How to Assess Leadership Skills: A Comprehensive Guide for Evaluators

Leadership is arguably the most critical value creation lever within an organisation. In the context of private equity-backed portfolio companies working to a time-sensitive value creation plan, hiring effective leaders is even more vital. 

Simply evaluating new leaders by their CV and an interview is no longer enough. Proper consideration comes from adding multiple leadership assessment techniques into the mix. Data-driven people analytics including psychometric testing for personality and behaviours helps build high performing, balanced and cognitively diverse leadership teams. Not only by evaluating new hires, but also continual internal assessments to uncover high-potential employees.

The importance of assessing leadership skills and potential

Assessing a candidate’s current leadership skills and their potential for leadership is a process that identifies individuals with the capacity to excel in leadership roles. It involves:

• Skill evaluation: Evaluating an individual's soft and hard skills necessary for effective leadership, such as communication, decision-making, and problem-solving abilities.

• Experience: Analysing a candidate's past experiences, both domain/market and situational, to determine their suitability in handling leadership challenges.

• Compatibility with company culture: Ensuring that the candidate's values, beliefs and style are compatible with the organisation's culture.

By considering these factors, companies can make data-driven decisions in their hiring processes, improving their overall leadership and ultimately contributing to the organisation's success.

Assessing leadership styles

There are several different leadership styles, each with its own advantages and disadvantages. To effectively assess leadership skills, it’s important to understand the characteristics of each style:

• Autocratic: The leader makes decisions without considering input from team members. This style is efficient but can lead to low morale and a lack of innovation.

• Democratic: The leader collaborates with team members and incorporates their input into decision-making. This style promotes a positive work atmosphere but can be time-consuming.

• Laissez-faire (Delegative): The leader provides minimal guidance, allowing team members to make decisions independently. This style can foster creativity but may lead to chaos without proper structure.

• Transformational: The leader inspires and motivates team members to work together to achieve a common goal. This style creates high levels of engagement and innovation but may require a strong vision to implement.

• Transactional: The leader focuses on achieving results through rewards and penalties. This style promotes clear expectations and a strong work ethic but can lead to a focus on short-term gains.

A leadership style is the application of an individual leader’s skills, behaviours and experience. Leaders can adopt different styles in order to achieve different goals or to manage different types of employees, but their personality and behaviour plays a large role in how well they handle each approach. For example, a leader who over indexes on emotional intelligence is unlikely to prefer an autocratic approach. And a leader with highly pragmatic behaviours is unlikely to choose a laissez-faire style.

Testing for leadership styles

Several tests can help assess an individual's preferred leadership style, providing valuable insight for self-improvement and development. They are mostly based on personality and behavioural analysis.

Some of the most popular leadership style tests include:

1. Myers-Briggs Type Indicator (MBTI): The MBTI is a widely recognised personality test that assesses how an individual perceives and processes information, and it can indicate potential leadership styles.

2. DiSC Profile: The DiSC assessment categorises individuals based on four main personality traits (Dominance, Influence, Steadiness, and Conscientiousness) and helps identify their preferred leadership style.

3. Situational Leadership Style Questionnaire: This test evaluates an individual's leadership style by analysing their responses to various work situations, indicating their level of task-orientation and people-orientation.

4. Leadership Practices Inventory (LPI): The LPI measures an individual's frequency of using effective leadership behaviours and helps identify areas for improvement.

5. PACE Behavioural Analytics: PACE builds individual and team behavioural profiles and benchmarks them against the leadership teams of successful private equity exits. 

Leadership self-assessment approaches

The process of leadership self-assessment is essential to support the understanding of one's leadership style by identifying strengths and weaknesses. With this knowledge, individuals can strategically focus on enhancing their strengths and address any shortcomings, to continually strive for effective leadership.

Self-assessment contributes to the development of self-awareness, a vital component of emotional intelligence, necessary for good leadership. Through consistent reflection and evaluation, leaders can recognise the impact of their actions and behaviours on others. Combining self-awareness with the feedback from colleagues and team members can offer a more comprehensive perspective on leadership performance and areas for growth.

Self-assessment tools

A variety of leadership self-assessment tools are available for individuals to gauge their leadership abilities and gain insights into their strengths and weaknesses. These tools often involve questionnaires or quizzes designed to measure key leadership attributes, such as communication skills, decision-making abilities and emotional intelligence. 

Some popular tools we mentioned above for testing leadership styles are also relevant for individuals to use as self-assessments. For example, Myers-Briggs Type Indicator offers users one of 16 different kinds of personality. PACE Behavioural Analytics can be used by individuals to assess their leadership behaviours and by teams to judge their behavioural complementarity and therefore suitability to lead a high growth business. 

Regular use of these tools can help leaders build greater self-awareness and identify areas for improvement.

Behavioural analytics in leadership assessment

Why the CV is outdated

The traditional CV has long been the cornerstone of the recruitment process. However, it has become increasingly clear that CVs and interviews are poor predictors of future performance. Job candidates can easily exaggerate their skills and experiences, making it difficult for employers to discern the truly qualified individuals. 

The main problem is that evaluating via CVs focuses on assessing tangible achievements rather than the underlying behaviours that drive performance.

The piece that is left out with these methods is an understanding of natural alignment. If a candidate does not have behaviours that naturally align with the goals of the business, they are going to need a lot of management for them to deliver on objectives. This is why behavioural analytics is useful as part of the leadership assessment process.

The role of data-driven approaches

With the limitations of CVs, interviews and personality tests, the need for data-driven people analytics is paramount. By utilising a data-driven approach, employers can access more objective and accurate insights into a candidate’s potential for leadership success. Behavioural analytics provide substantial advantages in leadership assessment, allowing companies to make better-informed decisions and reduce subjectivity in the recruitment process.

Read our full article on data-driven psychometric testing for further comparison between MBTI, HPI, EQ-i, FFM and PACE, using the specific lens of leadership.

Going further than personality tests

In recent years, companies have begun incorporating personality tests into their hiring practices as a means to gain deeper insights into a candidate’s abilities. These tests aim to reveal more about an individual's strengths, weaknesses, and behavioural tendencies. However, they still fall short in accurately predicting future performance. 

While personality traits can provide some insights, it is important to recognise that behaviours are a better indicator of actual performance. “I am a playful person” is a different statement to “I adopt a playful approach to my work”

Explore the power of behavioural analytics and its potential in predicting leadership success in ambitious, high-growth businesses.

Behavioural analytics is an emerging field that focuses on analysing the actions of individuals to predict future outcomes more accurately. By focusing on actual behaviours, rather than inferred personality traits, this approach can more accurately estimate performance levels. This data-driven approach has the potential to greatly improve the accuracy of leadership assessments and can help employers identify candidates who are more likely to excel in high-growth businesses.

In this article we go deeper into why assessing leadership behaviours is the key to truly predicting performance.

Examples of leadership assessment questions

The goal of these questions is to evaluate one's ability to handle a diverse range of situations, both professionally and personally. The following paragraphs provide examples of leadership assessment questions, highlighting some key aspects that align with the confident, knowledgeable, neutral, and clear tone.

1. Situational Judgement Test (SJT) questions:

These types of questions present hypothetical situations and ask how the person would handle them. The focus is on gauging their leadership style and decision-making abilities. For example:

• "Your team is experiencing a conflict and two members are not communicating. How do you resolve the issue?"

• "A project deadline is fast approaching, and your team is falling behind. What do you do?"

2. Behavioural questions

Focusing on past experiences and actions, these questions can shed light on a person's leadership style and their overall decision-making skills. Examples include responses to statements such as:

• "Describe a time when you had to rally your team to achieve a challenging goal."

• "Share an experience where you had to make a difficult decision that had a significant impact on your team."

3. Self-assessment questions

These examine an individual's perception of their own leadership abilities and help identify areas for growth. Potential questions might be:

• "How do you respond when you receive constructive criticism?"

• "On a scale of 1 to 10, how would you rate your ability to delegate tasks?"

4. Scenario-based questions

Intended to provide insights into a person's problem-solving and adaptability, these questions often involve real-world situations. Examples of scenario-based questions are:

• "Imagine that your team has just received a new project with tight deadlines. What steps do you take to ensure timely completion?"

• "You notice decreased morale in your team. How do you identify and address the root cause?"

Incorporate these leadership assessment questions into your evaluation process for a comprehensive understanding of an individual's aptitude and potential as a leader. Using a mix of question types, including situational judgement tests, behavioural, self-assessment and scenario-based questions, will provide varying insights that, when combined, offer a well-rounded view of the person's leadership capabilities. Remember, keep it brief and maintain a confident, knowledgeable, neutral, and clear tone throughout your assessment.

Further resources on leadership assessment

• Leadership Assessment: The Importance of Behaviours

• The Top Psychometric Tests for Leadership Assessment

• The PACE Behavioural Analytics Test

• Leadership Dynamics People Analytics Tools