Articles Posted in Talent

“The most common interviewing methodology is the ‘past behavioral interview’ (PBI),” according to an article in the Harvard Bus. Rev., Nov. 2005 at 100, 106. A PBI avoids personal questions but asks about the candidate’s experience performing activities that are relevant for the job. The PBI “can explain about 25% of the variances in performance among employees.” The problem is that PBI’s don’t work well with executives – and I suspect with senior lawyers – for two reasons.

One reason is that a person’s performance on any behavioral interview question is dominated by the same three qualities: experience, job knowledge, and social skills. Whoever has those three will answer most behavior questions skillfully.

Second, behavioral interviews basically establish a candidate’s minimum qualifications; they don’t spot star talent. Such interviews assess knowledge more than intelligence. The way to assess intelligence is to ask questions that require candidates to exercise their intelligence in situations that are novel for the person being interviewed. (See my post of today on executive intelligence.)

An article in the Harvard Bus. Rev., Nov. 2005 at 100, explains a test for “executive intelligence.” The author, Justin Menkes, writes that “studies have shown that [IQ tests] predict work performance at least as well as competency interviews do (the most common assessment tool used today for hiring and promotion) and about ten times better than personality tests do.” (id. at 106) (See my posts in 2005 of July 31 on the predictive accuracy of emotional intelligence (Ei) instruments, July 14 on another set of definitions, Nov. 13 on four attributes – one being Ei, and Dec. 21 on Ei diminishing with rank.)

Even so, Menkes faults IQ tests for being limited to assessing academic abilities that have scant bearing on managerial thinking. His instrument, by contrast, depends on the three skills his research has identified as crucial for thinking critically as a manager: accomplishing tasks, working with and through others, and judging oneself and adapting one’s behavior accordingly. It is certainly possible for in-house lawyers to view their work in these categories, but I feel they are too broad.

Each of these three all-encompassing categories have five or six cognitive skills associated with doing them successfully, and taken together how a person fares when employing those cognitive skills makes up the person’s executive intelligence. (See my post of today on behavioral interviewing.)

There’s only one general counsel, and that person may be in the traces for years, so if he or she hires upwardly mobile, talented legal stars, their having a short track and no space to run will cause frustration (See my post of Oct. 10, 2005 on competitiveness among direct reports.).

Ambitious lawyers don’t wear blinkers; they will look elsewhere, eventually, to run for the roses. (See my posts of May 20, 2005 about losing a strong performer, Sept. 10, 2005 about the need for some B-players, and Oct. 18, 2005 about not every lawyer wanting to do rocket science all the time.)

Some amount of legal work is better done inside and lacks charisma: it is meat-and-potatoes guidance that plow-horse lawyers and paralegals ought to do, not stallions. The daily legal fodder of most in-house counsel consists of relatively routine legal questions and documents, not Sea Biscuit dramatics.

Over a five year period, more than 100,000 executives took emotional intelligence tests (Harv. Bus. Rev., Dec. 2005 at 24). Their scores for EQ, on a 100 point scale, peaked at the “manager” level – which in the case of lawyers might be about 8-12 years out of law school (average score of 77.5), and then declines from “director” – the next few years (74.5 score), through “executive/VP,” perhaps the equivalent of direct reports to the general counsel (72.5), down to “senior executive,” the general counsel (71).

The researchers, and the authors of a book on the topic, speculate that “companies are still promoting executives principally on the basis of what they know or on how long they’ve served the company, rather than their ability to lead.” Note the implied premise that strong leaders have high EQ scores.

I wonder about the direction of cause and effect. Does being promoted breed EQ deafness or do the EQ deaf stand a better chance of being promoted?

“Evidence suggests that, up to a point, an additional year of schooling is likely to raise an individual’s earnings about 10 percent” (NYTimes, Dec. 11, 2005 at BU6). I wondered whether this holds for law departments, so I did some calculations on data from 1998 for 90 law department administrators.

Those with a high school degree only (5 administrators) reported compensation that averaged $50,500. With two more years of school (13 who attended junior college or did not graduate a four-year college), the average was $64,600. Completing college, which 31 did, resulted in average comp of $74,400. With another two years for a graduate degree, the average rose to $87,500; those 15 administrators with an MBA or JD reported average compensation of $98,500.

Based on this data for legal department administrators and office managers, moving from 12 years of schooling to 14 increased average compensation 28 percent, about 14 percent per year. Two more years of education after college increased average compensation about 18 percent, which means 9 percent per year of additional schooling. Getting a business or law degree rewarded these administrators, on average, with only about 6 percent more per year. The returns diminished steadily as these administrators stayed longer in school, but even at the top end, the net present value over a career must handsomely repay the investment and opportunity cost.

Responding to the latest Corporate Counsel survey of in-house lawyer satisfaction (Nov. 18, 2005), Ellis Mirsky of Trial.com criticizes two points. First, he believes that survey respondents being described as “generally contented” is pretty thin gruel: “Attorneys need to be developing skills, increasing knowledge and securing their future for themselves and their families.” Mirsky seems to think that being contented means being placid, on the treadmill professionally, no longer striving – I disagree that in-house counsel generally fall into that state, or on the other side that law-firm attorneys generally avoid it.

The second criticism he makes is that at a relatively young age in-house counsel must retire, and that they may have no pension then and therefore sink to penury. By contrast, a lawyer in private practice can continue chugging on, earning money, until Black’s Law Dictionary runs out of words. Here, Mirsky may hit the mark.

As I read an article about general counsel who graduated Columbia Law School (I am class of 1977), I kept noticing the large numbers of people who report to the lawyers profiled. George Madison at TIAA-CREF “manages a team of 250” in compliance and law, Brad Smith at Microsoft “oversees a legal and corporate affairs department of 850 people.”

Other general counsel had only the number of lawyers mentioned, such as Joe Ryan at Marriott who “supervises more than 70 lawyers,” Larry Purtell at Alcoa “who heads of team of 75 lawyers,” and Esta Stecher at Goldman Sachs and “her team of 200 attorneys.” Since law departments typically have one non-lawyer for every lawyer, at a minimum you can double these numbers.

OK, no surprises here. General counsel of large companies lead large flocks. To be an effective shepherd takes skills quite different than what it takes to give excellent legal advice.

Given the increasing importance of general counsel understanding the business they represent, it makes sense that many of them have held positions outside of the law department. They learn to see the world as a client, and they grapple better with the complexities of their company.

I can think of Mary McDonald (former General Counsel of Merck), Ken Frazier (Merck), Rosemary Berkery (Merrill Lynch – and see my post of Aug. 3, 2005 on her career detour.), and James Lipscomb (MetLife). (See my posts of April 18, 2005 on the high failure rate at Manulife of departing lawyers.)

A survey in the spring of 2005 by the Economist Intelligence Unit found that 45 percent of the responding companies had appointed a Chief Risk Officer or equivalent, although the majority of these were in the financial services sector (Fin. Times, Oct. 18 at Spec. Rpt. 2).

Egg, the UK-based online financial services provider, hired a CRO in November 2003. Now, all the risk functions of the company – legal, audit, risk and compliance – report through the CRO to the board.

Will this be the fate of law departments over time; or, stated differently, are they at risk of reporting to a CRO?

A book review (Fin. Times, Oct. 15/16, 2005 at W4) draws from the theory of choice the notion of positional goods. Having the best title, the nicest view of the park, the closest parking spot, the largest bonus is impossible for every lawyer to achieve because they “are all pushing through the same narrow turnstile.”

In law departments, where promotions come rarely and one general counsel is all that is allotted, the pursuit of positional goods dooms lawyers to frustration.