Tony Carter, Chairman Air New Zealand, says cultural fit can probably be better assessed by interviews and referee checks. Photo / NZ Herald
Tony Carter, Chairman Air New Zealand, says cultural fit can probably be better assessed by interviews and referee checks. Photo / NZ Herald
A number of experienced directors spoke to Henri Eliot about their views on board directors taking tests to assess personality, skills and cognitive abilities.
Recently, Michael Schrager in Harvard Business Review discussed whether Board Members should have to take a personality test often used to assess personality, skills and cognitive abilities of prospective employees.
Should prospective board directors in New Zealand undergo the same type of personality tests?
A number of experienced directors spoke to Henri Eliot about their views on this topic.
Tony Carter, Chairman Air New Zealand says that "I have never used it, although I have in executive recruitment, where it was helpful."
"I suspect it is a tool which is worth considering, but in most cases the 'cultural fit' can probably be better assessed by interviews and referee checks. It is likely to be most valuable when a person is being considered for their first governance appointment and assessing whether they are potentially a good fit with the balance of the board."
Rob Campbell, Chairman Tourism Holdings Limited, says, "Well the first problem I see if personality tests were required would be that there would be no accountants on boards. I'm sure that, more seriously, most boards would find such testing intrusive, though this would be very inconsistent given that many companies do use such testing for senior executives."
From Rob's experience, he feels that "such testing has quite limited utility in candidate selection. Experience, energy, engagement and expertise (I just invented a new rule - the four E's) are the key factors."
Abby Foote, independent director at Z Energy has a different perspective where she finds it encouraging to see more of the rigours that are typically applied when recruiting for executive roles being applied equally to board appointments. While she has found that "there's not always a perfect fit between the evaluation tools used for executive recruitment and the nature of a board role, there are valuable insights to be gained from the use of such tools".
From Abby's experience, tools such as the Hogan Assessment system enable boards to form a view as to how director candidates are likely to contribute around the board table, areas where they may benefit from some development, and insights into how individual candidates can best be supported as they transition onto the board. She adds that: "individual directors may also benefit from the insights such tests provide, particularly if it's been a while since they have undertaken such an assessment as an executive or as a reminder of areas in which their strengths or development areas may show up differently in a board room role."
Abby feels these tools "will provide the most value if the board already has good insights into both its existing members and how the overall board functions, and is committed to developing the board as a high performing team. However, the tools can also be useful for boards with elected members or appointees without governance experience to identify development opportunities, which will enable that person to quickly become a valuable contributor to the board."
Finally, Abby sees "no reason why such assessment tools should create legal or privacy issues in a boardroom setting when such issues seem to be easily managed when the tools are used when recruiting for executive roles. "
Victoria Carter, independent director Turners Auctions, has a slightly different perspective that being a director at a monthly meeting is a bit different to being part of a management team where fit and personality can be very important. "I think before shareholders worry about the need for personality testing which the Harvard article eludes too, they should be more concerned with diversity - because with diversity you get a range of thinking, views and ways of looking at life which might be more valuable!"
She adds that "boards are a bit different, (where) you want a range of views and opinions to create some healthy discussions. Divergent backgrounds mean people tackle the same idea in different ways. So if you are doing a personality test to get a homogenous board doesn't it defeat the purpose? Not that you want someone always being argumentative at the board table but healthy debate can lead to better decisions."
Victoria personally does not know many companies that do personality testing. "The reality is a good board does annual reviews like you should be doing with employees, so if you had someone who seemed to be always niggling and not constructive then the Chair can deal with it appropriately. Not sure if personality testing would have identified that such a person might undermine the board anyway!"
