Can you test for CEO ability?
People certainly try. A recent Fortune article examines various assessments that Fortune 500 companies use in selecting a new chief executive.
It’s an interesting piece, but I’m a skeptic on these tests’ ability to pinpoint the correct candidate. Any time you give an assessment in the context of qualifying someone for a job, you assume you know the “right” answer. Coming up with a set of psychometric indicators that prove one contender for the CEO role is more fitting than another is sticky business.
Not to mention the tests can cost $85,000 per candidate—or much more.
The article dives into different tools executive search companies use to qualify CEO candidates.
- Simulations. Used by around 6% of companies, simulations confront the candidate with a real-time dilemma, such as a potential M&A. Assessors watch as they attend meetings and make decisions on the situation, often over several days. You might learn something about a leader’s style here, but the artificiality of the exercise and, again, the lack of a “right” answer limit the utility in my opinion.
- Cognitive tests. A smart CEO is better than a dumb CEO, yes. But you’ve likely proven baseline cognitive abilities once you get to executive roles. Will 10 extra IQ points matter in the CEO role? Probably not.
- Behavioral and personality assessments. Readers of Managing the Future will know that I’m a big proponent of tools like DISC and CliftonStrengths. However, these tools are intended to be value-neutral. They offer a language for describing differences between people, but they have repeatedly failed to predict job performance. Yes, certain situations might call for certain types of leaders; a Dominant CEO might initially struggle at an organization whose culture is heavily Influence-based, for example. But woe to the board or leadership team that uses personality testing as anything other than very light shading on a much fuller portrait of a CEO candidate. There’s no way to score “high” or “low” on a DISC test, and no way for it to tell you who’s going to most capably lead the company forward.
Some CEO assessments go even further, looking for unusual indicators in a candidate’s lifestyle. Hogan, maker of one of the most popular executive assessments, describes on its site the correlation between a person’s enjoyment of luxury or their number of speeding tickets on one hand and their ability to manage and lead on the other. Looking for red flags is a good idea; indulging in too much psychological conjecture isn’t.
At the end of the day, nothing replaces tried-and-true tactics for the uncertain art of predicting a good CEO. Boards and other stakeholders should engage in probing discussions with candidates about their values and their motivations, honestly examine the candidate’s past performance and do deep background checks with people who have worked directly with the individual. In this case past performance can be an indicator of future performance.