Personnel Decisions International has prospered by selling a process by which to assess leadership candidates.
For decades, Personnel Decisions International (PDI), a global leadership consulting firm based in Minneapolis, has helped companies develop and manage talent with the aim of improving business performance.
PDI has benefited too, as a busy 2008 shows. Despite the slowing economy, the company last year enjoyed double-digit revenue growth for the third year in a row, used its own talent assessment methods to choose a new CEO and made a key acquisition enabling it to expand offerings to a broader range of clients.
"We like to think we've helped the field of human resources and talent management to become less about an art and a bit more about a science," said R.J. Heckman, president and chief executive. He said PDI has "made it harder and harder to deny the link between strong talent practices and stronger performance.''
Revenue at privately held PDI, with 700 employees in 30 offices around the world, was close to $150 million in 2008, Heckman said. Domestic work accounted for 55 percent of the total, with the balance from Europe, Asia and Latin America, where growth rates generally are higher.
Founded in 1967, PDI works with 22 of the top 25 publicly traded companies in the Twin Cities, five of the metro area's seven largest privately held companies and 15 public entities including the state of Minnesota, Heckman said.
Clients include 80 percent of the Fortune 100 and 75 percent of the Forbes Global 100, and many companies ranging from $1 million to $400 million in revenue.
Optimistic about 2009
Despite the worsening economy, Heckman said he's optimistic about 2009.
"We know we can drive changes that last, and that's why clients stick with us," he said in an interview at the new offices PDI moved into late last year, bringing together employees formerly spread out on several floors elsewhere.
"The double-digit growth rates are possible when you retain and drive success in your clients and find a few new ones along the way."
Heckman cited a recent PDI survey that found that 93 percent of employers are concerned about retaining key employees during a downturn. Accelerating development of key employees, who can provide a competitive advantage, is a more effective way to retain them than offering competitive pay and benefits, the survey found.
In his previous role at PDI, Heckman spearheaded development of TalentView of Performance, a tool that measures employee performance that companies can use in deciding how to fill leadership positions.
Managers who score high on it "will deliver a more engaged workforce who will then engage their customers, who will buy more and will help the numbers go up," Heckman said.
PDI has worked with Eden Prairie-based Supervalu Inc. for more than 30 years. PDI's talent assessment services were especially valuable after Supervalu's acquisition of the larger Albertson's grocery chain, said David Pylipow, Supervalu's executive vice president of human resources and corporate communications.
"PDI played a very big part in the process," Pylipow said. "When somebody's pretty low on their scale, I've learned they're not a strong candidate at all. There are certain things you gain from interviews and reference checks, but [PDI's] process gives you a much more rigorous look."
CHS Inc., a Fortune 200 energy, grains and food cooperative based in Inver Grove Heights, brought in PDI about five years ago to improve talent assessment and development and help with succession planning, CHS President and CEO John Johnson said.
"Our experience with PDI has been very rewarding for the organization," Johnson said. "Things would have to get pretty dire around here before we'd start cutting talent assessment, talent development and preparing the company for succession."
Taking their own medicine
At PDI, Heckman and other candidates went through the company's own assessment process before Heckman was chosen in June to succeed outgoing President and Chief Operating Officer Cindy Marsh, who continues to serve as vice chairwoman.
"I deliver these services, so I'd seen the power of them for the clients with whom I'd interacted," Heckman said of the daylong assessment, which includes simulated challenges and interactions with ersatz colleagues. "I knew I'd learn a lot, and I knew it would be eye-opening."
Heckman previously was vice president and general manager of the company's leadership assessment products business, and also had worked for PDI in Boston and New York. Before joining PDI in 1999, he worked for Graco and Allied Signal, now Honeywell.
"I think they saw me as a bit of a change candidate," Heckman said. "Our field is changing pretty rapidly with technology, global talent and the growth of our business overseas."
Heckman engineered a significant move in October, when PDI acquired Ninth House. The San Francisco-based firm has a dozen years of e-learning development experience focused on new and mid-level managers -- those at lower levels than PDI previously had targeted. Jeff Snipes, CEO and founder of Ninth House, serves on the board of directors of what is now known as PDI Ninth House.
Ninth House specializes in producing what Heckman said were entertaining yet educational presentations from "faculty" such as Stephen Covey, which can be delivered to thousands of people at a time over the Internet and onto their computer desktops.
"What we didn't have was the lower-touch, higher-tech-for-the-masses kind of technology-based approach," Heckman said. "You're getting personal coaching at a very low price in a very engaging format.''
Heckman said interest in PDI Ninth House-type materials is strong in India, where he traveled last month, as well as in a handful of European countries.
One challenge in bringing about a meritocracy within a company is the differing ways in which leaders evaluate talent.
"The biases that permeate talent decisions in many companies lead to major mistakes,'' Heckman said. "With a level playing field, with research-based methods that have proven to predict one's likelihood of success ... organizations will make fewer mistakes and perform better.''