvard Business Review blog, “Becoming a Better Judge of People.”

• How does this person treat someone he doesn’t know? If you meet in an office, how did he treat the receptionist? If you go out to a meal, is she polite to the waiter?

• Does the person feel authentic? Did your BS detector go off at any time? Are they trying too hard?

• Is this person an energy-giver or taker? We’ve all known people that give off a negative energy. Does this person have a positive view of the word or tend to react negatively?

And one of the most important questions to consider: Is this person self-aware? A good understanding of your strengths and weaknesses is key to being a good leader.

Testing candidates can tell you a lot about their qualities, skills and values. But spending time with them and observing how they behave can tell you even more. 

Qualities to Look for in a CEO

The Wall Street Journal reported this week that the pace of CEO changes is picking up again and almost 20 major companies are searching for a replacement in the top position. These include Microsoft, J.C. Penney Co. and Toys ‘R’ Us. Martha Stewart Living Omnimedia Inc. has been searching since late last year to replace Lisa Gersh.

What should these search committees be looking for?

A study done by Russell Reynolds Associates found nine attributes that differentiated CEOs from other top executives. The study assessed areas like communication skills, relationship skills and decision-making approaches. These nine attributes fell into three areas: willingness to take calculated risks, bias toward action and the ability to efficiently read people.

I can agree with these attributes as being critical to those taking over management of a major company. Having hired, fired and served as a CEO for several companies, I suggest they look for CEOs who have these qualities as well.

1. A person who is willing to admit his or her mistakes

This one is so important that Chapter One of my book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes,” is about checking your ego.

A CEO must be willing to admit his mistakes, learn from them and move on. Covering up mistakes can not only lead to bigger problems, when you are found out you risk losing the respect of all those who work for your company as well as those that do business with you.

Making mistakes is not usually the major cause of a company’s failure. It’s covering them up or adhering to the mistakes that can lead to major issues.

2. A person who isn’t afraid to hire people smarter than himself

A CEO has to be able to leverage the talents of others. When I am acting as Interim CEO I am always happy when I am surrounded by people smarter than I am. I am the catalyst to get a job done and that is easier to accomplish when the people around me are smart and capable.

3. A person who doesn’t back down from the realities of a bad situation

I devoted a chapter in my book to this as well, called “Confront Your Harsh Realities.” One of the biggest mistakes CEOs make is refusing to recognize challenging situations. Whether it’s an issue with a vendor, problem employees, financing difficulties, a changing marketplace — whatever the issue, a good CEO needs to recognize when a bad situation is brewing and be prepared to handle it.

4. A person who is proactive, not reactive

A good leader needs to head off potential problems before they occur, preventing crises if possible. If a leader is proactive he will have the people, ideas, tools and other resources in place to handle anything that comes along.

5. A person who communicates openly and regularly

A company grows and thrives on open communication in good times. And in bad times, a staff that feels fully informed about what is happening is better able to pull together and weather the harsh periods. And CEOs that keep lines of communication open across all levels in a company can learn a lot from those on the front lines.

I thought of the bias toward action attribute when I read a story about Stephen Elop, who may be Microsoft’s next CEO. According to an article on UsNews.NBCnews.com, when Stephen was a college student in the 1980s he didn’t like the data-sharing methods available. So he bought some Ethernet cable and ran 22 miles of cable around the campus from building to building, creating one of the first Internet networks in Canada.

That’s the kind of man you want leading your company.

Should You Work for a Family Business?

The title of a recent Wall Street Journal feature caught my attention: “The Upside of Being an Outsider in a Family Business.” As an interim CEO, I know a lot about being the outsider in a family business. But my position is different from the start — I have been brought in as the boss at a critical time, with power and authority to weigh in on decisions about the future of the company.

What about executives that chose to go to work for a family business, knowing from the beginning that they are outsiders? They would naturally have doubts about their ability to move up in the company. Will they be eligible for promotions or will those automatically go to family members, who may be less experienced and less qualified?

If you go to work for a family business, are you limiting your career and opportunities for future growth? Will you be caught up in family squabbles?

While those potential disadvantages of working for a family-owned business are ones to consider, there are actually several advantages to working as a non-family executive in a family-owned business.

You may be more respected for bringing in an outside perspective.

In many family-owned businesses, the family members’ experience is limited to just that business. You are bringing a wider spectrum of experience and more knowledge about the market. Every business needs a fresh perspective and new ideas.

Competition for executive jobs may be less.

Forbes Insights released research in the spring that showed 47 percent of executives from private companies perceive that their upward mobility will be limited if they go to work for a family-owned business. Fifty-five percent of people that run family businesses reported that this perception harms the talent pool. While it isn’t always the case that a family member will be considered over any other applicant for a promotion, that perception may keep qualified people from seeking out the position in the first place.

• You may be given more responsibility and enjoy more flexibility than in a publicly owned company.

If a rigid, corporate lifestyle is not for you, you may find more flexibility at a family-owned business where rigid policies don’t have to be enforced. And because family-owned businesses tend to be smaller, you may actually move up the ladder and take on more responsibility faster.

• Family-owned businesses rely on outside talent and may do more to keep you on board.

Family members in a family-run business tend to be more loyal to the company as it is in their family and they may also have an ownership stake. But if you are hired as an executive and prove yourself to be a valuable employee, that company will have to work harder to keep you in a senior position. In a recent article on Fox Small Business Center, consultant Mary Hladio, president of Ember Carriers Leadership Group in Cincinnati, Ohio addressed this issue.

“In today’s competitive market, family-owned businesses have to be mindful of how non-family talent can benefit their business,” she said. “Businesses need to be prepared to offer fair compensation, competitive benefits, a growth track and perhaps some non-traditional benefits.”

Those benefits may even include an ownership stake in the company. Other family-run businesses like RDG Concessions, which operates several luggage and apparel shops at San Francisco International Airport, tries to retain senior employees by treating them like family and involving them in operational decisions.

Working in a family business as a non-family member may not be for you. But you may not want to automatically rule it out, either.

Any Time of Year is Good to Express Appreciation

I know a CEO of a large security services company who began a tradition when his company was first founded. Every year he wrote a card to each employee during the holidays, expressing his appreciation for that person’s contribution to the success of his company.

As the company grew larger and larger, he kept up the tradition. He had to start earlier in the year, and may have enlisted others to address the envelopes, but he never quit writing those cards.

envelope and noteI’m sure some of you are shaking your head already. “Why should I thank them for doing their jobs?” you may be thinking. Or, “We thank all our employees twice a month. It’s called a paycheck.” Or you may think that no one thanks you, so why should you be bothered to thank others?

It’s true that criticism is much more prevalent in the workplace than appreciation. It’s partly human nature to point out the negative and leave positive actions unrecognized. And a lot of managers don’t believe in showing gratitude or just feel awkward about it.

Jack Welch is the former Chairman and CEO of General Electric, now an author and founder of the Jack Welch Management Institute. One of the tenets of his leadership philosophy is “Lead by Energizing Others, not Managing by Authority.”

He believes in making people passionate about their jobs and prefers inspiration to intimidation. Part of this leadership lesson includes letting others know exactly how their efforts are helping the organization and sending handwritten thank-you notes to colleagues and customers.

There are even sound business reasons for doing so. Ones that contribute to your bottom line.

In a recent article in the Wall Street Journal online about showing appreciation at the office, it was reported that more than half of human-resource managers say showing appreciation for workers cuts turnover, and 49 percent believe it increases profit.

Dr. Noelle Nelson, a consultant and clinical psychologist, wrote a book called “Make More Money by Making Your Employees Happy.” In the book, she cites a study from the survey research consultancy Jackson Organization, (since acquired by Healthstream, Inc.), that shows, “Companies that effectively appreciate employee value enjoy a return on equity and assets more than triple that experienced by firms that don’t. When looking at Fortune’s ’100 Best Companies to Work For,’ stock prices rose an average of 14 percent per year from 1998-2005, compared to 6 percent for the overall market.”

Increased profit, less turnover and a more pleasant, positive work environment. All from showing employees a little appreciation.

One way to express appreciation is with a personal handwritten note sent to the employee’s home address. In the note, cite a few of that person’s contributions over the past year.

If that isn’t possible, at least consider rewarding all the employees at your company. Take an example from Apple. In 2011, the new CEO, Tim Cook, gave all the employees paid vacation during Thanksgiving. In a memo he wrote, “In recognition of the hard work you’ve put in this year, we’re going to take some extra time off for Thanksgiving. We will shut down with pay on November 21, 22 and 23 so our teams can spend the entire week with their families and friends.”

You may not be able to shut your entire office for three days to show your appreciation, but consider an afternoon off or treat the office to lunch one day, any time of year.

In fact, any gestures of appreciation you make at times other than holidays often get more attention.

Joey Reiman, CEO and founder of BrightHouse, gives all his employees March 4 off every year. He calls it, “the day to March Forth on our dreams.”

Voltaire was probably not talking about company profits with this quote, but it is appropriate in an office setting too: “Appreciation is a wonderful thing. It makes what is excellent in others belong to us as well.”

The Real Estate Market Will Recover in October – Just Don’t Ask Me Which October, a guest post by Vic Taglia

As managing partner of GGG and the Turnaround Authority, I get the pleasure of providing guest posts by our other partners. The following post is by our newest Partner, Vic Taglia.

A realtor called me today about selling my house in Florida. My neighbor sold his in a short sale for less than half of what he paid four years ago. The realtor told me that new owners of the development will be starting construction at much lower prices, so now may be the time to sell, before the supply increases. The new owners of my development bought the property (with the big name designer golf course, club house, fitness center, tennis courts, pool—you get the picture) out of bankruptcy about 18 months ago.

I spoke with the Property Appraisers of two Florida counties in the past few weeks and they see continuing declines in property values across the board—commercial, residential, industrial, raw land, etc. They have advised their Boards of County Commissioners to prepare for continuing declines in real estate taxes.

Last year we sold an office and warehouse building to an end user. I asked the banker who financed the deal if his big bank was now making real estate loans (I was looking for some good news). He laughed and said this particular deal got done only with SBA guarantees and the personal wealth and guarantee of the buyer’s owner.

I talked with an accountant who tells me his wife is now working for a big auctioneer. “They had their best year ever last year—over 250 auctions,” he said.  They have so many properties to auction, many are held on line.

I have also talked with real estate brokers and appraisers who report the same thing: Real estate in Florida continues to decline in value and they don’t see any recovery on the horizon.

I spoke with a client last week who told me he is selling his 65 foot two story motor yacht (with an elevator, no less).

“I thought you loved that boat,” I said.

He responded, “I do, but I want to buy some 100 acres of land nearby to play with on the weekend.  This land will appreciate in value, my boat won’t. And, besides, I want the cash.”

This is from an entrepreneur whose business generates over a million dollars of cash every year and who has bankers making appointments to try to lend him money.

Another accountant friend sold his house three months ago and moved to a rental house on the water. He reduced the rent 20% by paying a year in advance. He is using the capital from his home to purchase and flip foreclosures.

Wednesday is real estate day in the The Wall Street Journal. It used to be fun to see all the fancy resorts, big condo buildings, ranches, etc. with full page ads. Now the ads are one sixteenth of a page with headlines such as Bankruptcy Court Ordered, Absolute Auction, FDIC Owned Property, etc. Sometimes these are the same properties I saw six years ago.

Land is close to free in my part of Florida and elsewhere, and construction costs are the lowest in decades. I am not shilling for Florida real estate (I can, however, offer you a great deal in a wonderful golf course community outside Tampa), but I want to draw your attention to some hard facts.

1.  Land in many places has reached values unseen in decades.

2.  There is no recovery in sight.

3.  There are bargains to be had for long-term cash buyers.

4.  Owners are reaching their limits of endurance; they are becoming motivated sellers.

5.  And Cash is King, now and forever.

What does your real estate situation look like? Does it confirm or counter this picture?