In today’s global workplace, compatibility and chemistry can matter as much as competence and creativity.
Hiring processes frequently turn into grueling marathons of test projects and psychometric profiling. And the rise of social media, big data and the predictive analytics championed by human capital gurus such as Google’s Lazlo Bock virtually assures that testing will play an ever greater role in the selection and management of employees and their managers.
The same economic logic and efficiencies that drive organizations to test their employees for temperament and fit should encourage shareholder activists and regulators to demand directors and boards to be similarly profiled. The psychology of fiduciaries and boards matters as much to shareholder value as the psychology of managers and employees. Even the president of the New York Federal Reserve reportedly declared that the nation’s largest financial services companies suffered from institutional pathologies at the very top. Personality testing for boards and their committees would make a creatively cost-effective first step for sussing them out.
“It’s not a crazy notion at all,” asserts Robert J. Kueppers, managing partner of Deloitte Llp.’s Center for Corporate Governance. “We do suffer from the relative opacity of governance…. The biggest impediment, of course, is that many boards would find this intrusive and invasive…. There might also be legal issues around discoverability.”
With virtually all forms of psychometric testing, privacy is a serious concern. But regulators who champion transparency as a virtue should be willing to explore how best to balance the privacy rights of fiduciaries with shareholder needs to better know the temperaments of the directors representing them.
Too much comity may breed a risky groupthink; too much boardroom fractiousness can undermine culture and strategy. Shareholders worldwide may have not just a right but a duty to insist that their boards agree to take personality tests for the sake of enterprise efficiency and effectiveness.
Michael Schrage
Michael Schrage, a research fellow at the Massachusetts Institute of Technology Sloan School’s Center for Digital Business, is the author of Serious Play.