Intelligence and Good Judgment

It is hard to overstate the importance of the concept of intelligence for applied psychology; intelligence testing may be the most important single contribution psychology has made to larger society. Advocates of intelligence testing provide data showing that IQ predicts virtually every significant life outcome from income and occupational status to life expectancy. Nonetheless, the concept continues to make some of us uncomfortable for three reasons. First, the concept of intelligence is still poorly defined; the default definition is, “intelligence is what intelligence tests test”. Second, all of us know people who have received very high scores on standard IQ measures who nonetheless have trouble functioning in the world. And third, in standardized cognitive assessment, problems are fully defined; in the real world, problems are almost always poorly defined. The term “intelligent” is a judgment that we use to evaluate performance; for example, in athletics, certain people are known as smart players and others are not. A moment’s reflection suggests that the term “intelligent” mostly applies to decisions—smart decisions precede smart actions and vice versa. Decision making is particularly important in business, politics, and warfare where money and lives are on the line and bad decisions affect the welfare of many people. Decision making is also typically difficult in business, politics, and warfare because there is almost never enough time or information to make a carefully reasoned decision. The term “good judgment” applies to the ability to make sound and defensible decisions with limited time and information. The book, “Why Smart Executives Fail” by Sydney Finkelstein (2003), contains a large number of richly detailed case studies of failed business enterprises and is a superb data base for thinking about good (and bad) judgment. At the surface level, businesses fail for a variety of reasons—technology shifts, new competitors, ill-advised acquisitions—but at a deeper level, bad judgment appears to be the cause of the problem in every case. And in every case, the bad judgment was exercised in two stages. In the first stage, the company’s CEO chose the wrong means to accomplish a desired end. In the second stage, the CEO stayed with his/her choice despite information that the choice was a bad one. For example, in the 1980s, General Motors (GM), the world’s largest automobile manufacturer, faced two looming problems. The first was competition from low cost, high quality Japanese cars. The second was labor unrest at home. The CEO of GM, Roger Smith, decided he could solve both problems by replacing his workers with robots. He invested more than $45 billion in robots—enough to buy both Toyota and Nissan—but the investment failed because the key to the Japanese success was the manner in which they integrated their technology with their workforce, rather than their robotic technology per se. As one industry insider noted, by using technology without the prepared workforce, all Roger Smith did was automate confusion. However, he persisted in his decision, and GM’s productivity continued to decline relative to Toyota. Again, bad judgment is a two stage process. In the first stage, a person chooses the wrong means to get to the desired end. In the second stage, a person persists with the choice despite evidence that it was wrong. For persons familiar with the structure of the Hogan Business Reasoning Inventory (HBRI), choosing the wrong means to get to a desired end is a failure in Strategic Reasoning, while persisting in a bad choice after data are available is a failure of Tactical Reasoning.

Why Personality Matters

Why does personality matter? To answer this question, we need to resolve two prior issues:

What is personality?Who wants to know why personality matters?

The answer to the question, “What is personality?” is that there are two answers. There is what we call “personality from the inside” and there is what we call “personality from the outside”. Personality from the inside concerns your view of you, it concerns the person you think you are—it concerns your hopes, your dreams, your values, your goals, your aspirations, your fears, and the things you think you need to do to realize your goals and avoid your fears. We refer to personality from the inside as your identity.

Personality from the outside concerns our view of you, the person we think you are, and we refer to this as your reputation. It concerns the things we need to know in order to be able to deal with you effectively. So, there is the you that you know, personality from the inside, or your identity. Then there is the you that we know, personality from the outside, or your reputation.

These two forms of personality are different in very important ways. Consider the you that you know—your identity. Freud would say that it is hardly worth knowing—because you made it up. Everyone has to be someone, and you are the hero or heroine in your own life’s drama, but that doesn’t mean that your identity is necessarily closely related to reality. The way people think about and describe themselves is only modestly related to how others describe them—people don’t really know themselves all that well. Even worse, about 100 years of research on identity shows that it is very hard—almost impossible—to study in a rigorous and empirical way. As a result, we psychologists don’t know very much about identity that is interesting or useful.

Consider the you that we know—your reputation. Reputation is quite interesting for several reasons. First, the best predictor of future behavior is past behavior; your reputation reflects your past behavior, therefore your reputation is the best information we have regarding what you are likely to do in the future. Second, reputations are easy to study—we need only ask other people to describe you. And third, there is a well-defined and widely accepted taxonomy of reputations that has been used to study occupational performance, and as a result, we psychologists know a lot about the kinds of people who do well or poorly in different kinds of jobs. That is, we know a lot about the links between reputation and occupational performance.

As for the question of who wants to know why personality matters, it matters to two categories of people: (a) people who are interested in their own career development; and (b) potential employers. People who are interested in their own career development need to know about their own strengths and shortcomings relative to the demands of various occupations. More precisely, people who want to approach the topic of career development in a strategic manner will want to know: (1) How their strengths match the demands of various careers; and(2) how other people will perceive them during job interviews and while working.

Personality matters to potential employers in at least three ways. First, they need to know what kind of employee you will be—will you be cranky, difficult, and hard to manage or will you be a world-class organizational citizen? Second, they need to know if your personality fits the demands of the job for which you are applying—do you have the drive to succeed in sales, the social skills to succeed in customer service, the good judgment to succeed as a manager? And third, they need to know if your values (your identity) are consistent with the corporate culture—it doesn’t matter how talented you are, if your values are inconsistent with the corporate culture, you will not succeed in that organization.

The bottom line is that personality matters to individuals because self-understanding allows a person to be strategic about his/her career choices and career development. Personality matters to employers because knowledge about a job applicant’s personality allows them to be strategic about the hiring process.

Want to learn more about personality tests? Check out The Ultimate Guide to Personality Tests