A key part of what we do at AH Loder Advisers is assessing and providing a strategy for improving the culture, team behaviour and decision-making in organisations, teams and individuals. In this article, we talk about some of the interesting results we have seen when assessing the decision-making capacity of Investment Managers in the City of London. All the managers surveyed in this article were asked to complete an online judgement decision-making assessment.
“Active managers have been falling short of their passive counterparts not just during the post-financial crisis period, but for well over a decade and during various phases of multiple economic cycles.”
Looking at your Judgement
This assessment is not an IQ test nor a personality profiling assessment but measures capacity in values-based behaviours both in the working world (work-side) and in the personal world (self-side) across over 60 areas. Established in the 1970’s following decades of research by Nobel Prize nominee Dr Robert S Hartman.
An objective and measurable assessment
The assessment delivers an objective in-depth measurement of someone’s values-based behaviour and the capacity for good judgement in only 15 minutes. It is the ideal tool because of its abstract nature; the managers were unaware of what was being measured or how. It is also excellent for benchmarking and ranking performance of different individuals over a period of time.
Used by Organisations
Used by leading businesses and sports organisations and in the UK and USA, including the world-renowned Mayo Clinic, this assessment will identify the best performers and is also an excellent tool in the development of high performers. We use it in recruitment, coaching of executives and also in the very binary world of Extreme Adventurers and Special Forces where a bad decision could be fatal. We also use it as part of a Material Risk Takers assessment and also in Investment Beauty parades.
A great tool for Compliance
In a world that is getting more and more regulated, finding a way to independently assess key risk takers in an organisation is fundamental. This tool provides an objective, measurable way of doing that, which can be repeated at least every six months, allowing for quick and early intervention if a deterioration in performance is seen. Nobody sets out to make bad decisions, but humans do it on a regular basis.
What does a Great manager look like?
If one knows what ‘Good’ looks like, the question posed now is what does ‘Great’ look like’ in an investment manager? Interestingly, over 80% of the manager’s profiles had extremely strong problem-solving capacity on their ‘work-side’. For their profiles to be ‘Great’, we would like to see a more solid foundation on the ‘self-side’. This would allow them to be able to perform at a much higher level on their ‘work-side’.
“Good judgement is the result of experience and experience the result of bad judgement.”
People, Task and Strategic
Three of the main areas measured by assessment focuses on a person’s capacity with ‘People’, ‘Task’ and ‘Strategic thinking’. We typically have seen stronger people and task scores with weaker strategic and lateral thinking ability. This would not be unusual for the managers to have a higher ‘people’ score, as they are interacting with their clients on a day-to-day basis.
The Great managers had an even balance across all three areas. It is possible that these managers have developed their strategic thinking since starting in the industry, but this may require further research to confirm. However, in essence, this balance means that when entering a scenario, they are more likely to place equal consideration to people, task and the strategic consequences of the scenario i.e. benefits and consequences. Being able to see the bigger picture in their working world is a quality that ‘Great’ managers all possess.
One of the key areas that the assessment measures is problem-solving ability and someone’s ability to understand, process and come up with a decision at pace. This ability to come up with quality decisions at a rapid pace can often leave others behind in their exceptional capacity. It is striking that 70% of the investment managers in this case, scored in this ‘extremely capable’ bracket. However, 30% of the managers were lacking in energy and this probably impacted their problem-solving score.
But they have low energy
The assessment’s previous research identified that people score much better with their “intuition”. Intuition can be noticing and sensing subtleties in other people but also in what is going on around them. Many would agree it is an important attribute for an investment manager, especially when looking at compliance and risk. In this case, the intuition scores have been impacted by the low levels of energy.
Burn Out is happening
Since 2000, the energy scores in all the people assessed have generally declined across the board by as much as 48%. Could this be the case for the general working population as a whole?
This is very concerning as energy impacts a person’s ability to make good decisions. The reason for this is probably the stress caused by the culture that those participants are part of, more so than that caused by themselves. Stress is without doubt the overriding contributor to poor decision-making and prevents a manager from being ‘outstanding’.
In Investment Managers, we have seen, 80% with a poor ability to manage themselves and this has impacted on their energy scores. 25% had moderate stress in their personal lives and 25% had high to severe stress. In other words, the low energy and high stress in their personal lives will impact their performance in their work lives and their ability to make good decisions for both themselves, their colleagues and more importantly their clients. They will struggle when it comes to a challenging and difficult situation. They will not become ‘Great unless this is addressed. This is a real sign of burn out.
When measuring the balance of value someone has towards the three key working dimensions of ‘people’, ‘task’ and ‘strategy’ then combining these with three personal dimensions of ‘self-esteem’, ‘role in life’ and ‘self-image’ then you tend to see someone as self-assured and consistent in their approach and often display natural leadership (even if they are not leaders!). That was not the case in this survey. In the majority of cases there was low-self-esteem and also signs of them undervaluing their work. This Value of Work score has been declining over the years looking back over the data and this is especially true in young people, especially from more privileged backgrounds.
One of the areas measured by the assessment is being able to follow directions accurately. The entire group of managers scored extremely well in this area – so their precision and attention to detail is clearly very high. They may well indeed expect this same precision and accuracy from their staff and this may be a key factor in their success. 70% of the Outstanding Managers had the strongest possible score in this area.
Stop Beating Yourself Up
An area that the assessment will typically highlight as a development area for high performers can be self-criticism. Many high performers fall into a combination of being highly motivated and therefore take on a lot, and then beat themselves up for not achieving everything on their radar.
In this case, 50% of the managers were highly self-critical of themselves and 50% had only moderate confidence which conversely impacted their self-esteem. High levels of self-criticism can spill out into criticism of others. So watch your negative language. People do not like being criticised.
Ask for help? These managers did not!!
50% of the managers do not like conflict and are not very assertive. This is a concern, as it is likely that they will not ask for help and as they are all pretty good problem-solvers will try and resolve the issue themselves. This could get them into trouble or lead to a compounding of an already poor decision. Interestingly, when contacted after their assessment to see if they wanted a debrief, not single manager took up the offer!!
Quite often we see people setting their goals too high and which are unachievable. Then they beat themselves up. As humans, we are generally very negative and fearful animals, so it is not helpful then to set goals way outside our reach. Set goals that are a stretch but achievable. Then stop and congratulate yourself.
You can improve…we have seen it happen
The important thing to note is that all of the indicators measured by the assessment can be developed and improved. The assessment can help all managers identify where their area their areas of development need to be focused and they can then be developed to become ‘Great’ manager with some coaching/mentoring and development.
Where do you go from here?
We can help. We can screen all your Investment and Operational managers/directors in order to set a base-line benchmark for their decision-making. This is objective and measurable. We will highlight major areas of concern in each of the reports. From there we are able to build a programme for improvement. We are then able to assess again six months later or a minimum of six weeks. Would it not be nice to have a group of consistently outperforming active managers making good decisions?
We can help you
If you found this article interesting and would be interested in learning more or would like your team or organisation to be assessed, then please contact Sandy Loder.