Leadership Assessments: Pros & Cons

After a strong expansion of leadership assessments, some companies are now limiting their usage. Should Leadership Assessments be used for candidate selection? Are they a good development tool? This video describes their advantages and limitations and outlines how to make best use of these leadership assessments. Please share your own experience through survey monkey questionnaire (link in the comment section below). I will provide feedback on the survey results shortly.

Over the past 10-15 years, companies have significantly increased their usage of leadership assessments. As a consequence, this industry sector has expanded a lot. Leadership assessments (which are sometimes also called executive assessments) are no longer the exceptional measure that is used only for very special positions or circumstances, but have become a much more broadly used HR tool.

1) Who conducts such leadership assessments and what tools are used?

Leadership assessments can be provided by different players, such as training companies, headhunters and recruitment agencies or companies specialized in assessment centers. Most of the large executive search firms have developed leadership assessment offers. The assessment tools may include psychometric tests, feedback tools, interviews and assessment centers.

2) What are leadership assessments used for?

There are two main areas: development and selection.

  • Selection concerns internal promotions or external recruitment. In case of selection (internal or external), employees are assessed versus certain job expectations.
  • In case of development, the assessment helps identify leadership development gaps in view of a certain position or level of responsibility as well as strength on which to build. This analysis can then be used to define tailor-made individual development plans.

In most cases, leadership assessments are done on an individual basis according to specific development requirements or selection purposes. But they can be used also on a broader basis, for example in case of an integration process, where the employees of two companies compete for jobs in a newly integrated organization.

After a strong expansion of the usage of leadership assessments, some companies have started to limit them or in some cases to stop their usage. These are typical “swing” effects and the purpose of this article is to analyze the advantages and limitations of such leadership assessments in order to come up with a recommendation concerning their best usage.

3) What are the advantages of leadership assessments?
a) Better decisions

Selection or development decisions are based on the manager evaluation, which can be supported by HR. In case of recruitments, this is usually based on interviews.

The main advantage of leadership assessments is that they provide greater insight into the candidate profiles thanks to the involvement of a third party, the usage of psychometric tests or (in certain cases) the use of assessment centers. These tools allow gaining richer and deeper insights about the person and thereby contribute to hopefully more robust development or selection decisions.

b) Objectivity

The involvement of a third party and the usage of professional assessment tools help to make development or selection decisions more objective.

The diversity discussion has shown how strongly our perceptions of others can be influenced by our cultural and sociological bias. External assessments can help limit those. That is obviously particularly relevant in the context of selection decisions.

c) Broader perspective

External assessments provide a broader perspective on individual profiles, because they give the opportunity to include several dimensions through the usage off different tools, which we had outlined earlier. That may give a more comprehensive perspective in addition to being more objective.

As an example, the inclusion of a potential assessment into selection may allow gaining also a longer term perspective on the ability of an employee to grow (please see my article on  How to assess potential?). This may be a valuable additional selection criterion in addition to the “fit for the role” criteria, that the selection decision may otherwise be limited to.

d) Bench-marking

Leadership assessments can include a bench-marking perspective. Many of the psychometric tests allow bench-marking a profile against a certain industry norm. If a headhunter conducts the assessment, they can compare profile of the person who is being assessed to the other talents they know in the industry.

e) Higher acceptance of the decisions

The involvement of a third-party can help increase the acceptance, especially in the case of selection decisions. That is particularly true in a merger, when employees from two different legacy companies compete for roles in a newly integrated organization.

The fact that a neutral third-party is used and that selection is supported by professional assessment tools may increase the confidence of employees that the process is fair and transparent.

f) Employee engagement

When leadership assessments are used for development purposes, this is usually highly valued by employees and seen as an investment in their career. Getting detailed and “neutral” feedback and having time to reflect about strength and development opportunities is often perceived very positively by the employees concerned (see also my articles on career management: You are the CEO of your career3 steps to define your career strategy4 principles of career management)

What are the Disadvantages or limits of leadership assessments?

So as we see, there are many advantages of leadership assessments. But interestingly, a number of companies have in the meanwhile gone in the opposite direction. After having made quite extensive usage of such assessments, they have decided to limit them. Let’s see why.

a) Cost

The cost of leadership assessments can differ very significantly. If they are mainly based on psychometric tests, with one or two debrief sessions by a consultant the cost is more limited (usually below 1K Euros).

The cost can be six to seven ten times higher for more comprehensive assessments. That is the case, if an interview process with several consultants is used in addition to the tests, if several debrief meetings are planned (e.g. with the manager and HR and with the employee) and if a coaching sequence is linked to the debrief of assessment outcomes.

b) Dis-empowerment

There is a risk that managers or HR take less ownership of people decisions, but refer to the outcomes of the assessment. In extreme cases managers or HR might even be tempted to partly delegate the decision responsibility or the communication of decisions (especially tough ones) to the external assessment provider.

Any professional assessment provider would emphasize, that the assessment can only be a complement to the managerial decision and that it can by no means substitute it. But the reality may differ sometimes in a subtle way (“I could not go against the assessment outcomes”).

In some organization managers and HR may end up feeling less entitled to rely on their own judgement, but feel that important decisions can be take only on the basis of the facts and figures that the assessment provides. That can over time undermine managerial courage and the feedback culture.

c) Slower decision processes

Leadership assessments may slow down people decisions, because they take more time than a simple interview process.

d) False perception of objectivity

Even the most professional assessment never provides perfect objectivity, because the tools and methods are based on certain assumptions. Some psychometric tests are form example based on the theory of Karl Jung, others on the school of Sigmund Freud or of Jacques Lacan.

Certain experts actually challenge the scientific or psychological foundation of these assessment tools (e.g. of the psychometric tests).  But even outside of the scientific debate it must be recognized that any assessment of a person contains components of subjectivity and bias.

Companies that focus on the usage of a specific assessment approach may therefore actually introduce or reinforce certain bias in their people decisions.

e) The quality of the providers may differ quite significantly

The high market demand has led to a multiplication of the leadership assessment offers. Not all are of the same quality. A number of providers are using their own assessment methodology or tools, which makes it more difficult to evaluate their reliability.

The selection of the provider must therefore be done very careful. More and more HR leaders have a good knowledge about the assessment tools and their underlying assumptions. They should be involved in the decision making.

f) Company context

The cultural and business context of an organization might be quite different from on company to another. The specific challenges of a job have also to be taken into account. It is therefore important to ensure, that these context components are fully taken into account.

In some cases, the briefing of the consultants is not done sufficiently well or the consultants may not take the necessary time to get an in-depth understanding of the requirements. That can lead to standardized outcomes and to wrong recommendations.

g) “Assessment Fashion”

Leadership assessments have become quite popular, which may have led to a certain over-usage. The limitation of assessments that some companies have now decides may be a way of limiting these assessments to cases where they can bring their full value.

Conclusion : So when should leadership assessments be used?

I see executive assessments as a highly valuable tool for leadership development. Leadership assessments can help stimulate and enrich self-awareness. This increased insight in one’s own preferences as well as strength and weaknesses is a key driver of leadership maturity. I therefore see assessments as an important component of any leadership learning journey.

I also believe that assessments can be very helpful when broad selection processes have to be contacted, for example in the context of an integration process. Managers and HR May otherwise be quite overwhelmed and the quality of their selection judgment may suffer. The objectivity of a third-party can clearly significantly contribute to the acceptance of a selection process, especially by the employees of the acquired organization.

On the other side, I believe we need to be very careful in using external assessments for selection decisions. In the case of internal promotions, this can be justified in exceptional cases, for example when it comes to the most senior positions in a company and where the board might need that additional input.

The same is recommended in my eyes for external recruitment, where leadership assessments should be the exception. It is advisable to rather invest quality time in the interview process. The added value of leadership assessments in external recruitments is limited for the company and for the candidates. From the company perspective, the full outcome of a leadership assessment is very difficult to use efficiently and might instead lead to an overload of data that is difficult to contextualize. For the candidates, the selection situation makes it difficult to take full advantage of the feedback, because they are in a competitive mindset.

In all cases it is of great importance to ensure that the assessment is used only as a complement and not as a substitute of the managerial selection decision. The manager must fully own this decision.

So we see that there is no black or white and no one size fits all. I hope that this article may help make more informed choices on when to best use leadership assessments.

More information in my book:

Sven Sommerlatte : Successful Career Strategy – An HR Practitioner’s Guide to Reach Your Dream Job (Springer, June 2023).  ISBN: 978-3-662-66790-3

Click here to find my book

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