The value of executive assessments

by

One of my friends is on the management team of a startup that recently received a large VC investment. He was telling me about the process they went through, which included a full assessment of him and the rest of his management team. He was telling me of the exorbitant fees, which the VC brilliantly made his company pay, that the assessment company charged to spend a day with them and write up a report. I was not surprised, as I had interviewed with a company a couple years ago that focuses entirely on those types of assessments and charges similar fees. And I told him I thought it was worth it.

So we got into a lively little debate about how reasonable it is for these high-end firms to charge a five-figure fee to complete a single assessment. I think it is, as long as the company and/or individual conducting the assessment is one of the few who are truly very good at it. If the investors want to invest in the company in large part for their management team, and usually they do, knowing the risk areas and strengths of the individuals and of the team as a whole is information worth every dollar. That’s why these VC and Private Equity guys are more often than not making this a part of their due diligence. They often go through the same assessment for key new hires and as a foundation for individual and team coaching.

Similar to an investor looking at an investment from the outside, business executives often do not have the visibility they need into the IT organization to make key leadership decisions. Exacerbating the problem are those CTOs and IT directors who are performing poorly but holding their business executives hostage with their threat of walking away with critical technical knowledge that cannot be replaced. Business executives often need support and an outside perspective to make key leadership decisions and to help their leadership improve their individual and team performance.

[Before I go on, in the spirit of full disclosure, we provide selection, assessment and coaching services at Thought Ensemble, both as part of other projects and as an independent offering. So I am not entirely objective when offering this opinion that this is a high value service ]

Here’s why I think business executives should consider getting some outside support when making decisions about their IT leadership: For both selection (recruiting) and assessments (on existing leadership), they often do not have the skills in house to appropriately evaluate leadership, or even know what criteria on which to evaluate. From a coaching perspective, not only is the understanding of the specific challenges IT leaders face important, the external perspective is very valuable. The costs of hiring the wrong leadership, keeping the wrong leadership, or of not helping potential leadership develop are too high. Sometimes executives who are not performing can get some coaching or supplement themselves with other leaders to address their development needs; other times these executives have flaws that cannot be addressed and should be replaced. Either way, having that information and acting on it is incredibly valuable.

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