The accurate assessment and development of organizational leadership potential and capability is a critical factor in any effective talent strategy. While designing, implementing, and maintaining assessment processes have been a mainstay of organizations with robust talent systems for decades, the increasing emphasis on identifying high-potential individuals in corporations has resulted in the exponential growth of using assessments for development and decision-making. Consider industry estimates from Forbes and others that global organizations spend upwards of $360 billion on leadership development programs annually (see the Forbes link under suggested readings). Unsurprisingly, organizations are increasingly jumping on the assessment bandwagon to enhance the rigor of their talent discussions.
Moreover, independent benchmark studies conducted by Church and colleagues with top development organizations over the past ten years have reported that 85 percent or more use assessment methods for identifying and informing their internal movement and succession planning efforts, and that percentage has been increasing year over year even through COVID-19 (see “How are Top Companies Assessing their high-potentials and senior executives” and “How are Top Companies Designing and Managing Their High-Potential Programs” under suggested readings). As c-suite leaders and chief human resource officers focus on building their leadership pipelines both for near-term succession and with an emphasis on finding the “diamonds on the rough” high-potentials deeper in their organizations, the role of assessments has become increasingly more strategic than in the past.
Why Assessments Are Often Lacking
Despite the increasingly widespread use of these tools, we continue to hear senior leaders and HR practitioners in other organizations question the value and impact of their assessment efforts. Why is this the case? Isn’t it enough to hire a consulting firm, have them assess a group of executives or middle managers, deliver feedback on their strengths and development areas, and let them back out into the world to become better leaders?
The answer is no; it’s not that simple. Many factors play into the success of a leadership assessment and development program beyond just collecting and delivering feedback to participants. Aside from broader organizational system aspects, such as ensuring you have senior leadership sponsorship and deliver true differentiated development support after results are received, the assessments’ content is one of the most surprising areas where companies miss the mark from our perspective. In our experience working with these tools internally in companies like PepsiCo and Novartis and our external consulting efforts, standard “out of the box” approaches to leadership assessment are limited in application. If we step back and apply a culture change lens to the implementation of an assessment process, using generic models of leadership typically falls short for three key reasons:
- Lack of Future Focus and Cultural Relevance
- Over-reliance on Specific Methods or Tools
- Under Leveraging the Insights from the Data
The answer is simple. To build an effective, impactful, and meaningful assessment system, you need to customize the leadership framework for your organization, leverage a blend of tools that align with this framework, and design the process to yield data-based insights for multiple stakeholders, from individuals to the C-suite. Next, we’ll discuss how a customized approach can address each challenge we’ve raised.
- Focus Assessments on Future Capabilities Needed for Your Organization
The best leadership assessment and development programs focus on the capabilities (i.e., experiences, knowledge, skills, and abilities) that will be required for the future success of a given organization. This focus makes an assessment strategic and, therefore, more valuable and engaging for the organization and the senior leadership team’s talent agenda. Generical leadership models are great for developing generic leaders but less so for building the critical capabilities you need in your company. While using a standard “out-of-the-box” set of assessment tools might be faster to implement and possibly more cost-effective (depending on the consulting firm and if the target population is relatively small), it will inevitably fail to deliver beyond helping a group of feedback recipients improve their effectiveness. It’s simply not that relevant beyond the basics. Just as organizations don’t all have the same cultures, face the same business challenges, or have the same drivers for sustained growth, it makes sense that the most impactful leadership capability and assessment frameworks will be those embedded in your organization’s unique context. 
They should be relevant and meaningful and reflect the organization’s culture, language, and priorities to maximize their value (see the article by Church & Ezama under suggested readings that describe the PepsiCo GREAT5 leadership framework for an example).
- Take a Multi-Trait, Multi-Method Approach to Assessment, aka Use Multiple Lenses
Along with taking a more customized and company-specific approach to assessments, another critical step to ensuring more significant impact and value is to build an “assessment suite” that leverages multiple tools. By taking a more holistic and customized approach to building our fully integrated assessment suite, you have a real opportunity to:
- Drive a culture of the desired behaviors for the organization deemed strategically crucial for the future by the C-suite.
- Provide insights using different but complementary data-based lenses into the talent strengths and gaps relevant for leadership development planning and succession.
- Create significant pull and ownership from your C-suite sponsors.
And, of course, the participants will also receive better, more meaningful, and impactful feedback on leadership dimensions that matter to the business.
While it is critical to use empirically validated assessments to evaluate your leaders’ strengths and opportunity areas, more than using a set of generic tools alone is needed to gain a competitive advantage in the market. Though it may seem straightforward to take this approach, the watch out is that your competitors might be doing the same thing with the same tools. This approach might be helpful if benchmarking your leaders against others outside your organization is essential. So, instead of solely using an “off-the-shelf” suite, we suggest implementing a blend of third-party tools configured in a way that provides feedback against an internally relevant leadership framework.
Crucial to success, however, is ensuring that your behavioral tools (e.g., 360 feedback, which benchmarks show is the most used by top development companies) are direct measures of your future-focused leadership model. There is tremendous value in creating a custom 360 that links to your internal model, which allows for creating nuanced, measurable, and actionable behaviors that can inform individual development planning (for more on designing 360 systems, see the Handbook of Strategic 360 Feedback under suggested readings). After collecting enough data, it is also possible to empirically determine which items are the most predictive of future success internally, which truly brings your future-focused framework to life for the C-suite.
Since no one tool is the perfect solution, and senior leaders often have differing preferences based on personal experience, using multiple assessment measures and methods will drive maximum insights and predictive power for your organization. Equally important, using a blend of custom and standard tools will also help mitigate legal risk from the process because the tools measure different facets differently. Some examples here include coupling a custom 360 (i.e., behavioral feedback from others) with personality assessments (i.e., self-reports), cognitive tests (i.e., problem-solving and pattern recognition), structured interviews, and group exercises (i.e., third party observation), and digital simulations or situational judgment tests (i.e., testing for decision-making in novel situations). For examples of how these tools can be used in practice, see the SHRM report “Selecting Leadership Talent for the 21st-Century Workplace” under suggested readings).
Another argument for using a suite of tools customized against the internal model concerns the user experience for participants. Stated differently, you might have the most valid assessments the market offers. However, if participants have a negative experience or find some of the data confusing because they present results using different concepts, data quality can become irrelevant because they may reject the results outright. Leveraging the language of an internal model for presenting results from all the tools used will keep the terminology simple to follow and positioned as developable in nature (since the framing is in the language of leadership, not the underlying psychology of the tools themselves).
For example, a popular and valid personality assessment, the Hogan Assessment Suite, has detailed reports against multiple dimensions and subdimensions (additional details on the Hogan are under suggested readings). While results can be presented stand-alone to a leader using their 20+ proprietary dimensions, the same data can also be mapped and presented using the language of an organization’s custom approach. Similarly, for cognitive ability tests, instead of assigning a single number representing someone in the X percentile, you could map that percentile as one component within a “Strategic Thinking” or “Decision Making” capability. In our experience, participants almost always receive this better. It helps remove some stigma around testing in general and avoids the temptation to rank people using their cognitive scores.
- Unlock the Value of Assessment Insights for Leaders, Teams, and the Organization
The third method for ensuring your assessment data will provide maximum value sounds simple but is often overlooked for various reasons. Despite the best intentions of many senior executives who commission assessment work, there is frequently a lack of knowledge (i.e., the “knowing-doing gap” and/or capability regarding how best to maximize the value of the data-based insights beyond the immediate individual(s) being assessed (see the recent Workforce Solutions Review article by Ulrich, Church, Eichinger, and Pearman under suggested readings). In short, aside from the clear focus on helping develop individual leaders, assessment data can also be used highly effectively at the team (e.g., for team composition and staffing) and organizational levels as well (e.g., for talent planning and succession, building targeted development interventions and programs based on patterns of outages/needs, and for driving culture change and organizational capability regarding the language of leadership and embracing what top development companies call a “talent development mindset”). Each of these applications is described briefly below.
Figure 1. The Three Levels of Assessment Insights
a. For Leadership Development
Focusing on the development of individual leaders is often the number one reason organizations embark on assessments per the benchmark data (e.g., 72 percent use data for development per the top development company benchmarks noted earlier) and the reason many of these tools were initially created. Whether for individual coaching or as part of a leadership development program, using assessment data as a baseline can be very effective as the starting point for individuals as they craft their development journeys. Assessment insights help raise the recipient’s level of self-awareness (which research has shown predicts future success) and allow them to target their strengths for reinforcement and development opportunities to work against (for more on the role feedback can play, see The Feedback Reality under suggested readings). Data at this level is also useful for identifying future leadership potential, but this purpose is less for the individual than the organization.
b. For Enhancing Team Composition and Effectiveness
At the group or team level, assessment data summarized across a set of individual leaders can also be used to drive composition (i.e., through the staffing of complementary skills when looking at the team holistically) and team effectiveness (e.g., by focusing on group strengths and potential opportunities for working together more effectively). This typically involves enrolling intact teams and/or talent cohorts in the assessment process with two goals in mind. The first is to create bespoke interventions for the entire cohort (e.g., a networked team with shared purpose and goals or raise the level of collaboration for a specific leadership level). The second is to analyze the data to help support team dynamics and interventions in improving working methods, setting team charters and norms, enhancing communications, understanding formal and informal roles, and optimizing performance (see Executive Team Dysfunction, Defeated and Team Effectiveness 101: A Primer on What works for examples of this type of work done at PepsiCo over the years).
c. For Senior Leadership Succession Planning
Arguably, the most strategic and impactful use of assessment data for organizations and their C-suite leaders is when they are integrated into the broader talent management and HR agendas. This integrated assessment includes using insights to identify high-potentials based on the future success profile, and inform talent discussions, planning, and targeted development during formal review processes with senior leaders. In addition, these insights can be invaluable in slating key individuals for succession roles and summarizing capabilities of top successors to c-suite positions for the Board of Directors (in publicly traded companies). For example, assessment data can help pinpoint the development needs of a senior successor to enhance their readiness for the C-suite role using the 70/20/10 model of critical experiences, coaching and mentoring, and formal learning. Executives can utilize this data to decide who has the more robust profile to lead a significant SVP operating role with 50,000 front-line employees, for example, vs. who might be better suited for an SVP insights or strategy position. While this application of assessment data, mainly when it is based on the unique capabilities needed to drive sustained growth for the future, top development benchmark data indicates that less than half of top development companies use their data for talent decision-making or succession (44%) and even less for identification of potential (36%). Perhaps it’s an issue of accountability rather than capability, as only 13% of companies formally measure the outcomes of their talent management processes (per benchmark studies under suggested readings).
d. For Driving Culture Change and Organizational Capability Building
The other areas in which assessment data in the aggregate can be leveraged strategically for the organization are for use in large-scale capability or development interventions to close enterprise gaps in core areas (e.g., inspirational leadership, effective collaboration) as well as culture change initiatives (e.g., core values and leadership expectations). In essence, if leadership frameworks and the tools that measure them have been tailored for the future, by assessing significant numbers of leaders, an organization communicates and reinforces the “how” results should be achieved along with the “what.” This should not be surprising given that customized 360 feedback and other tools have been used for decades to drive culture change (see Church and Burke’s chapter on Strategic 360 for Organization Development in the Handbook). Yet, in our experience, many organizations are underleveraging this opportunity. Having a CEO and C-suite team endorse a custom set of leadership capabilities. However, it sends a powerful message about what is critical for the desired end-state’s success.
The Small Print
With all our focus on developing custom-integrated suites of solutions for enhancing the impact of assessments, it is remiss not also to stress the importance of ensuring the responsible use of data and the role that governance plays in global and ever-changing legal environments. Whenever an organization is designing and utilizing these types of tools and processes, special care must be given to the following:
- Protecting their integrity regarding what has been communicated to participants regarding the transparency and use of the assessment data itself,
- Understanding the role of languages and cultural differences when conducting and using assessments, particularly in global contexts,
- Building capability of those delivering the feedback if done so internally (e.g., HR professionals) as well as managers and even c-suite leaders in how to make the most effective and informed use of insights from the tools and
- Conducting a formal validation study using internal leaders to ensure there are no biases inherent in the tools being used in your company (see the SHRM resource under Suggested readings for more detail).
Where Does AI Play a Role in Talent Assessment?
As technology and its application to the world of work continues to advance at a breakneck pace, digital platforms and processes, along with the role of AI and Generative AI, have become one of the hottest topics of discussion. While there are many big ideas around the use of AI for talent tools and processes (see, for example, Where Does Artificial Intelligence Play in the HR Game and How to Tame the Talent Marketplace under suggested readings), in our experience, the current state of AI and Generative AI are not quite ready to replace talent professionals entirely. However, this is an area that anyone who works with talent needs to watch carefully as it continues to evolve.
In closing, assessments are critical for talent management and leadership development. If your organization struggles to justify the resources and spend thought or is simply interested in maximizing the value from these tools, the opportunities and actions are clear!
Suggested Readings
Leadership Development Is A $366 Billion Industry: Here’s Why Most Programs Don’t Work (forbes.com)
The handbook of strategic 360 feedback. (apa.org)
Hogan Assessments | Personality Tests That Predict Performance
Selecting-Leadership-Talent.pdf (shrm.org)
The Feedback Reality – TalentQ (talent-quarterly.com)
Executive Team Dysfunction, Defeated – TalentQ (talent-quarterly.com)
Team Effectiveness 101: A Primer on What Workshttps://trainingindustry.com
Where Does Artificial Intelligence Play in the HR Game? – TalentQ (talent-quarterly.com)
How to Tame the Talent Marketplace – TalentQ (talent-quarterly.com)
