A Better Way to Maximize Business Impact and Eliminate Analysis-Paralysis with Leadership Assessments: Two Critical Case Studies
Multi-rater feedback tools have been used for decades in organizations as part of leadership development programs. While many organizations have not truly assessed the ROI of these multi-rater tools, Hutrics has demonstrated the direct business impact of these assessments on key outcomes such as turnover, productivity, and customer satisfaction and done so across multiple industries. One important question to build upon in the multi-rater space is—’which stakeholders’ ratings are most important in driving those important business outcomes?’. While, traditionally, it is common practice to incorporate feedback from the ratees’ manager, direct reports, peers and a self-assessment (i.e., full 360)—it is critical to know if we really need all of these raters’ input to get to the most important business drivers that organizations care about. This is important for 3 key reasons:
- Driving business impact from multi-rater tools should be the #1 priority
- Overloading leaders with too much data (potentially 4 different stakeholder points-of-view) keeps leaders from focusing their time on development and gets them stuck in analysis-paralysis
- Streamlining the process to only include the most important (and accurate) raters saves time and money—thus speeding up the administrative process and eliminating manual steps (e.g. selecting peer raters) that are a overly burdensome for all involved
To illustrate the three key points above, we examined multi-rater data from two large healthcare organizations (each with over 20,000 employees)—one that conducted a traditional multi-rater assessment and one that reduced the number of stakeholder groups involved in their process.
In the first large organization, a traditional multi-rater assessment was conducted (including self, peer, manager and direct report raters) across over 500 leaders. As noted in our three key points above, we first analyzed business impact and noted the direct connection, using advanced statistical analytics, between the multi-rater assessment and key business outcomes (customer satisfaction, productivity and turnover). A deeper analysis of the data, by stakeholder group, showed that the strongest connection to the business outcomes was seen in the direct report ratings and the self-ratings. The peer ratings and the manager ratings had a negligible relationship with the key business outcomes. There is, unfortunately, another tradition of multi-rater feedback vendors providing very long reports to leaders that can be difficult to comb through to find actionable information.
In the second large organization, a similar process and outcome took place where feedback from direct reports was the key driver of customer satisfaction and employee satisfaction (not peer ratings and manager ratings)—over the course of multiple years of assessments with the same leaders (i.e., a longitudinal study). Again, incorporating the feedback of peers and managers into the multi-rater process has shown to add more data into the reports but limited upside to driving business outcomes and adding analysis-paralysis time for the leaders being assessed. When we take a step back and think it through, the direct reports of the leader are the ‘closest to the action’ when rating the leader on key competencies (and this is the #1 reason that research focuses on leadership evalution from a leader’s given subordinates). Competency models should (and rightfully so) focus on the most important and frequent actions of the leader—many of which are rarely be seen by their peers and their manager. So, the analysis from the two large organizations above make sense—that the direct report ratings were more accurate and more significantly tied to actual business outcomes.
There has been little innovation in the multi-rater space for decades, so this research is important in order to shift our thinking based on actual statistical analysis and drive a change to a better approach to assessment. By incorporating self-ratings and direct report ratings only into the process, we accomplish the goals of 1) maximizing business impact by focusing on the ratings that matter the most to business outcomes, 2) significantly reducing analysis-paralysis by reducing the number of raters required to analyze in a multi-rater report (a very long report) and 3) we streamline the administrative process of executing a multi-rater assessment by eliminating the burdensome step of requiring the leader to select and submit their choices of which peers will rate them (and the bias involved in trying to select peer raters who will be objective). Any HR professional will note the difficulty in gaining 100% compliance on leaders in selecting their peers to rate them. At Hutrics, we tie into an organization’s HRIS system, so we automatically pull in the necessary rater information (self and direct reports) without the manual step of uploading peer information.
For more information about Hutrics’ comprehensive leadership assessments (that include competency assessments along with personality, working memory, culture fit, experiences) and how they can help you achieve better business results, contact us today.
