“Leslie Pratch provides incredibly accurate and valuable insights into the abilities of our managers. Her perceptions and suggestions accelerate the partnerships we develop with a new manager and help assure a more successful relationship out of the gate.”
David Hawkins, Managing Partner
CHS Capital LLC
We assess the underlying psychological forces that lead to success or failure among already high achieving individuals. Examining the dynamics of the person-firm-environment interaction makes it possible to set forth scenarios in which an executive’s psychological tendencies might present risks or opportunities to investors or board members. We also indicate ways to manage the relationship between board members, investors, and the operating executive, whether it be support or incentives.
Methodology: The Active Coping Assessment℠ System
It is rare that executives will admit they are stubborn, hostile, or disingenuous – certainly not in interviews with those able to hire them. To the contrary, most regard themselves as persistent, assertive, and sincere, and their responses to questionnaires and interviews are calculated to demonstrate those abilities. Even the most astute interviewer will have trouble distinguishing stubbornness from persistence. Indeed, dysfunctional aspects of a personality may not bubble to the surface until the executive experiences severe stress, when the need for capable functioning is greatest.
Typically, companies look at what an executive has done in the past. To validate what an executive may claim, most companies conduct interviews and reference checks. That approach relies mostly on measures of past performance. How executives have performed in the past may not predict how they will perform in the future – especially as individual, the industry, and organizational conditions change. To predict how an executive will perform under new operating conditions, we tease out the particular talents that worked for the executive in the past and discuss the circumstances under which those attributes may or may not work in the future.
We present the executive with vague, ambiguous, mildly discomfiting situations, each requiring a response. Each has been empirically designed to elicit different aspects of the kinds of psychological functioning that are crucial to effective performance. To generate a response, the executive must fall back on his or inner psychological resources. There are no cues for how to answer. There is no pretending, no role-playing, and no faking good. Nothing about the assessment allows the candidate to rehearse a response or give a canned answer.
What makes our Active Coping Assessment℠ System so useful is its psychological realism. This realism gives our approach tremendous ability to predict how an individual will actually perform across stressful situations. By linking an executive’s values and motivations to the strength and stability of his or her coping tendencies, we predict how an executive will respond to the demands of a specific complex management role.
Success Rate of The Active Coping Assessment℠ System
Our method of assessment increases predictive accuracy by going beyond surface measures of behavior to examine an executive's psychological tendencies to behave in unforeseen business situations in ways that create or destroy value. The predictive validity of our assessments is more than 98%, far greater than the usual 50% predictive validity achieved by relying on past performance alone.
In a four-year prospective longitudinal study funded by the Booth School at The University of Chicago, we conducted one of the first systematic efforts to identify in advance individuals from a pool of already high achieving leaders with the psychological resources needed to be successful business leaders. The Active Coping Assessment℠ System was the basis for this research. Subsequently, we conducted one of the first and most extensive empirical studies into the personality characteristics of successful CEOs of private equity-backed firms.
We continue to conduct empirical research to fine-tune our approach. In a recent publication, we present data generated using our Active Coping Assessment℠ System for executives of five portfolio companies of a particular private equity firm. This was one in a series of papers examining the validity of our approach to help to select executives.
A central feature of our model is a construct called active coping. Active coping is the individual’s readiness to adapt resourcefully and effectively to challenge and change. Executives who exhibit active coping strive to achieve personal aims and to overcome difficulties, rather than passively retreat or be overwhelmed by frustration. Active coping predicts an executive’s behavior when the characteristics of the future environment in which the executive may have to behave cannot be fully specified in advance.
For senior management roles, the environment is especially complex and difficult to predict. Individuals with the greatest likelihood of performing successfully in such roles will be those who can respond in an adaptive manner to emergent, dynamic, and complex situations. This means that companies need to assess candidates' readiness to acquire new skills and strategies for coping with novelty.
Here, techniques borrowed from clinical psychology can help. These techniques, combined with customary management evaluation tools, can increase the accuracy of executive selection and the likelihood of positive returns by establishing whether the executives who will drive portfolio company performance have the capacity to execute corporate strategy. A prediction of how the executive will function in that particular management role emerges from an analysis of the dynamics of the executive, the strategy, and the operating environment.
Another recent publication took up the subject of integrity in executives an effort to refine our understanding of a crucial factor of executive performance. Please see Publications for a complete list of articles published in peer reviewed and cross-over journals.
See Making the Assessment for an outline of the steps involved in the Active Coping Assessment℠ System.