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THE GLUCK REPORT, Part I: Testing, Testing

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Managing staff at an advisory firm isn’t easy. It’s not like solving a financial problem: You’re dealing with people, not hard numbers. Yet advisors who want to grow their businesses must confront staff management issues.

With the independent advisor channel growing, entrepreneurs are riding a wave of success allowing many advisory firms to grow rapidly. But maybe clients are complaining about your service. Perhaps you have a staff position you can’t keep filled. Or you need a salesperson to make cold calls. How can you better manage staffers and figure out their greatest weaknesses and strengths? One answer: psychological testing.

After spending a few weeks researching testing and giving my staff a battery of exams, I am convinced that this method could play an important role in helping an advisory firm manage people better. Psychological assessments can give you insight into what makes people tick. They can help you understand what’s missing from your team, and why employees spend time infighting instead of creating.

When I write about portfolio management software, I try the applications or ask advisors who use the programs to tour them with me. Researching this story was no different. Here are some tests I reviewed.

Hoffman Vocational Values Assessment. My first experiment was with a test of job satisfaction and morale assessment written by Professor Edward Hoffman (see sidebar). The 25-question test is based on the work of Abraham Maslow, the leader of the humanistic school of psychology, and took about five minutes for 20 of my staff of 25 to take. It asks question such as, “How much do you feel bored and stagnant in your current work/job?” and “How much do you feel well accepted and liked in your current work/job?”

I looked at the individual results when my staff filled in their answers and felt pretty good overall about the results. But it did not give me much useful information until Hoffman reviewed the results and told me what they meant. That’s when the value of the test became much clearer. Hoffman told me that my staff looked to their jobs for fulfillment and that work was an important part of their lives, which he said was pretty normal for business in New York. The good news was that we were above average in a number of key areas: “belongingness” and social interaction, feeling challenged and creatively charged, and feeling respected and appreciated. We were also above average in self-actualization, with 19 of the 20 staffers saying that from time to time they had an experience of great fulfillment.

But one issue worried me: Producing marketing materials did not make my staff feel like they’re making the world a better place. Hoffman’s recommendation: Find a charitable activity we can all work on together. So that’s what we’re doing. I called a meeting and explained the results of the assessment to the staff and asked that we come up with a charitable activity we can all do together. The reaction was truly moving. One employee came to me privately and we both fought off tears and hugged, and we tried to plan what we can all do. My first experiment with testing was a success. The HVVA can be found at It costs $19.95 per employee, but group rates are available. Hoffman interprets the results for companies with fewer than 10 employees for $95, those with 11 to 39 employees for $199, and those with 40 or more employees for $299.

Myers-Briggs Type Indicator. This is the most widely used employee test in the world, not because it is so much better than other methods, but because it’s the oldest and most studied. The MBTI is based on Carl Jung’s landmark 1921 book, Psychological Types.

MBTI asks questions that rate four pairs of personality traits: your natural predisposition toward extroversion versus introversion; sensing versus being intuitive; thinking versus feeling; and judging versus perceiving. After taking the test, you get a score based on which traits are most dominant, with each trait represented by a single letter. For instance, I’m an extrovert (e), intuitive (n), thinking (t), and judging (j). All together, then, I am an “entj.”

“If you look at sales, the typical position means that the person orients energy outwards into new clients, and you might call that networking and marketing yourself,” says David Wood, president of TypeFocus Internet in British Columbia, “so a person who is going to be asked in his job requirement to make cold calls or to network within a social situation will find it easier and do a better job if that matches his natural preferences.”

That does not mean an introvert cannot do a sales job. With some sales jobs, an introvert would be more appropriate because the job may require great technical knowledge or perseverance and follow-up, traits an introvert might be better at. But in looking for a salesperson, many firms prefer extroverts because it is easier for them to break the ice with people they don’t know.

Being intuitive rather than sensing means you prefer to go beyond your senses and focus on the meaning of information. An accountant, for example, is often sensing and takes things at face value. Wood says that if you say the following numbers: 12312312, an intuitive would react by saying, “I bet the next number is three.” A sensing person would take it at face value. “Sensing people tend to live in the moment while intuitives live in the future,” says Wood.

Thinkers make decisions based on principles and reason, while a feeling type is less likely to do things based on logic. A thinker might pick the color of her car because it shows less dirt, while a feeler would pick the color just because she likes it. Judges prefer decisiveness, planning and punctuality–they like rules, while perceivers prefer flexibility and spontaneity.

So how does knowing your MBTI score help you? In many cases, it mostly tells you things about yourself and others that you already know, but it makes it easier to understand yourself and others. For instance, since I am an entj, I am organized, logical, and creative. However, I’m not strong at doing repetitive menial tasks. If I hire an assistant, I would need someone who is strong at administrative work.

Wood’s company offers career assessments used by 100,000 individuals and 5,000 government employees in Canada. Next fall, he plans to launch human resources assessment tools for small businesses. In the meantime, his company offers a free assessment, a shortened version of MBTI, at I asked three of my staffers to take this assessment. They found the free automated report generated by the site interesting but did not know how to apply what they learned from it. Wood says that a manager could interpret MBTI scores of employees by reading one or two books about personality types, such as Work It Out: Clues For Solving People Problems At Work, by Sandra Krebs Hirsh (Consulting Psychologist Press, 1996), or Type Talk At Work, by Otto Kroeger (Dell, 2002).

“When you cut through everything, when you know personality types, you have a model and theory of difference that you constructively use,” says Wood. “You can understand better the people you work with and work in synergy. Each of the opposite preferences are complimentary.”

Kolbe Indexes. Perhaps the best-known assessment tools used by financial advisors are Kolbe Indexes. Dan Sullivan, whose Strategic Coach program has been well received for years by many successful advisors, uses Kolbe Indexes, and that has helped give Kolbe a good reputation among advisors.

Founded by Kathy Kolbe, Kolbe Corporation offers a group of Web-based assessments. The flagship is the Kolbe A Index, which measures the “conative” aspect of the mind. The mind is believed to have three distinct parts–the cognitive and thinking, the affective emotional, and the conative action-oriented. IQ tests measure your cognitive mind, personality tests measure the emotional part, and Kolbe A measures how you take action and go about doing things. While Kolbe has no formal education in psychology–her undergraduate degree is in journalism–her work has been acknowledged by academia.

If you take the 10- or 15-minute Kolbe A Index for $49.95, you get a report that scores four aspects of your conative mind: fact finder, follow-through, quick start and implementor. The four aspects are broken into three categories–initiate, respond, and prevent–that roughly translate into being strong, medium, and weak or negative about each conative characteristic. For instance, I am an initiate fact finder, which means I need a lot of facts and research before I take action. I’m in the medium range at follow-through and quick start, and weak or prevent at implementing. So I basically knew all this about myself before I took the test. But seeing it in a lengthy report that explained it to me resonated with me. A day after taking the Kolbe A Index, I went shopping for equipment for a new media room for my home. The salesman sat me in a room with a $120,000 home theater. “You’re going to get 90% of this,” he told me after a quick viewing. “What’s that mean?” I asked. He told me to stop trying to figure out which speakers and amplifier to buy–I’d drive myself crazy with the details, he said. But I realized that as an intense fact-finder, I needed those technical details. I left the showroom and ignored the salesman’s calls to my home later that week.

Kolbe offers B and C indexes that can help you build teams at your company. The Kolbe B asks employees what they think they need to do their jobs well, and the Kolbe C asks managers what they think the employee needs to possess to do his or her job well. After taking the Kolbe A, three of my staff took the Kolbe B and I took the Kolbe C for their positions.

The reports that came back were useful. To understand the gap between what I thought was needed for each staffer to succeed, versus what the individual thought she needed, was helpful. For instance, it showed that one staffer was not strong in follow-through even though I had specified in my assessment that I needed someone who was strong at follow-through. And in her assessment of what she thought the job required for success, there was evidence that this staffer was striving to be more of an initiate in follow-through.

The report that focused on our abilities as a team was also elucidating. It aggregated our individual scores to evaluate us as a team, and told us that we were out of balance. All four of us were strong fact finders and need a lot of detail to make decisions. “Being so heavy in fact finder,” says Sandra Deems, a master Kolbe consultant, “means you have too much of a good thing in one area and that can slow you down. A team like this may spend too much time advocating how to get things done and doing the research rather than getting things done.”

Some practical advice from Deems: This team could use the addition of someone who is strong in follow-through and as an implementor. You could add another person, or subtract a member of the team in order to create better synergy and balance.

Amy Bruske, an executive VP in charge of sales and training at Kolbe, says advisors can purchase a Talent Pack and Management Module, which bundles Kolbe A and B Indexes with an audiotape explaining how to manage the different types of employees, a separate audiotape for employees, and a one-hour coaching session about your team’s results. A Talent Pack is $96 per employee plus an additional fee that is dependent on how many managers participate in the process by filling out Kolbe C Indexes.

Test of Nonverbal Intelligence (TONI). Equivalent to an IQ test, TONI-3 lets you know if an employee has the mental ability to do a job. The test requires no reading, writing, speaking, or listening by the test subject. Completely nonverbal and largely motor-skills-free, requiring only a point, nod, or symbolic gesture to indicate response choices, this test is used mostly by schools.

Interestingly, the publisher of TONI-3, Pro-Ed Incorporated of Austin, Texas, does not promote the use of this test by small businesses or novices. While they sent me the test, the company cautioned that it should be given by a professional with experience in the field. This reflects a widely held belief in the growing industry of psychological testing for work. Many of the companies feel territorial about the knowledge, fear test results could cause people to lose their jobs unjustly, or that the results could be misinterpreted. One company, whose test was highly recommended by Hoffman for its efficacy in business, refused to cooperate with this reporter or allow us to take their test.

To administer Pro-Ed’s test, I tapped an industrial psychologist on my staff. “Anyone could easily be trained to administer and score this test,” says Howard Gendel, who specializes in financial services marketing. “They simply must be diligent in following procedures to eliminate administrator biases, and an explanation of what the test best measures would be appropriate to place it in context.” Gendel said the TONI-3 has limited relevance to many employment situations, however, because most jobs at advisory firms require strong verbal skills.

Hogan Personality Inventory. This might be where advisors can get the most bang for a testing buck. Hogan Assessment Systems, which has about 50 employees in Tulsa and Jacksonville, offers a range of personality tests. The test I took, along with three of my staff, is the Five Factor Personality Inventory. The 20-minute test yields a 19-page “leadership forecast” filled with useful data. Other reports are also offered based on this assessment instrument.

The five factors measured by Hogan’s test are neuroticism–whether you’re calm and even-tempered or nervous and emotional; extroversion–whether you are energized or drained by being in groups or crowds; openness–whether you’re flexible and open to new ways of thinking; conscientiousness–whether you plan and are detail-oriented or often late, disorganized, and sloppy; and “agreeableness”– whether you are relationship-oriented and try to get along with others or blunt, abrasive, and argumentative.

Hiring people who are agreeable and get along with others is crucial in a small advisory firm with only a handful of employees. “Being an employee in a small business is a lot different than working at a big company,” says Rodney Warrenfeltz, a managing partner at Hogan. “You’re almost hiring a family member.”

Hogan charges between $25 and $375 for a personality inventory assessment, depending on the report you choose. The 19-page leadership forecast report I received cost $125, but for another $125 you can add a report on personality traits that can derail a career or relationship; $125 more gets you a report that assesses your core values associated with satisfaction in your career and relationships.

Warrenfeltz says that to fully use his firm’s assessments, Hogan requires a manager to take a one-day, $1,000 training session. After that, an employer can use the assessments to build teams and make new hires. Consulting is available from Hogan or from affiliated psychological consultants, and that can add value to the service.

“An advisory is hiring a professional for $60,000 to $100,000 a year, but may not know how effective that person is for three to six months,” says Warrenfeltz. “You might know if he’s interpersonally inept, but won’t know if he’s even-tempered with a good demeanor, easy to get along with, conscientious, open to new ideas, and flexible. Those are all characteristics that a good five-factor personality test should give you answers to.”

Warrenfeltz adds that “if you’re a small company and you burned $30,000 or $40,000 on this person, that’s a lot of money, when on the front end you could have taken some training and learned how to use a good assessment process to screen candidates.” But he cautions against using assessments in selecting new employees without training. “When you use a test to screen employees, you need to be able to prove that it is a valid test,” says Warrenfeltz, noting that MBTI’s publisher recommends against using its assessment for selection of employees even though many companies do so. “If you have been using the MBTI and discriminating in hiring practices, then you could make yourself more vulnerable to a lawsuit.” While the government has generally focused its resources in prosecuting cases of discriminatory hiring practices on companies with more than 50 employees, Warrenfeltz says advisors may want to review government guidelines at

Editor-at-Large Andrew Gluck, a veteran personal finance reporter, is president of Advisor Products Inc. (, which creates client newsletters and Web sites for advisors. Advisor Products may compete or do business with companies mentioned in this column. He can be reached at [email protected].


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