Hogan Business Reasoning Inventory Manual

Provides brief technical information around HBRI rationale, test design, development, norms, test properties, and administration. The HBRI is the first cognitive assessment measure that identifies decision-making style in a business environment.

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1. The Rationale of the Hogan Business Reasoning Inventory

1.1 Introduction

Managers and executives must make periodic decisions about how best to allocate their scarce financial and human resources. Each decision they make is the result of a problem solving exercise. The history and success of every organization is the cumulative sum of these problem solving exercises and subsequent decisions. The quality of individual managerial problem solving and decision making is a function of intelligence.

Peter Drucker, the fabled philosopher of management, constantly emphasized that businesses get in trouble because senior managers exercise bad judgment (cf. Drucker, 2006). Managers are supposed to direct money and energy toward activities that increase profitability. Most often, however, they spend time and money solving problems and completing projects that don't matter. It takes clear-minded analysis to determine how appropriately to direct money and energy. Clear mindedness is a function of intelligence.

Drucker also emphasized that the root of every business crisis is the fact that the assumptions on which the business was built and is being run no longer fit reality. Drucker called these assumptions the "theory of the business." Constructing a valid theory of the business, and then subsequently evaluating and revising it, is a function of intelligence.

Menkes (2005) notes that, although most people understand the importance of clear mindedness for the success of a business, new managers and executives are rarely if ever selected on the basis of their ability to think clearly. Clear thinking is the same as intelligence as we define it. What is needed is a sound and defensible method for evaluating the ability of candidates for management and executive positions to think clearly.

Standardized intelligence testing was developed to predict academic per formance. An effective measure of executive intelligence should predict clear thinking and effective management decision making. Drucker describes in very general terms what the key components are: thinking critically about the theory of the business by reviewing the assumptions on which it was founded and in terms of which it is being operated. We believe this process can be usefully specified in terms of time perspective as follows:

Past perspective: Are the operating assumptions of the business still valid?
Present perspective: Given the stated goals of the business, are people working on the right problems and tasks?
Future perspective: Given the stated goal of the business, have people appropriately anticipated the potential problems and possible outcomes?

Within each of these perspectives two kinds of thinking will apply. We call them "problem-finding" and "problem-solving;" later we also refer to these two kinds of thinking as "strategic reasoning" and "tactical reasoning." Problem-finding involves detecting gaps, errors, or inconsistencies in data, trends, textual materials, or verbal arguments. Problem-solving involves determining what the right answer is, once a problem has been stated or framed correctly.

The Hogan Business Reasoning Inventory (HBRI) is based on the preceding discussion. It assumes that "intelligence" refers to clear thinking and is a key component of successful managerial per formance. It assumes that intelligence involves constructing and evaluating a competent theory of the business. It assumes that two kinds of reasoning are essential to this process—problem finding and problem solving. It assumes that these two kinds of thinking can be measured, and that the results from this measurement process can be used to evaluate candidates for managerial and executive positions. And finally, it assumes that the results of this measurement process will predict successful per formance as a manager or executive.

1.2 An Evolutionary Model of Intelligence: Meta-Representation

This section outlines our model of intelligence. The word "intelligence" is a recent addition to our language, and it is instructive to note that the ancient Greeks did not use the word. Rather they used words like clever, cunning, and wise to describe individual differences in per formance. More importantly, all of these words have behavioral referents—people are only called clever if they routinely manifest a certain kind of per formance. In our view, intelligence should be defined in terms of certain behaviors, and people refer to these behaviors when they conclude that someone has "good judgment" or, conversely, "poor judgment."

If the word "intelligence" denotes something real, then it must be rooted in biology and promote individual and group survival—there must be adaptive consequences associated with individual differences in intelligent behavior. In a study of self-consciousness, Sedikides and Skowronski (1997) argue that self-awareness— the ability to think about one's impact on one's social environment—is an adaptive outcome of human evolution. They propose that self-awareness gave early humans an advantage relative to their major competitors.

We think that Sedikides and Skowronski (1997) are correct as far as they go—the capacity for self-reflection is a necessary precursor to intelligent behavior. However, we propose that intelligent per formance depends on a more general capacity that can be called "meta-representation." By meta-representation, we mean the ability to reflect on our per formance (physical, social, intellectual) across all aspects of experience, to review it, and then evaluate it. The definition of stupidity is to continue doing something that yields a poor outcome but to expect that the outcome will improve if one persists in doing the same thing. In contrast, when smart athletes fall behind in a game, they reflect on their per formance both on its own...

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Excerpted from Hogan Business Reasoning Inventory Manual by Robert Hogan, Joyce Hogan, and Paul Barrett. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided by Hogan Assessment Systems, Inc. solely for the personal use of visitors to this web site.