How startups use psychometrics for leadership development can make or break them: 4 major principles to follow

A survey by the Society for Human Resource Management estimates that at present, 18% of companies use psychometric testing for a range of purposes, most commonly recruitment and hiring.  According to Harvard Business Review, skillful application of cognitive and personality tests (also known as psychometrics) help companies avoid hiring and managerial mishaps, which are estimated to cost a company at least one year’s pay.  Poor management can be especially fatal for startups, making skillful leadership critical to a startup’s early growth and success.  Ray Dalio founder of Bridgewater Associates, the largest hedge fund in the world managing $160 billion discusses the value of psychometric use for leadership development in his widely recognized bestseller Principles: Life and Work.  Dalio and his employees use psychometric observations and evaluations to identify and minimize derailing behaviors among high potential leaders.  In sum, leaders who lack self-awareness and fail to learn from their experiences contribute to their own derailment.  Honing self-awareness is the prevailing objective among clients in my executive coaching practice aiming to mitigate the derailing pitfalls that new challenges bring.   Applied research findings in this area reveal the most common derailments among faulty leaders:

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  • Problems with interpersonal relationships
  • Failure to build and lead a team
  • Lack of self-awareness
  • Inability to learn from feedback and experience
  • Trust/integrity issues
  • Inability to change or adapt
  • Poor composure under stress
  • Over-reliance on strengths

Unfortunately, many organizations choose the wrong psychometric assessments to use in their leadership development efforts, or use them in the wrong way.  Expert application of psychometrics can be a costly investment for small startups.  Typically the luxury of employing an esteemed management company like McKinsey for psychometric use in leadership development is far outside of the budget of early stage startups.

My professional experiences teaching and utilizing a range of psychometric assessments and later coaching tech leaders through challenging transitions provide a framework for offering these guiding principles on how startups can optimize psychometrics for their leadership-development.

Four major principles to follow:

Consider applicable laws.  Stay in legal compliance whenever employing psychometric tests. in your organization.  Anti-discrimination laws apply to psychometric assessment tools (particularly cognitive tests) stating they must be job-relevant and demonstrate internal and external validity.  The Americans with Disabilities Act provides specific guidelines for using psychometrics within organizations- they must respect people’s privacy and not aim to “diagnose” potential hires or employees in any way.  Historically organizations have used clinical psychometric assessments like the MMPI-2 for employment decision-making, though it was designed for the purpose of diagnosing mental illness and identifying traits common in those with personality disorders.  Because the MMPI-2 was developed for use with psychiatric and prison populations,  some employers have been taken to court for using it in their organizational decision-making and lost.  Using psychometric tools designed for use and application in industrial/organizational settings is a safer bet for company decision-making.

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Choose your tests wisely.  Aim to build an evidence-based approach for evaluating leadership growth and performance, with specific purpose in mind. If using psychometrics for hiring, aim to demonstrate that your hiring tools predict how you’re defining ‘success’ in a given role using rigorous statistical analyses.  Relying on interesting but random psychometric outcomes will at best waste time and resources, and at worst lead managers to make faulty decisions.  If using psychometrics to increase self-awareness in leaders, select assessment tools designed for this purpose, proven to be scientifically valid by experts in the field, and have demonstrated utility in identifying and redirecting problematic behavioral patterns.  Whenever possible, get support from experienced organizational consultants to help your company select appropriate tools for your company’s specific needs.

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Follow test administration protocol or risk invalidating outcomes.  “Proctoring” assessments ensures they are being taken according to the test’s protocol, either by having people take the assessments in front of an informed test proctor, or through video conference monitoring if they are remote.  Be sure that test takers are given clear directions according to the test developer or risk invalidating test results.  Be aware that some people may feel compelled to influence their results in order to appear more competent for a particular role, or may be more guarded in their responses as a way of presenting themselves in the most favorable light to potential employers.  Some psychometric tests have built-in measures that indicate whether a candidate’s pattern of responses reflect an effortful attempt influence their test outcomes, or if their responses are inconsistent with one another.  Using outcomes from multiple psychometric tests (referred to as a ‘test battery’) can help to gather a more accurate, comprehensive testing profile.

Leadership development initiatives with opportunities for privacy and self-directed learning enhance engagement.  When participants are allowed to maintain a sense of privacy over their psychometric assessment outcomes, they are more likely to engage in deeper, lasting growth.

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This practice provides a safer space for leaders to do a deep dive into understanding their own personal challenges.   Innovative venture capital firms like Alpha Bridge Ventures are investing in startup founder success with an on-boarding process that uses psychometric surveys to determine leadership style, then tailors support through an inter-disciplinarian team of coaches and wellness professionals.  Other venture capital firms like Andreessen Horowitz recognize the limitation of time and resources executives have to spare for developing their own employees.  Outsourcing leadership skill-building through founder retreats, externally facilitated consultation groups modeled after Stanford’s T-groups, or providing a broad and deep alumni support network à la Y-Combinator are all ways startup founders are achieving leadership success.   Larger organizations are investing in employee development through bespoke leadership programs like Potentialife, which provide participants access to strategic, self-directed leadership growth modules through the convenience of an interactive app.

Startups that invest in their leaders self-awareness will benefit from the long-term gains that self-knowledge delivers.  Appreciate that no matter how much progress we make, there’s always more to learn.

We cannot solve our problems with the same thinking we used when we created them.

– Albert Einstein

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Millennial managers leading startups: their generation’s new face of management.

According to Pew Research center the millennial generation (born 1983 – 2000) now number 75.4 million, surpassing the 74.9 million Baby Boomers (born 1946 – 1964) and Generation X’ers (born 1965 – 1984).  More than one-in-three American workers today are millennials, and have become the largest share of the American workforce.

In today’s current work climate, it’s not enough for millennial-aged managers to focus on productivity for their company’s success.  Employees who share their generational employment outlook expect them to drive the company’s mission with clarity and inspiration, embody a leadership style that supports their work/life balance and self-care routine, and provide opportunities for them to do work that fulfills their passion for making a positive, meaningful impact.  Millennials widely embrace thought leaders like Simon Sinek who encourage them to marry their values and intentions to their work endeavors for lasting fulfillment in their life.  Amid these formidable expectations, it’s easy for a manager who understands the values of the millennial generation to feel conflicted about how to drive productivity while still supporting her employees work paradigms.

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Any manager who leads without a strong sense of direction is destined to fall short of their targeted goals.  A millennial manager I coach in the venture capital space suggested I write an article based on the headway we’ve made in developing her leadership approach to managing her millennial-aged team.  The following Q & A is based on questions she and other millennial managers have expertly hashed out through their leadership coaching work.

“How can I screen potential candidates during the hiring process to reveal their true work ethic?  The nature of our work is deadline driven, and it’s hard to know who will prioritize work objectives over personal objectives.”

How to hire them:  Work ethic fit is critical to a company’s success, because a candidate with mismatched work ethic will negatively impact productivity, disengage other employees, and create inefficiencies for the rest of the team.  Early stage startup culture has influenced new hire expectations – it’s not unusual for employees at startups to serve in multiple roles to sustain rapid company growth periods.  Experienced millennial managers ask potential hires to share how they’ve handled shifting workflow and multiple role responsibilities in prior positions.  “Can you tell me about a time when you’ve asked a manager for guidance on how to prioritize your workload?  Particularly when you’ve thought meeting a deadline was going to be difficult or impossible because of the high volume and pace of the workload.”  This gives hiring managers a chance to learn if the person has experience identifying and solving workflow prioritization with others. By being transparent about their company’s work style and pace, and sharing specific examples of how team members typically ‘get shit done’ they reduce the the risk of hiring a poor fit for their company culture.  Millennial managers recognize the need to reconcile workload with self-care routines, and have learned to ask revealing questions like “How do you deal with burn out or work fatigue?  How have you managed times when you’ve had conflicts with team members?  What are your expectations for personal time off, working overtime, or through holidays?”

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Experts in psychological personality assessment use tactical questions like this to measure what they refer to as ‘faking good’, to detect a person’s willingness to be forthcoming or tendency to present themselves in an unrealistically positive light.  If given multiple opportunities, can a potential hire share a well-rounded work history that naturally includes unmet challenges, times of burn out, and how they’ve learned from those experiences?  Or are they consistently defensive and unwilling to acknowledge when they’ve been challenged or experienced conflicts at work?  Millennial managers seek to hire people who are willing to be direct and forthcoming, understanding this communication style lends itself to effective problem-solving with others.

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“What can I do to inspire my team members to take initiative in their own professional development?”

Millennial startup founders-turned managers understand the desire for personally meaningful work as a motivating principal behind professional development.  Based on this core value, millennial managers can inspire their employees to invest in their own development by encouraging them to cultivate their personal vision of career growth and success.  Managers seeking to inspire their employees ask “What do you enjoy most about their role?  What would you like to eventually do more of, and less of in your career path?”  By understanding what personally motivates someone, what is most rewarding, and how they’d like to see their professional opportunities take shape, a manager can provide support based on that particular vision.   Further, supporting employees in this way and holding them accountable for progress in their role performance will resonate on a deeper, more meaningful level.

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“How can I set the standard for work ethic with my team?  My employees get overwhelmed by deadlines, and it seems to be influenced by low self confidence and their desire to protect their work/life balance.” 

How to drive high performing employees:  When managers find they have an employee struggling to meet deadlines, the situation can put everyone on the defense.   The dilemma of many millennial managers in startups is that most if not all of the employees are highly valued for their unique abilities and everyone’s individual contributions are critical to company progress.  Further, the time and resources it takes to replace an employee and the risk of destabilizing team morale makes opting to solve the problem a frugal first approach.  While some employees may be failing to complete work as a result of prioritizing personal time, others may be failing to meet work expectations for other reasons.

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Through coaching, a millennial startup founder I support resolved how to effectively manage one of her highest-performing employees who’d begun struggling to meet his production deadlines.  After processing her emotions and generating a communication action plan, she began by conveying her high regard for his contributions to the company’s success, giving examples and recognizing his overall growth.  She listened to his perspective about why his productivity had declined without jumping to conclusions, with the intent to support him in finding a resolution that fit both of their needs.  This encouraged him to share openly about what his challenges and mental roadblocks were, and what changes could lead to a return to consistently high productivity.  This inquiry-led communication style led to both of them making a shift in thinking about how he could best operate in his role without compromising future leadership opportunities, provided new ways for him to contribute to deadline completion, fostering a solution-focused dynamic between them as manager and employee.

Many of the millennial managers I’ve supported have found inspiration for their managerial style based on the wisdom of their favorite leaders in tech, turning up their employee productivity and balancing idealism with practicality by:

  • making changes to the types of work an employee is responsible for completing (e.g. shifting an employee from working autonomously on projects to working in a support role to others)
  • providing alternative options for employees’ work evaluations based on their preference (e.g. brief periodic check-ins to ‘debug’ work progress rather than a longer final project critique)
  • building a work culture that encourages employees to take part in decision-making in how they solve problems rather than dictating how problems get solved

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