I’m a big fan of the HR process known as Topgrading. If you aren’t familiar with the concept, it is a philosophy and set of tools used to identify, recruit, and manage talent at an organization.
Topgrading was created by Brad and Geoff Smart, and was used most famously by Jack Welch at GE, which became known as “CEO University” for its ability to develop talent that went on to become Fortune 500 CEOs. It’s not a process for the squeamish, as it uses a really rigorous and objective set of criteria for analyzing the talent in your organization, and it calls for swift action if you find that someone isn’t up to snuff.
Because of this, and because of the “Neutron Jack” reputation Jack Welch got for the huge number of layoffs he did in his early days as CEO of GE, Topgrading had a bit of a negative tone to it for a while. It was associated with “cold” CEOs that managed people as numbers, not as humans. This couldn’t be further from the truth.
However, the issue is still often debated in management circles. Should you have leaders – particularly CEOs – that are more results driven and analytical, or should they be more emotionally intelligent and capable of bonding with their staffs? Do you want the CEO that focuses more on numeric returns, or on creativity, innovation, and quality of life at the company?
The answer, of course, is both. But I thought that this blog post on the results of different types of CEOs was a pretty interesting read. It really makes you stop to think about your leadership style, and how your strengths and weaknesses as a businessperson impact your performance.
I’ve cut and paste the majority of the post here:
“Cheetah” CEOs outperform “Lamb” CEOs
January 14th, 2009 . by Brad Smart
Two recent issues of The Wall Street Journal and Chief Executive have created a bit of a firestorm, with Topgrading research questioning, if not destroying, a common myth – the myth that top executives, including CEOs, need more Emotional Intelligence than Type A intensity. University of Chicago researchers studied 225 CEOs assessed with Topgrading methods, and found that CEOs who were extremely results-oriented delivered much better financial results than CEOs high in Emotional Intelligence.
Are you surprised at this politically incorrect result? The current issue of Chief Executive shows the staggering costs of mis-hires at the top … and the fact that 2/3 of CEOs fail to meet the objectives they were hired to achieve, and the average tenure for a CEO these days is only 18 months. I think the two lines of research are related – that high level managers are hired with too much weight placed on Emotional Intelligence and not enough importance put on getting results.
In this article, I summarize some academic research on success of Topgraded CEOs, and you can judge whether the results are equally applicable to other upper management jobs. Having assessed well over 6,000 senior executives, including more than 600 CEOs, I happen to think what you are about to read pertains to ALL upper management jobs.
UNIVERSITY OF CHICAGO STUDIES CEO’S WHO WERE TOPGRADED
The September 15, 2008 issue of The Wall Street Journal reported findings in which three University of Chicago professors (Steven Kaplan, Mark Klebanov, and Morten Sorenson) studied the ghSmart Inc. Topgrading assessments of 225 CEOs hired by private equity firms. The question was – what are the strengths of CEOs who made more … or less … money for the shareholders.
WSJ: “The findings are sure to intensify debate about how much toughness is appropriate in a CEO.” With tough CEOs at General Electric, IBM, and Hewlett-Packard replaced by CEOs high in Emotional Intelligence, and with hundreds of studies of EI in the psychological archives – almost all seeming to sing praises for EI – the results indeed break with conventional wisdom.
As you might expect, the private equity firms researched, including Blackstone and Bain Capital, are not shy about measuring the financial performance of CEOs they hire.
RESULTS: Among the high-scoring traits of CEOs delivering superior financial results are: following through on commitments, hiring A players, setting high standards, holding people accountable, and analytical skills. Correlating less with financial performance are treating people with respect, listening skills, persuasion, creativity, and enthusiasm.
These results coincide with my experience – high performing leaders are not necessarily super salespeople, but as Jim Collins points out in Good to Great, underneath the surface they are intensely motivated. And results-oriented “doers” are not necessarily warm and empathetic, but people respect and follow them as leaders. Mark Gallogly, a co-founder of Centerbridge Partners, suggests that CEOs of public companies need more soft skills to manage relations with the public, shareholder groups, analysts, governmental entities, etc.
The ideal of course is to have both intense drive to produce results AND warmth, understanding, and empathy. But for any upper management job if there are two finalists, one with superior financial results and “okay” Emotional Intelligence, and the other with superior EI and only an “okay” record of accomplishment, which would you hire? Me, too.
Geoff Smart’s Topgrading professionals performed all the in-depth Topgrading assessments of the 225 CEOs, and he and I have discussed the results. In personal communications Geoff said that soft skills are important; however, the existence of the hard skills is what differentiated CEO performance.
In his CEO performance study Geoff refers to “cheetah” CEOs, who scored highest on being fast, aggressive, persistent, proactive, strong in work ethic, and holding people to high standards. And there are the “lamb” CEOs, who scored highest on showing others respect, listening, and openness to criticism. The “cheetah” CEOs met or exceeded their financial targets twice as often as the “lamb” CEOs.
It may be that the tough skills are absolutely necessary to get results, and the soft skills are important in moderation. I personally cringe when boards weight the soft skills over the proven ability to get results, because that almost always spells disaster. But it’s equally risky to hire the Type A, hard driving SOB manager who is clearly deficient in EI.
For more than a decade my specialty as an executive coach at GE was to help the autocrats “grow ears,” and it was my recommendation to Jack Welch to fire any executive who did not achieve at least a 7 on a 10-point scale on the interpersonal aspects of leadership. Jack agreed, and got the attention of the world when he fired four executives who exceeded their stretch operating and financial goals, yet after a year continued to be deficient in … you guessed it … treating people with respect, listening, etc. High performing companies, in my experience, have a lot of excellent managers who are a 9+ in getting results and a 7 in Emotional Intelligence.
