Thursday, September 10, 2020

The Talent Stack: Differentiating Between Values, Abilities and Skills When Evaluating People

Let’s talk about talent.

More specifically, how to identify and assess people who are best suited to ‘click’ seamlessly with your corporate culture, deliver meaningful impact and results effectively and quickly. The Talent Stack is a powerful framework that helps focus your attention on the right people attributes and candidate qualifications, and in the right order of strategic priority.

I was first introduced to the concept of “Values, Abilities and Skills” by Ray Dalio during my time at Bridgewater. One of his (now famous) “Principles” was that we should look at people as having these three very different tiers of qualifications or attributes that should not be commingled together, with values being most important and skills the least.

Over the years, I made small adaptations and interpretations of my own, and used this framework extensively both when recruiting people to join my teams and when evaluating whether I am a good fit for a role or a company that was recruiting me. I called it “The Talent Stack” (see Figure 1).

Just as we evaluate the “tech stack” of a company to understand its technology capabilities at different levels – infrastructure, applications, data & analytics – we should be using The Talent Stack to evaluate a person’s capabilities at the values, abilities and skills levels to determine the likelihood of culture fit and success in a given role.

Figure 1: The Talent Stack: A Framework for Evaluating People Strategically and Holistically 

The fundamental value of this framework and approach is the recognition that what you look for in people comes in three “flavors” – and these three flavors of people attributes are very different from each other, hence should be looked at separately and not lumped in one long list of “required qualifications.”

Some of them, i.e. values, are fundamental to culture fit and are hard to change or ‘develop’ through a training program. Others, i.e. abilities, are innate to a person’s way of thinking or natural inclinations, and while they can be altered or cultivated, that usually happens over a long time horizon. And yet others, i.e. skills, are learned and developed through specific experiences and educational programs that are much more predictable in terms of duration and outcomes.

Let’s take a deeper look at how values, abilities and skills are different by definition and how to use The Talent Stack framework to evaluate both job candidates and employment opportunities.

There’s a reason why values are at the top of The Talent Stack. They are both the most important attribute people bring to an organization and they are very hard – virtually impossible – to change or cultivate later in life.

Our values are what makes us ‘tick’ – our deepest beliefs and emotional motivators. Values are deeply personal and important to each of us, and they guide everything we do and how we do it. They define who we are, who we want to be, and how we want to live our lives. Most importantly, they guide all our choices and decisions. They are the ultimate “why” underlying all our actions. When we talk about ‘character’, we’re really referring to the values a person espouses to and acts by.

Our values are shaped early in life by our parents, grandparents, teachers, mentors, and role models (or the absence thereof). When our experiences – both personal and professional – are in harmony with our values, we feel happy, excited, motivated, optimistic, fulfilled. When there’s a conflict or mismatch of values we feel the opposite.

Values are not rational or premeditated – they are innate, spontaneous, emotional. We can’t help but act on the impulses generated by our values. Which is why values are nearly impossible to control, reform or develop beyond early childhood.

Values are most commonly encapsulated by a single poignant word and often further elaborated by a short descriptive sentence. Here are some examples:
  • Integrity – to be honest and forthright, to represent a single version of the truth, and to speak one’s mind without reservation or manipulation of the facts
  • Kindness – to feel and act with genuine care for the wellbeing and feelings of others
  • Positivity – to have an optimistic, can-do attitude even in the face of adversity or challenges
  • Excellence – to strive for and expect high quality and the best possible results, and be unable to accept or tolerate mediocrity

So how do we use values systematically when evaluating talent? First, values are the most important determinant of culture fit. To test for that, a company first has to clearly define and articulate its own corporate values, as described in our previous blog on The Strategy Checklist. Then, the recruiting process should include a formal evaluation and scoring of each candidate against the corporate values. This should be done across all open roles and job descriptions – it is a systematic way to address the question “What kind of people do we want to hire?” throughout the recruiting cycle. Inversely, a candidate can evaluate the company’s values against their own and decide whether this is the kind of place they want to work at.

Values can also be job-specific. In addition to the core corporate values, some positions may have additional or more specific values requirements. For example, HR roles will require an extra penchant for discretion and a predisposition to preserve the privacy and confidentiality of others. Similarly, sales or business development roles would require a natural desire, even hunger, for growth and attainment of goals.

After values, the next tier of The Talent Stack in order of importance is a person’s natural talents and cognitive inclinations, or abilities. They are important because they point to what a person is capable of, what they could handle or achieve, regardless of the context they are in or the role they are assigned. While our specific skills and experiences only speak narrowly to what we have done in the past, abilities provide a peek into what we might be able to accomplish in the future across a variety of tasks or situations.

Abilities are based on how we are naturally wired, intellectually, emotionally and physically. Abilities are not binary or absolute, but rather they are measured on a continuum and on a relative basis. By and large, we all have the same set of abilities, such as being able to communicate and socialize with others or being able to work with numbers. But some people are a lot better at, or more naturally comfortable with, these undertakings than others, so we say that they are a “people person” or a good communicator” or a “numbers person”. 

Because abilities derive from a person’s innate talents and inclinations, they too are not easy to acquire or develop quickly or in a predictable fashion. But unlike values, abilities can be shaped and cultivated later in life, though it normally takes effort and discipline. For example, it is not impossible for a naturally shy, introverted person to acquire the ability to communicate with others in an engaging, even captivating, ways. But that evolution would only happen through a conscious effort on the part of that person, and require determination and perseverance in the face of challenges and failures.

There are many ways to define and categorize abilities, based on what companies are seeking for a particular role or objective they need to achieve. One popular standardized framework for assessing general abilities is the Myers-Briggs Type Indicator (or MBTI) assessment. It breaks down commonly sought-after professional abilities into four dimensions:
  • Extraversion (E) vs. Introversion (I) – are you more comfortable interacting with the outer world and other people or do you prefer to operate in your own inner world,
  • Sensing (S) vs. Intuition (N) – do you focus on the specifics and details of what you observe or are you more inclined to analyze, conceptualize and add meaning to what you see,
  • Thinking (T) vs. Feeling (F) – do you rely on logic, facts, and objective factors (i.e., using your brain’s prefrontal cortex) when you make assessments and decisions or are you more likely to involve emotions, empathy, and subjective circumstances (i.e., using your amygdala),
  • Judging (J) vs. Perceiving (P) – are you more prone to make quicker decisions and bring closure and clarity or do you tend to ponder, revisit, and stay open to additional information or input from others.
The MBTI is a great tool to systematize the evaluation of a broad range of abilities, but its four dimensions do not cover every human trait you may need to evaluate. For example, it doesn’t test for things like artistic creativity or quantitative aptitude or propensity to learn or adapt. So recruiters need to rely on a variety of tests and tools, as well as their own definitions and assessments of the specific abilities they are searching for.

While values are an indicator of ‘fit’ especially with a company’s culture, abilities are an indicator of ‘likelihood of success’ at particular types of jobs or activities. For example, if someone is a natural outgoing communicator, they are likely to have more success with a sales, prospecting or business development job. If someone is naturally inclined to think conceptually, see patterns and frameworks in everything they observe, they are likely to have more success at an analytical or innovation role than someone who is more inclined to focus on the particulars and details of the tasks.

Much of the focus of recruiting processes is currently centered on specific past experiences, certifications, and skillsets. Too much, in my opinion. The reason skills are at the bottom of The Talent Stack is because they are the most undifferentiated attributes of a candidate and offer only limited predictive benefit as to a person’s fit with the organization or their likelihood of success in any role.

Skills are acquired either through education or with experience, and as a result, are commoditized – anyone can pursue a degree, obtain a certification, or have experience in a particular industry. Consequently, two candidates may have gone to the same MBA program, passed the same CPA test, and held identical positions at a management consultancy or an accounting firm, but would potentially be very different in their values and abilities, and therefore differ vastly in their organizational fit and prospects for success in a new role.

Skills can also be developed a lot more ‘easily and predictably compared to abilities or values. For example, a law degree takes 3-4 years and a certain amount of investment in effort and expenses, but at the end of that, securing the credentials is all but guaranteed. Similarly, acquiring advanced skills in, say, Excel or PowerPoint or Python, or even learning a foreign language, is a relatively straightforward process – there are many courses and learning tools to gain the desired level of proficiency.

Despite the relatively low level of insight they provide, skills have a rightful place in the recruiting process. First, having the requisite education, certifications, or experience is sometimes ‘nonnegotiable’ for certain roles, especially more technical or junior ones, where the focus is more on completing tasks and following procedures than on exercising judgment, being creative, or interacting effectively with people.

More importantly, because they are commoditized, skills can serve as a heuristic for inferring abilities and even values. A person who has successfully completed a 4-year law degree is likely to be a hard worker, highly intelligent, and a believer in the rule of law. A candidate who has worked at a top management consulting firm can be expected to have strong conceptual and problem-solving abilities, excel at quantitative analytics, and be a polished presenter and communicator.

In that sense, skills provide a shortcut for recruiters to uncover candidates with the right abilities and values. The key, however, is to avoid being mechanically over-reliant on skills and to leave room for the process to discover strong candidates with the necessary values and abilities, even if they lack some of the desirable skills or experiences.

In the end, it’s not whether values and abilities are more important than skills or whether we should no longer screen for skills (the way many colleges no longer screen on the basis standardized test scores). Values, abilities, and skills all contribute important elements to painting the full picture of a candidate and should be used appropriately in concert with one another.

What’s important is to recognize that there is a clear hierarchy, whereby, especially for more strategic or senior roles, values are more important than abilities and abilities are a lot more important than skills – and to engineer a recruiting process that reflects that hierarchy.

Getting the values fit wrong is much more costly and damaging to a company than recruiting a person who lacks one or two of the technical skills needed for a role. And so is hiring a technically or experientially skilled person who ultimately lacks the requisite abilities and qualities for success in the role.

The Talent Stack framework is a handy tool to create the appropriate tiers of people competencies a company is looking for and to devise a systematic and as-objective-as-possible process to evaluate candidates across the full spectrum of personal qualities required for success.

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