The Ipsative vs. Normative Debate
By Kenneth L. Greenberg, CEO - KLG Consultants, LLC
Introduction - As a due diligence tool, pre hire, or for management
coaching and professional development post hire, the market is crowded
with professional assessment tools. These types of assessments can
engender fear, apathy or outright disdain depending upon one’s
perspective.
Some professional business owners use assessment technology while
building management teams for portfolio companies. Others feel they either are not applicable
because of the contractual obligations and agreements in the documents underlying the
acquisition or investment, or they believe assessments are not applicable given the prior success
of the target company. However, many consultants focused on team building and integration,
leadership development and strategic planning will not take on an engagement without
administering assessments to the participants in the program.
Whatever your perspective, understanding the two fundamental differences of the assessments
currently on the market, can go a long way to helping your firm deal with the risk inherent in
management acquisition, team integration and post investment management performance.
“It looked good on paper.” - You may have heard these words before or even uttered them
yourself, post acquisition or investment. The numbers made sense; the projections were
validated by your best and brightest. The management team’s resumes and references all looked
great. You even interviewed the management team and the interviews went well. Why is the
management team now so dysfunctional post investment?
Change - Typically, people problems in these circumstances can be summed up in two words,
change and culture. Try as you might to make the acquisition process as seamless as possible,
subtle forms of change ripple throughout the organization and disrupt people’s effectiveness.
Whether certain leaders leave due to agreement or others change their roles, new reporting
requirements are implemented and a new configuration of the board is put in place; change
happens due to your involvement in a portfolio company. Change affects different people in
different ways.
Reaction to Change - Although the effect on people may manifest itself much like grief; where
people get stuck in the grieving process is the key question. Some experts describe the five
stages of grief as follows:
• Denial
• Anger
• Bargaining
• Depression
• Acceptance
A smooth transition is dependent upon knowing who might get “stuck” and where they may get
stuck. This is where a comparison of the ipsative and normative assessments is critical.
Ipsative Assessment Tools - Ipsative tools are by their nature, self reporting. When one takes
the assessment, one tells the assessment what he or she thinks of him or herself and the
assessment reports that input. It is not unlike going to the doctor and saying “I have a back ache
and believe I need surgery.” Most doctors would not act on that input, save ordering more
diagnostics assessments. Put another way, these types of assessments, “look good on paper” but
allow the assessment subject to tell the test what they think the end user wants to hear. The
output is not much more reliable than an interview and it is not necessarily a useful tool for
predicting how that person will react to the change that results from your involvement in the
company.
It is also very difficult to use an ipsative assessment to coach a person for performance
improvement. Essentially the tool leaves it to the assessment subject to tell the user where he or
she needs improvement. Like the doctor with only patient input, one is left with very little
reliable diagnostics on which to act in order to affect a cure and make the patient better. When
coaching management members to accept change and thrive, behavior change is the cure, and
one needs to know underlying hard wired behavior.
Reliability - Many experts agree reliability is the key empirical measure of the efficacy of an
assessment tool. Reliability is measured by the percentage of similar results each time a subject
is administered an assessment. According to the United States Department of Labor, anything
less than 70% reliability may render a tool less than adequate. Because ipsative assessments are
self reporting, test subjects can simply change their answer each time they take the assessment,
depending on what they think is expected of them. It can be quite easy for the output to change
each time the subject takes the assessment. Because, the assessment is self reporting, it is not
feasible to test for “distortion” or inconsistency of answers in just one assessment.
Normative Assessment Tools - The other type of assessments, normative assessments,
measure the subject’s answers against sample populations. The scores generated from these
assessments are not unlike the percentile scores found in standardized tests. They can measure
core behaviors, learning styles and professional preferences as compared to the general workingpopulation or against benchmarks of best performers in various occupations. The most cuttingedge of these assessments claim 82% reliability. Normative assessments can also report
distortion, or consistency of answers. As previously mentioned, ipsative assessments are by their
nature distorted by the subject. A measure of distortion is critical in order to know how candid a
subject has been while taking the assessment.
Because most normative tools report core natural behavioral tendencies, learning styles and
professional interests as compared to statistically viable sample populations, it is easier to
predict how a subject will react to change, and when and how coaching can best be used to help
that subject adjust and improve. Team interaction and integration can be facilitated using a
reliable tool that can help new owners understand their talent pool and how they will or won’t
work together.
Because of their reliability, normative assessments can also be used to benchmark the best
performers in a company. Benchmarking allows the creation of a continuity plan to facilitate
replacement of departing key people. Proper benchmarking can make the continuity plan more
predictable and less risky. Matching candidates to fill roles in a specific company or department
based on learning styles, behavior tendencies and professional likes, increases the probability
that there won’t be a performance drop off post departure of key individuals. This is frequently
referred to as analyzing candidates for “job fit”.
One other benefit of normative assessment tools is some meet or exceed regulatory guidelines
for non-biased hiring and promotion tools. As you develop the organization at any portfolio
company, very difficult decisions often need to be made. The risk of litigation can often hamper
optimum decision making for hiring, promotion and allocation of duties. Because the latest
normative assessments are often based on third party research, validated over periodic studies,
they are accepted as a third party analysis of a candidates fit for a position or role. Properly
utilized, use of the tools, have stood up in court. (We are not lawyers and this is a matter to
review with your employment counsel. The assessment landscape should be evaluated with
your advisors with these guidelines in mind.) Beyond risk mitigation, proper use of these
assessment tools can help owners advise portfolio management on where their teams “core
strengths” can best help the organization achieve its goals. Aligning management teams to tasks
and functions, based on individual core strengths can go a long way to deliver high performance
and the results that follow.
Some organizational experts believe that when tasks are aligned with those best equipped to
execute those tasks, overall organizational performance improves. Peter Drucker once said, "The
task of management is to make people capable of joint performance, to make their strengths
effective and their weaknesses irrelevant." When change is occurring, the task is to handle the
change and minimize the disruption it causes the organization. Normative assessments can
allow owners better visibility as to who in a portfolio management team is best equipped for the
task of leading the company through the change and transition to new ownership and control.
Culture Clash - As mentioned before in this article, culture is also cited as reason for
disappointing outcomes post acquisition or merger. Corporate culture is described by W.P. Carey
as “the core values, ways and beliefs, business principles and traditions” of a corporation. The
missing piece in this description is people. More specifically, how the people of the corporation
operate in order to make it a successful organization.
Notwithstanding the organization chart one is shown pre-acquisition or merger, the informal
organizational chart of the actual organizational communication and decision flow, holds the
key to the culture of the corporation. Management typically fears changing that natural flow.
That fear manifests in various ways that are sometimes described as culture clash. This often
includes turf battles, sudden departures to competition, and worse. There is nothing nefarious
about the informal organization chart. Successful high performing organizations, either by
design or serendipity, allow their management teams to develop their role in the corporation to
their individual strengths, notwithstanding titles.
With normative assessments in hand, management team integration in spite of disparate
cultures is more easily facilitated as ongoing tasks can be aligned with individual strengths. New
owners can help facilitate the negotiation of roles, task assignment and the selection of go
forward practices that best fit the new integrated team. Once the ownership transition has been
executed, normative assessments can also allow owners to provide coaching to management
team members tailored to the particular person’s strengths and core characteristics. Because
quality normative assessments are empirical they can also be added to 360˚ assessments
and are not redundant to the self assessment portion of these tools. This allows a coach or
superior to temper the emotional response frequently encountered post 360̊ assessment, by
pointing to the empirical “x-ray” as confirmation of other people’s subjective concerns.
Conclusion - As a result, the best normative assessments can be confidently utilized much like a
doctor uses an x-ray, MRI, or other third party diagnostic tool. Ipsative tools on the other hand,
are subject to and require subjective interpretation and can be more easily distorted by the
subject. While useful in certain settings, ipsative tools are self assessments and therefore not
reliable tools for developing strength based integrated management teams.
If one is inclined to use assessment tools, and we encourage their use, we believe normative
assessment tools are best practice for developing high performing management teams post
merger or acquisition. When used properly along with other due diligence methods, these tools
are also very useful and valid tools for people due diligence tools pre merger or acquisition.
About the author
Kenneth L. Greenberg, President and CEO of KLG Consultants, is a former investment banker,
and the founder of KLG Consultants. He heads the Corporate Consulting practice at KLG.
KLG uses cutting edge assessments for talent acquisition, facilitative training, and coaching to help all types of organizations remove impediments to success and increase performance.
Ken is also a private equity investor. Prior to starting KLG Consultants, he participated as an
investor and principal in the purchase and ongoing management of a number of private
companies through a Phoenix based private leveraged buyout firm.
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