ve-BINAR: Using Math to Make Human Decisions: Exploring Employee Assessment Tools

Okay, very good. Well, good morning, folks. Great to have you here. Happy Thursday. Greetings from San Francisco, where it has been raining for a week and I think it's going to rain for another week or two. But in any case, welcome. Today's webinar is entitled Using Math to Make Human Decisions, Exploring Employee Assessment Tools. I am delighted to have our expert guest speaker on this subject, Chris Taylor. This webinar, as always, is being recorded. It'll be on our, on our site, on LinkedIn, on YouTube, and in fact, most of our interaction with these webinars comes after the fact with recorded sessions, downloads and viewings. So I think we think in this business and in many of our executive experiences, employee assessments promise a lot but deliver a wide variety of results when we actually put them in use. Chris is going to enlighten us on this topic and we will and we'll discuss the common employee assessment available as well as their limitations and proper use. Chris is a business advisor at Culture Index with many years of corporate experience. Culture Index is a strategic advisory firm that helps business leaders in management organize and management on organizational scaling and transformation using applied analytics. Chris, he not only has applied behavioral analytics experience, but he also brings a lot of years in sales leadership, customer success training and operations. So let's jump in. Quick housekeeping note on our webinars. We open up the floor for Q and A at the end of the discussions and you can send your questions through the chat function here or ask directly. So Chris, welcome. Great to have you. Chris, at a high level, tell us a little bit about your experience in the business of personality and assessment testing within various types of business environments like startups and SMBs.

Sure. So, you know, it's interesting. I've obviously been in business for a long time and over those years I've had given to me almost every assessment that existed. Well, actually I thought I'd almost every assessment existed now that I understand the full breadth of them. I hadn't, but I'd taken every different type. And I think one of the key things to understand about tools that exist in the psychological testing space is each of them is really good about returning a small amount of information about a person. The value in many of the tools is that this information is objective. Some of the tools are more subjective than others, but when you add objective information into a high quality process, you typically get a better result. And so what I find is often the case is people have a tool that they like because they understand it and it's in some of the cases quite A big hurdle to learn how to use it, but they don't understand the limitations. And so when they use information that seems like it's right, but they don't understand the limitations, they often make what I'll call an uninformed decision. And it's that kind of surface where a lot of these tools exist, where people sort of know what to do with them and then they're making decisions with them, and then they're wondering why those decisions aren't working out. And that's really the biggest thing when you're going to use an engagement tool is making sure that you already have a good process to add it into, and then it's then improving the quality or the fidelity of your decision making.

That makes total sense. Yeah. So what is the status of the use of these tools these days and what are the trends that you're seeing?

So the tool use is on the rise. And the reason is pretty simple. People have figured out that there's a hunger to make better decisions. And in the current environment, where people are moving jobs pretty frequently, where it's hard to find the right person, where you're trying to decide what your culture is, how remote are we, how in person are we, what are we doing? There's a drive to want to use a tool. And, and there's also some companies that are pushing the boundaries in the sales sense in a way that's causing more tool use. A good example is EOS has a tool set that many of their practitioners are involved in called the Colby. And again, good tools have limitations, and it's really in the understanding of that that helps you decide whether or not you should adopt these types of things or whether you're ready to add them.

Yeah, got it, Chris. That, you know, we. Over 30, 35 years, I've certainly run across a lot of tools out there like Culture Index, Myers Briggs, Disc, Hogan, Kolbe and others. Do. Do these tools, are they really unique? Do they have their own use cases? Do they generate different kinds of results?

They absolutely do. And so I think it's really helpful at this point to think about what the source of these tools are and then which ones are built from which family, because you've thrown out some names that are built on different families of research. And so it's in the 30s to the 70s, there were essentially three very well respected bodies of research that are the basis of most of the tools that are in the market today. The first is the most widely used tool in the history of man. And that's the Myers Briggs Assessment. Many of us have taken it. I've taken it four times in my life. And it is a very accurate tool that helps you understand your current feelings about your behaviors. So the problem with the Myers Briggs in a business sense is it's not consistent over time. In other words, I've actually had multiple different Myers Briggs designations just depending on where I am in my life. As a self discovery tool, the Myers Briggs assessment is reasonably unparalleled because there's so many people that have taken it. There's deep insight into every one of the variations. But for business, Myers Briggs is, I don't want to say it's worthless because if you want to host an employee self discovery session and have people understand more about themselves, it has value. But again, one of the main things I see as a problem that people do is they want, the bosses want their employees to get better so they give them tools and then say, well, why didn't they change? When in fact the proper use of the tool is ask the boss to change and the employees may or may not come along, it honestly shouldn't matter. And so Myers Briggs is a very good tool. I love it for personal use. A lot of psychologists use it with their patients. But in a business world, not a big fan because the information isn't static over time. The other two big areas that almost all the assessments have come out of are called the big five and disc. So the big five, guess what, has five variables or five traits that they report on, disc reports on four. And then there's one other tool that's out there that has a lot of fans and it's called an enneagram. And it has nine factors to understand yourself. But honestly, when you look at every tool, they are either a riff of Myers Briggs Big five Enneagram or disc, or they've tried to combine multiple ones of them to get better, higher fidelity answers. And so those kind of tools would be things like 16 PF and Colby each Colby kind of tracks back to one of the big four. But in the end, right, it's all about the nuances there. And so in business, by a huge margin, the tools that are easiest to use are Big five and disc based assessments. And that's simply because the data doesn't change over time. Now what have the companies done? So you mentioned Hogan, you know, I mentioned Colby. A Gallup Strength Finders is another massive one. Performance index is out there, Culture index is out there. What are these companies doing? Well, they take the research that existed. It's very Very valid. And they do their own riffs and, and so they do some research. They try to gain higher fidelity answers and then they try to package it in a way that is easier for the manager or the leader to consume and easier for the person who's taking the survey to take it. The big four, if you do the true original versions, you're going to invest between 40 minutes and two hours on each assessment. As you can imagine, if you're trying to use one of those as a hiring screening tool, you're missing a lot of candidates who are simply just not willing to invest the two hours to complete it. And people will say, oh, well, you know, those were people I maybe shouldn't have looked at because they weren't willing to do a two hour assessment. But it turns out there's certain personality types that you may really want to hire that are going to be turned off by that. And so you should try to make your intervention short so that you can get as much data on as many people as possible. And so specifically Culture Index took the disc research and then the improvement that performance index made, and then they made it faster and higher fidelity answers. But Strength Finders has done the same thing for the big five. And what's interesting is I run into clients that are actually using two tools. They use a Big five tool and a disc tool to make more informed decisions. And it's a little more laborious to train everybody, but it's not a bad approach because both of those tools are somewhat complementary.

That's very enlightening. That's a good segue to another question I've got, which is why and when would an executive team decide to adopt the use of a personality assessment? I have seen, I mean, even in our, in our Vendex business, I work with clients, some of whom use assessment tools for their executive team, others use assessment tools for everybody. So what's, what's the rhyme and the reason of using these tools from an executive team point of view?

So I run into companies, if somebody's engaging me, they're going to use it across their whole company because there's simply not enough return on investment just using it with the executives. And so what happens is some of these tools are quite expensive to use on an individual basis. Like I've had a $30,000 PDI assessment performed on me when I work for a very, very large medical device manufacturer. And you know, that was the step that was required when you went from director to be considered for senior director VP roles. Well, clearly we're not going to spend $30,000 per person on everybody we hire in the company. That's just not feasible. So what happens is people say, well, I don't want people to feel a certain way or I don't want to invest the hours it takes to get this and train the people to use it. And so they start limiting the use of the tools, when in fact I would advocate going the other way, which use the tools, train the people to use them, and then use it as broadly as possible so that you can make better human decisions. And so how it actually works, each company, it's a little bit different. I think that the economics of it and the need to not want to train too many people is what leads to the limitations. And then if I say I got to make better decisions on just my executives, then they'll make good decisions on their people. It's kind of funny actually, because how is that executive going to have a magic wand to make a great decision on a person without the information necessary to do that? And then this kind of leads to another topic that's really important to understand because DISC and Big 5 do not give you insight into the whole person. And this is one of the biggest misnomers and mistakes people make when they look at these tools. When you understand. I'm going to talk for a minute about just disc. Disc gives you incredible insight into 30% of a person's personality and it's their brain wiring, it's their fit. Are they a fit for the role you're asking them to do? And that's a wonderful thing to have that insight because when we interview people, we interview for three really important things, right? Job fit, experience and attitudes and values. And one of the big, big, big no no's and the mistakes people use is they use a tool to say this is the right person, but they're only looking at the job fit and they're ignoring the experience and the attitudes and values. And so when I work with clients, I work for them to improve the whole process. And that is I will relieve the burden of you having to see if this person's a fit for the job. But I need you to double down on making sure their experience is valid, they can actually do what they say and they're going to bring the right attitude and value to your team. When you get all three of those things right, it's magic.

That, that's fascinating. Chris, can you talk first? So talk about driving performance, developing high performing teams from an assessment point of view, as opposed to like a screening Tool. So let's say you know, my organization, yes, very comfortable with screening tools to decide who to hire. But then on the flip side, all right, I've got my team, how can I drive higher levels of performance? And I use these kinds of tools for that objective.

So Disc and Big five absolutely give you information on how to motivate the team. And now here is the other big problem in these tools. Most people, when you tell them about a tool, immediately jump to, wow. Wouldn't it be impressive to have that information available when I hire people and turns out it is. But when I have clients that have been with culture index for 4, 5, 6 years, guess what percent of the overall value they attribute to hiring? 15%. The massive bucket of value is actually managing, motivating and aligning the team to the work that's in front of them. And I actually have a really interesting story around this because as we all know, the business market is a changing environment. And so did an assessment for a alternative mortgage company that was puzzled. They were puzzled because they sell a very high profit mortgage and they do it by dialing for dollars. So the people, basically you have to feed them leads and they dial and they have to generate business. It's a very hard way to make a living, but it's a very profitable one if you can get the alternative mortgages closed. And for the last 10 years they had a success model. They were using a tool and they understand, they pre screened their people and they brought them in. And these people were very, very successful. They were generating about a million dollars a month off of a 15,000 per month spend on leads. In other words, every rep they had cost them the salary plus 15k in leads. And a top, top performer, an A player, was generating a million dollars a month in mortgages. And all of a sudden the people that they had, that were more support characters, this happened in 2021, became the dominant players. And the people that had been succeeding for 10 years were starting to fail. They went from over a million dollars a month to less than a quarter million dollars a month on average. And I'm talking about 80 people. So we're not talking about a small shift, but they couldn't get their brain around what the issue was. And we went in and showed them by doing an analysis not just at hiring, but of the team and where they were at, right then we identified 20% of their reps who were not motivated for whatever reason. And then we found another group that had been the former low performer, but they're people that have a very high score, excuse me, in perfectionism. So they're not that social beast that just gets on the phone and convinces you to buy something. They're the person that's a little quieter, they're personable, but they really are involved in the details. And what happened was, right, the documentation required to get one of these alternative mortgages became more important. In other words, I can convince you, but if I can't get the paperwork from you to make the deal deal happen, then the deal doesn't happen. And so we actually modified. They had two pathways to success prior to 2020, and we've now scoped that to two. But the dominant one was the one that used to be their minor pathway. And so by envisioning the people using tools, we were able to objectively show them why. The people that they for years have been saying are the non performers, but we still need a few of them because they keep all the details going and they help the other guys when their work gets overload on them ended up being their top performers because of a market shift. And it's exactly that kind of analysis that companies that are using these tools on a regular basis are able to adapt to without the frustration and the why does the guy that I loved for the last six years now a dog? The answer in this case was a market change. But now we could identify who and why and why we needed to change and hire the different people in those roles.

I was going to ask you about the use of assessment tools and diagnostics in sales teams in particular, so you definitely address it. Anything else? Because our community, our clients and our community of sales, of our community of executives are sales leaders. And so everything we do is focused on sales leadership and leadership capital. Anything else that you think would be pertinent and good to know about diagnostic and assessment tools to drive sales performance?

Absolutely. So two ways. Number one, on an individual basis, these tools can help you unlock an individualized recipe for each employee. And the best sales managers do this kind of intrinsically. The problem is the best sales managers aren't the best at getting the plans and the performance and all the other things that need to get done in that sales management job. So often when you look at the senior leader in sales, the company's made a decision, do we want the motivator or do we want the guy that plans? There is one small subgroup of people, about 5% of the population that's good at both, but they're a rare commodity. They're actually some of the most successful sales leaders. But as I was saying, when you give a manager who maybe is pretty good motivator but really good at putting the plans and systems in place to support that sales team, and I unlock his ability to motivate people by giving them the information on an individual recipe per person, the performance increase is massive. More importantly, the reduction in turnover is massive. And one of the things that is the promise of these tools that if implemented properly is that we will reduce your turnover and that saves you a ton of money. Most people, most companies vastly underestimate the cost of turnover. I have one client who's in the H vac plumbing business and they have about. Well before they engaged me, they had about 15 people they hired out of high school to become journeyman plumbers that turned over in the first 120 days. And what we found when we did the analysis is every One of those 120 day turnovers actually cost that company $58,000. Now you can imagine in a sales role in a professional company, when a sales rep leaves and goes to a competitor, Gallup would tell you that that's going to cost you up to 10 to 15 times that Rep's annual compensation. And so preventing turnover, especially of your top performers, is absolutely critical. And then the ability to motivate those that you have until you get to a revenue point where you can upgrade. So that's the one side of the equation, which is how do I get more performance performance out of my reps? Now let's talk about the other, which is applicable in sales, but it's also applicable in every other department in a company. And that's what happens when we take a more flexible approach to how we align the team to the work. And I'll give you an interesting example, it happens to be a sales example, but many of them in all different areas and walks of life. One of the problems when we go into a company is that they have boxes on org charts and the box and a job description tells me exactly what that person's going to do. Turns out that again, every person has strengths and weaknesses. And what if I could just look at their strengths and weaknesses and move not all of it, but say 20% of it and take stuff that somebody's terrible at and somebody else could do three times faster and just assign that work there and then reassign the work that this person's superpower lends itself altitude. By doing that, you begin to understand that I don't need to hire as many people as I think I can get more done. And I Can have higher expectations. I'll give you an extreme example. It was a software sales company in the data warehousing space. Incredibly boring stuff. It was data warehouse automation. And at the time when I joined, we were selling this for $25,000 a seat license, which turned out to handicap us more than we ever knew, because the big companies, the people that were going to buy 100 licenses thought that that was too cheap, and they wouldn't consider looking at a tool that was that cheap, even if it provided a tremendous amount of value. On our journey over five years, we started out with three technical salespeople. They were the classic tech sales guy. They could demo the product, they could talk to a geek. They. They had enough charisma to talk to an executive, but they, you know, they were really about the product, what it could do and how it could help you. And they were pretty successful. Then we had kind of an unusual thing happen. Our CEO was in a fraternity, and one of his fraternity brothers said, hey, I got a kid that's coming out of college. He doesn't know anything about tech, but I think you ought to give this guy a look. And because they were buddies in the fraternity, we ended up hiring this odd duck of a person who turned out to be, in my world, would call him a rainmaker. Somebody who just is a social being that has a massive network that is tireless, that just goes from person to person. They're the kind of person, when you ask them, do you know how to solve this problem? They go, no, but I know this person and they've done it before. And let's call them and I'll find out the answer. And we didn't know what to do with this guy because he couldn't sell the product. He didn't even really know what the product did at a technical level. And so it caused us to stop for a minute. And as a management team, we got together and we did something we had never done before. We created a team. We took that young guy that was just a dynamo of people, and we added him to our best sales rep that had a 90% close rate. Quadrupled sales in the first year, tripled in the second year. Three years of doubling, which led to a profitable exit. And it was all because we took. Not because of tools in this case, but it was because we took an alternative look at the reality and came up with a new solution and tested it. Now, the key thing that happened then is because of this, because we had these teams, and then we created a second team. We had to compensate differently. And so instead of using traditional sales compensation, we went for a company compensation. So we had a company sales target and a company retention target. And when we hit that, everybody got paid their percentage of the bonus pool. And by doing that, we had this unbelievable synergy. And instead of being competitive in our sales teams, we had people handing deals off to other people, because if the deal got closed and we hit the number, everybody got paid. And so taking a look at things from a different lens is often very helpful. And it's something that I don't think we do very often. And it's one of the things I really enjoy is causing people to slow down for a second and go, maybe there's another way to do this.

I love that story. It's wonderful. Thank you. Thanks for sharing that. So I've got one more question. I'm just looking at the clock. One more question I'm going to ask. I'm going to then invite the folks on this call to be ready with a question or submit it through chat and then after that, we'll wrap up. So, in the spirit of horrible west coast weather, Chris, what are the downsides and let's say, required safeguards when using personality assessments?

I've already alluded to the first, which is understanding what the limitations of the data are, and don't make decisions solely based on it. Use it to add to a quality process. And so the first thing I do with every client of any size is reevaluate their hiring process and ask them actually to improve it in most cases prior to incorporating the use of this data. And that's because a bad process with objective data is still a bad process, and it causes people to use the tool incorrectly, hire people they're not happy with, and then guess what they do to the tool. They throw it away. Now, in my world, that's a problem because selling a tool, but in the other side of things, it's also a problem because people then don't believe in these things and they're absolutely useful when used appropriately and without training on how to use it. And again, one of the big advantages I have is I train everybody that uses my system two full days, and then I have a coaching program afterwards that comes into the program because we recognize that it's easy to fall into a, ooh, I had that work once. I want to do it again without having somebody say, guys, look at the whole picture. And in fact, that's one of the things I do regularly, is get involved in the early part of the hiring process before the interview to inform the interviewers on what they need to ask about that person. But more importantly, I'm really there to say, are you making sure you have something in place to address their experience and their attitudes and values? Because without those you're going to fail.

That's great stuff. You have certainly expanded my mind to better understand what tools are out there, the differences, when and how to use them. And I really appreciate it, Chris. Very, very useful. Any questions that are coming in from the floor? Floor?

Yeah, I'll take the liberty, Andrew, of asking a question, Chris, you'd already talked about, you talked about sales, but I want to expand on that a little bit because that's our target audience here. The three aspects of a assessment in the process of hiring somebody, you described it as the experience, the values and the personality. Right. Those three elements when it comes to the experience, what tool, what And I want to put you on the spot here, but what's the best tool to use when it comes to salespeople or are they all equal?

So we've got to take a step back and ask a slightly different question question, which is what is your sales process and what are you looking for? There's 19 different personality types. Some of them you're not ever going to want to put in a sales role, but there's probably 11 that you might. And so it depends very greatly on what your goals are and how you're imagining that sale happening. So the dialing for dollars rep is not somebody I want calling on somebody selling technical software. And so it's matching it's team assignment and then it's putting people with the right experience in to get what you want out. Now, every time you hire an employee, you're signing up for a number of responsibilities, one of which is motivating them, but another one is growing them. And you grow them through enhancing and enriching their experiences, whether that's in ride alongs or in sending people to courses. And depending on the person, you might use a completely different set of tools to develop that person. And these kind of tools that we're talking about allow you to understand who that is well, money well spent on and who it is money you're wasting on. When you take your typical very aggressive, social, persuasive sales rep, he doesn't remember anything after four days. Guess how valuable sending that person to a course is a waste of money unless you want to show them that you like them. And that's all you really did when you sent them away. Another type of person who's a good sales rep remembers that training for 10 years. That's a hugely better investment if the goal is to improve performance. And so when you start looking at it that way, you kind of arrive at we've got to match the people with the sale and then we'll get the result. But there is no one size fits all.

Great, thank you.

One of life's lessons. No one size fits all. Very good. Chris, again, wonderful to have you today. Thank you very much for your time, your expertise, your insights. We've covered a lot of ground and I, I'm guessing there will be follow up members of our community will reach out if we can make connections. We'd love to do that.

And I would just like to throw out there that I very much appreciate the opportunity that you, Henning and you Andrew have made for me. And in return for that, anybody in your network that would like to have a complimentary analysis done on their sales team, it'll only take seven minutes per person and a one hour meeting and I can uncover the good, the bad and the ugly about every team and I'm willing to do that for anyone who's interested and that is completely complimentary for your Venducks partners.

Oh, wow, that's, that's very generous. We, I, we're going to be taking you up on that, I'm sure. Thank you, Chris, that's wonderful. Well, again, thank you. Happy New Year. Great way to start the year together and we will be in touch very soon. Have, have a great trip in San Diego, Southern California and we'll see you soon.

All right, thank you guys. Appreciate it, Chris.

Thanks Henny.

Bye bye.