In 2018, Southwest Airlines Flight 1380 experienced engine failure. Debris from the engine struck the wing and a window, causing rapid decompression in the cabin and one passenger fatality. The flight’s captain, Tammie Jo Shults, who was one of the first women to become a fighter pilot in the U.S. Navy, calmly worked with air traffic control to land the plane successfully. Organisations always have crises, but they don’t always have leaders as skilled, self-possessed, and decisive as Captain Shults. What does it take to lead effectively through an organisational crisis?

First, we’ll explore what leadership means. Next, we’ll review characteristics of leaders who succeed through crises. Finally, we’ll touch on what organisations can do to develop crisis-resilient leaders.

What Do We Mean by Leadership?

Crisis is commonplace. Every organisation will face a crisis at some point. Leaders are responsible for dealing with those crises, and their legacy is typically defined by how well they handle challenges.

Leadership is related to organisational success. In fact, research shows that leadership has a significant impact on oganisational financial results. Who’s in charge really matters.

When we think about leadership, we need to start with human origins. Humans are a group-living species, meaning that leadership has always been critical for group survival. It involves convincing people to put aside their self-motivated goals to work together to accomplish a bigger task that benefits the group. Whether we’re talking about warfare, business, or athletics, successful leadership hinges on group effectiveness.

Leadership is the ability to build and maintain a high-performing team.

At Hogan, we’ve been studying leadership in conjunction with team outcomes and oganisational effectiveness for decades. We’ve learned a thing or two about how personality predicts who leads and how they lead.

What Are Crisis-Resilient Leadership Characteristics?

A quick word on these data: Hogan’s data science team surveyed studies on effective leadership through crises, identified the behaviours of successful leaders, and mapped them to the Hogan competency model. (We have conducted more than 400 criterion-related validity studies. That means we looked at personality and performance to learn which competencies matter for which behaviours, including effective leadership.)

So, what are the personality characteristics of leaders who effectively lead through a crisis?

Without further ado, let’s get to our findings . . .

Bright-Side Personality Characteristics in Leadership

The Hogan Personality Inventory (HPI) assesses the bright side of personality using seven scales to predict how people behave when they are at their best. Two HPI scales are related to how leaders respond during crisis situations: Adjustment and Ambition.

Adjustment measures the degree to which a person appears confident, self-accepting, and stable under pressure. Adjustment has to do with whether a leader panics easily or remains calm. It also speaks to whether the leader can confidently make critical decisions. (Think of Tammie Jo Shults’s composure as the airplane’s engine failed.)

Ambition measures the degree to which a person appears self-confident, leader-like, competitive, and energetic. The Ambition scale can indicate a leader who models appropriate behaviour to maintain order and who can adapt to unanticipated changes. The early days of the COVID-19 pandemic revealed how a leader’s response trickles down throughout an oganisation. When the leader appears calm, everybody else can feel calm.

Dark-Side Personality Characteristics in Leadership

The Hogan Development Survey (HDS) assesses the dark side of personality using 11 scales that concern how people behave when they stop self-managing. The HDS scales fall into three categories that show stress responses defined by moving away, moving against, or moving toward others:

• Moving Away – managing a sense of inadequacy by social withdrawal.
• Moving Against – managing self-doubts by persuading or manipulating others.
• Moving Toward – managing insecurities by building alliances or seeking approval.

Crises increase stress in everyone, including leaders. The Moving Away category, which comprises five scales, represents the most ineffective responses for a leader during crisis. When people move away in a crisis, they might downplay the size of the problem, ignore the problem, or even deny that it exists.

The type of leader people need during a crisis is realistic, calm, confident, and communicative. The Moving Away derailers are contrary to these qualities. Under pressure, a Cautious leader might become risk averse, reluctant to take initiative, and fearful of mistakes and failure. A Reserved leader may be disinclined to engage and communicate with others and may become overly tough or critical. Excitable means a leader might struggle to remain resilient or productive when faced with setbacks.

Values in Leadership

The Motives, Values, Preferences Inventory (MVPI) uses 10 scales to measure the inside of personality, which consists of values that are often unconscious but determine career satisfaction. Of all the scales, two are associated with handling crises: Affiliation and Security.

Affiliation concerns valuing frequent and varied social interaction. Leaders who score high on Affiliation tend to value networking and feeling a sense of belonging to a group or oganisation. Affiliation, which is positively associated with leading during crises, is related to showing the people involved in the crisis that you care and are part of their group too. Making people feel valued and supported is the important leadership behaviour here.

Security concerns valuing certainty, predictability, and risk-free environments. Leaders valuing Security are often interested in structure, order, predictability, and planning for the future. They might struggle with ambiguity, whereas people who are low in Security are accepting about not knowing all the information or what will happen next. Security, therefore, is negatively associated with crisis leadership. Leaders low in Security are comfortable making decisions in the face of risk and thus tend to handle crises well.

What Can Oganisations Do?

Putting it all together, a leader who has what it takes to lead through a crisis can remain calm, accurately evaluate the problem, make decisions quickly and effectively without perfect information, and reassure other people. Oganisations can prepare for potential crises by focusing on leadership selection and leadership development.

To find leaders who will effectively lead through a crisis, use a personality assessment to inform hiring decisions. Personality is highly stable, so selecting leaders with low Security or high Ambition, for example, is a wise strategy. The best predictor of future behaviour is past behaviour, after all.

If an oganisation has leaders already in place, leadership development opportunities can help them improve their ability to respond to crises. Development is the behavioural change that results from proactively managing reputation. A quality assessment that measures reputation can help leaders understand how others are likely to see their strengths, potential weaknesses, motivation, and values. With this strategic self-awareness, leaders can learn to adapt their behaviours under stress to perform more effectively.

Crisis is inevitable. Leadership is critical. Oganisations with effective leaders in place will handle crises better than those without. With the right leaders in place, crisis becomes an opportunity for oganisations to come out ahead.

Contact us for more information Learn about the Hogan 360

The post Leadership Through Organisational Crisis appeared first on Peter Berry Consultancy.

By researching the personal lives of CEOs and their behaviour outside of the workplace, Aiyesha has identified data that can be quite predictive of how they may perform on the job.

Let’s dive into how the personality characteristics of materialism and rule breaking can affect CEO behaviour.

CEO Personality Matters

Even with systemic fixes and the right incentives, not everyone will behave the same. That’s why corporate scandals still occur despite layers of regulation. Individual managerial styles matter.

“We know managers matter, but what about them is important?” Aiyesha asked. “What should we care about, and how does it matter for corporate outcomes?” Those questions inspired her research into about 1,000 public companies and executives in the US. Her findings? Certain personality characteristics, observable in off-the-job lifestyles of executives, correlate with actions executives take within organisations.

Regulators can step in and uncover fraud and scandals after they’ve already taken place—after shareholders have lost resources and employees have lost jobs. The goal of looking at lifestyles of executives is to know some indicators of risk beforehand. Stopping these actions before they take place by using an empirical measure of character is the underlying motivation driving the research.

Understanding CEO Risk Factors

Aiyesha’s research has shown two characteristics that could lead to major corporate blunders: materialism and an inclination toward rule breaking. However, organisations often ignore evidence of these values when hiring CEOs, especially for internal hires. Why?

First, there’s no need to dismiss a CEO candidate because they have multiple luxury assets or a few speeding tickets. They likely bring many other desirable strengths to the table, such as innovation, creativity, and a certain comfort with risk.

“But leaders can be a strong force in establishing the culture of the firm,” Aiyesha pointed out. Someone who breaks rules might inspire a culture that rewards rule breaking, for instance.

Most firms focus on education, experience, and accomplishments in selection. Including behavioural attributes in selection criteria can add to the educational and professional qualifications already in consideration. “Boards can definitely take more cautionary measures in their hiring practices, like expanding background checks for internal candidates,” Aiyesha added.

Repeated legal infractions or a lifestyle of conspicuous consumption are not reasons to dismiss a candidate. Candidates with these behavioural attributes bring very strong upsides to the table, but the attributes can be warning signs about questionable behaviour or values. Knowing what strengths and potential shortcomings a person brings to the role is the first step in establishing a system or process to mitigate the individual’s risks.

CEO Behaviour: Materialism

Measuring materialism in a CEO can be a challenge. For one, the signs must be observable. For another, the signs must be indicative of values, which is more difficult to discern.

When psychology researchers talk about materialism, they mean a set of values that define how individuals weigh intrinsic motivations, such as spirituality, benevolence, or community, relative to extrinsic motivations, such as image, status, or material possessions. “A very materialistic person will seek material acquisitions at the cost of community values,” Aiyesha said.

Merely possessing a lot of luxury goods is not sufficient to make one materialistic. “When someone has a zeal to pursue material possessions at the cost of the welfare of others and potentially themselves, they are exemplifying a materialistic value system,” Aiyesha said. The observable assets of executives like houses, cars, and yachts compared to their wealth level shows how intent they are on acquiring material possessions. If someone possesses five times the value of luxury assets as another person at the same wealth level, then it’s safe to say they probably have a tendency towards materialism.

Materialism is potentially a problem in a corporate setting if a CEO is willing to waste shareholder resources or damage the welfare of others to get material goods. This value held by a leader affects the values of the organisation, as well.

CEO Behaviour: Rule Breaking

Like materialism, external rule-breaking behaviour speaks to internal values. The underlying construct is a lack of self-control and disregard for rules and laws. If you believe rules don’t apply to you, you’ll be more likely to violate them to achieve your goals.

In looking at executives’ legal records, Aiyesha found that executives with legal infractions had a higher propensity to commit fraud and manipulate earnings numbers than those without. The results were true even for executives with only traffic or speeding violations. “Even minor violations can give an indication of deeper personality differences,” Aiyesha observed.

Here’s a twist: executives with prior legal infractions tend to be involved in committing the fraud themselves, while materialistic executives tend to create a culture where other people are implicated in the fraud.

Given that corporate fraud is an extremely rare event, Aiyesha also looked at the tendency to profit from insider trading. Rule-breaking CEOs profited more; the outsized profitability and lucrative timing suggest that they could have benefited unfairly. There also seems to be a correlation between these profits and the severity of the legal infraction—the more severe, the more profitable.

So, what should organisations do?

How to Hire a CEO

Based on Aiyesha’s research findings, these are the steps that organisations hiring for C-suite positions can take.

In general, boards should not dismiss a candidate simply due to luxury possessions or speeding tickets. They should, however, be aware of the risks that could point to a red flag.

Expanding selection criteria to include background checks and looking at behavioural attributes in addition to professional successes could be useful. Where necessary, organisations can also implement risk management and compliance measures as guardrails. Lastly, organisations can also help executives to develop strategic self-awareness and encourage them to define personal guardrails to manage their behaviour.

A Vote for CEO Frugality

“I want to end on a positive note and celebrate another characteristic that is linked to materialism. The opposite of materialism is frugality,” Aiyesha said. “Our research shows very strong consistent results of how frugal executives benefit companies in terms of stewardship of shareholder resources.”

The values of leaders set the culture of organisations. Materialistic or rule-breaking CEOs can tacitly foster an environment of materialism and rule breaking. Frugal CEOs, on the other hand, tend to have tighter controls and risk management systems. They tend to take a long-term focus and shape ethical cultures. These CEOs tend to focus on socially responsible activities.

“Creating a culture of frugality in organisations, either through hiring that mindset or by celebrating such an attitude so that it inspires everyone to have this notion, can take companies a long way in creating shareholder values,” Aiyesha said.

Listen to this conversation in full on episode 58 of The Science of Personality.

Contact us for more information Learn about the Hogan 360

The post CEO Behaviour appeared first on Peter Berry Consultancy.

The Research: Personality in Organised Crime

To examine the role of personality in organised crime, Danish researchers Oluf Gøtzsche-Astrup, Bjarke Overgaard, and Lasse Lindekilde tested a sample of 57 verified members of organised criminal groups (e.g., the Hell’s Angels) in Denmark, none of whom were incarcerated, using a comprehensive assessment battery: the Hogan Personality Inventory (HPI), the Hogan Development Survey (HDS), and the Motives, Values, and Preferences Inventory (MVPI).

These well-validated inventories have been used to assess more than one million managers and executives in some of the best-known corporations in the world. The HPI concerns personality characteristics that are associated with career success, the HDS concerns personality characteristics that tend to damage careers when overused, and the MVPI concerns values and career aspirations.

Research shows that organised criminal groups, like other human collectives, provide a sense of shared social identity and belonging to people who are unable or unwilling to join more mainstream groups. Furthermore, qualitative research on criminal careers points to the role of status attainment in drawing young men into criminal groups. Such groups seem to serve the same psychological functions as other politically extreme organisations and may attract similar individuals. Belonging to extreme groups provides members with a sense of meaning and identity and opportunities for status attainment that might not be available in mainstream society. This is the context in terms of which the assessment data should be interpreted.

The Personality Data: Who Are Gang Members?

The MVPI evaluates values and interests associated with career aspirations. The sample of members of organised Danish criminal groups received high scores for the Security, Hedonism, Commercial, and Power scales, indicating that, as a group, they value money, status, and fun delivered on a predictable basis. In terms of core values, they resemble any group of middle managers or venture capitalists in their desire for “the good life.”

The scales of the HDS concern behavioural tendencies that promote career success at moderate levels but can be dysfunctional when overused. The sample of Danish gang members have high scores for all the HDS scales. I would interpret their overall profile as highly adaptive in the context of their career choice: they are wary and alert for threats and signs of betrayal (cynical and not naïve), and they are willing to act if such threats materialize. In addition, they have good social skills and a colourful interpersonal style. Perhaps the most interesting aspect of their HDS profile are their high scores for Diligent (attention to detail and high standards of performance) and Dutiful (respect for authority). In terms of their action orientation and respect for hierarchy, the sample resembles special forces military or mercenary soldiers. In terms of their interpersonal style, they resemble politicians or venture capitalists.

The MVPI and HDS scores for this sample suggest the group has a lot of career potential that is not being realised in conventional terms. Their scores on the HPI suggest an explanation. The overall HPI profile is low, with the average score at the 28th percentile. By themselves, these low HPI scores would indicate social incompetence, but the HDS shows that the sample has substantial social skill. I interpret the low HPI profile as indicating that the members of the group feel alienated and estranged from the normal roles and rules of mainstream society. They want the same career outcomes—money, status, and fun—but they reject the socially accepted means for attaining those outcomes. Among the socially accepted means they reject is education; they have no interest in education and may lack the talent to pursue it. Finally, the members of this group have adopted a self-presentation style intended to signal their chosen lifestyle, and their rejection of normative social roles and behaviour, which are in fact arbitrary.

The Connection to Leadership

People evolved as group-living animals. The three big goals in life concern finding social support, acquiring status, and developing a sense of meaning and purpose. People satisfy these needs through their membership in groups: families, communities, churches, political parties, etc. For many poor working-class boys, membership in an organised crime group is a rational choice. But successful performance in those groups requires many of the same characteristics as successful performance at organisations like Apple or Amazon.

Contact us for more information Learn about the Hogan 360

The post Rethinking the Psychology of Criminal Behaviour: Personality in Organised Crime appeared first on Peter Berry Consultancy.

Firstly, lets clarify one very important thing. Succession planning is not just determining who will lead or takeover a business when the current leader steps down. When done effectively, the benefits of succession planning are far reaching and can have a major impact on the success of a business.

1. Builds stronger teams

When you develop and manage your succession plan in a structured and proactive way, the whole organisation benefits. The success of an organisation is not dependent solely on the leader – without teams actively supporting that leader, success is jeopardised. Effective and well-thought-out succession planning is an equally important consideration in the parallel worlds of sport and business. Much like a coach does not win games on their own, a business leader cannot drive the organisation forward on their own. If a leader is not prepared and competent enough to manage the culture and people of an organisation, failure is likely to be the only result.

Succession planning applies not just to the top job, but to all leadership levels throughout the business. By identifying leadership talent early and developing those leaders throughout their careers, they will be ready to step into leadership roles well prepared when the time comes.

2. Prevents disruptive leadership change

When there is a clear path set out for leadership, disruption caused by leadership change is minimised. With a plan in place, even if the leadership changes at very short notice, staff and potential leaders will be prepared.

Building a sustainable leadership pipeline readies executives and potential executives to advance at all levels of the organisation. By developing and training potential leaders, they can acquire an extensive knowledge of the business, teams, customers, and culture, and coupled with self-awareness, they are more able to make a smooth and effective transition to leadership and minimise negative impacts on the business.

3. The new leader is more likely to succeed

According to an article published by McKinsey, when leaders struggle through a transition the impacts are far reaching. The performance of direct reports under an under-performing leader falls by 15% compared to those who are led by a high performing leader. They are also 20% more likely to be disengaged or leave the organisation. This translates to cultural and financial implications.

Having practised and been mentored, trained and developed throughout their career under a succession plan, the new leader will be better prepared to lead and manage the challenges leadership brings. They will have developed skills in self-awareness and empathy with the competencies and ability to motivate, challenge and lead effective teams to drive operational performance.

4. Reduce the likelihood of hiring the ‘wrong’ leader

In its 2019 study “Succeeding the long-serving legend in the corner office”, PWC found that  the overall rate of forced turnovers was in line with recent trends, at 20%. But for the first time in the study’s history, more CEOs were dismissed for ethical lapses than for financial performance or board struggles. This highlights the importance of cultural synthesis between leadership and the organisation – hiring from within ensures this.

No matter how much a board learns about an outside candidate, executive stakeholders simply have a better understanding of an internal contender’s cultural fit, beliefs, strengths and weaknesses, especially as they relate to the specifics of the current business landscape and strategic objectives. As a result of the inherent information misalignment, the chance of making a mistake is much higher for a CEO hired from outside the company.

5. Separates the players from the stayers

By ignoring organisational politics and devoting adequate time and resources to assessing ‘hidden potential’, true leaders can be identified and developed. Often the individuals earmarked for leadership are socially skilled, confident and interested in influencing others and moving up the corporate ladder, however they may lack the requisite skills for effective leadership.

Evaluating potential based on objective data-driven metrics will help overcome the ultimate challenge: keeping the pipeline from entry level all the way to the CEO flush with options for filling vacancies.

6. Instils shareholder confidence

The Board is required to assess an organisation’s strategic direction and determine if it has the appropriate management team in place to achieve its goals. Shareholders are increasingly raising issues such as succession planning with their boards.

The fact that shareholders are directly asking executives about succession planning is drawing further attention to the importance of this governance issue.

Regardless of the structure of your business and whether or not it is looking for investors, succession planning should be a crucial ongoing consideration. It is not enough to bask in the glory of today’s successes – to remain competitive in the future, you need to focus on finding and developing those that demonstrate high potential in leadership.

For over 30 years, Peter Berry Consultancy (PBC) has been using an evidence-based approach to leadership assessment and development to ensure future leaders drive strategic and sustainable success in their organisations. Our team of qualified organisation psychologists work with businesses large and small to develop succession planning and leader development programs tailored to each organisation. To learn more, download our complimentary ebook ‘How to ensure your star employees become your superstar leaders.’

Download the ebook

The post 6 Benefits of succession planning appeared first on Peter Berry Consultancy.