- Wall Street firms have a secret weapon for hiring decisions: the leadership advisory firm ghSmart.
- Its founder, Geoff Smart, detailed its vetting process, used by firms like Blackstone and Citadel.
- Hourslong interviews inquire about candidates’ early childhood, ambitions, and past jobs.
There’s an unassuming group of talent whisperers who have the ears of top titans in finance.
A small company called ghSmart, composed of about 100 psychologists and business strategists, has established a hiring system that firms like Citadel and Blackstone use to make some of their most consequential talent decisions.
The bread and butter of that system is an hourslong interview (we’re talking five hours) that asks candidates about personal and professional experiences and uses psychological techniques to determine which applicants are right for the job.
Personality tests are common in corporate America. Tomas Chamorro-Premuzic, a psychology professor who wrote the book “I, Human,” has estimated that personality testing has grown into a $2 billion industry, The New York Times recently reported.
But ghSmart is a different animal — it’s not like the Myers-Briggs test, for example. The assessment doesn’t aim to categorize the person as a “type,” but results in a 30- to 50-page report detailing their strengths and risks for a certain role. It makes observations about patterns in behavior that could help or hurt in the desired job. It draws out names in the candidate’s past and present inner circle the company can use as references. Finally, it gives each candidate either a thumbs-up or a thumbs-down recommendation based on how their work habits and personality might align with the client’s goals, the values of the organization, and the working styles of key colleagues.
Unlike many corporate psychology assessments, ghSmart can play an outsize role in determining a candidate’s fate because it takes a stance on whether the candidate should get the job or be shown the door. When the company recommends against hiring a candidate, that’s often the end of the line.
“Other firms in our space, these squishy psych firms, just say, ‘They’re extroverted and good at this,'” said Geoff Smart, ghSmart’s eponymous chairman and founder. “They don’t really tell you what you’re not good at. And they certainly don’t draw a line in the sand and say hire, don’t hire. We’re so convicted in our recommendation.”
The company’s unusual but rigorous approach to screening job candidates has won it the trust of some of the finance industry’s most competitive and coveted workplaces, as well as other blue-chip corporations. These firms can spend millions annually on ghSmart’s services, which start at $25,000 per assessment.
“They tend to have long relationships with the firms they do this with,” one hedge-fund executive who’s worked with ghSmart said. “I always found it very useful.”
In an interview with Insider, Smart detailed his origin story (which involves a well-known private-equity titan), how his test works, how job candidates can prepare (hint: don’t), and which five questions will be asked about each past employment stop. He also discussed why talent may not be as important as cultural fit and disclosed how much each test costs.
An unlikely encounter with Henry Kravis got ghSmart off the ground
GhSmart was born out of an unlikely encounter with a Wall Street titan when Smart was a graduate student.
Smart was pursuing a Ph.D. in psychology from Claremont Graduate University, studying under the business-management legend Peter Drucker, when he reached out to Henry Kravis, a cofounder of the private-equity giant KKR. For his dissertation, Smart wanted to study how venture capitalists evaluate and choose who to invest in, and he was hoping Kravis, a Claremont alumnus, would agree to participate in a study on evaluating management teams.
But he couldn’t get past Kravis’ assistant, who rejected his requests and asked him to stop calling. Not easily deterred, Smart called back and promised to stop pestering her if she’d pass his message along to Kravis, and she relented. Kravis agreed to participate, and once he’d signed on, more than 50 other private-equity firms agreed to join as well.
“That became the kernel for ghSmart,” Smart recounted in a podcast interview. “And I kind of took that show on the road, told the story. And so our early clients were these investor types.”
GhSmart has since performed more than 30,000 assessments and consulted on leadership development for companies including Blackstone, Vanguard, GoldenTree Asset Management, the Canada Pension Plan Investment Board, and the business-news outlet Fortune, according to public statements and people with direct knowledge of the matter. Citadel has been a client for over a decade, according to people familiar with the matter, and an endorsement from its CEO, Ken Griffin, appears on ghSmart’s website.
Smart declined to comment on individual clients. A Citadel spokesman declined to comment.
Smart said clients rely on ghSmart for help improving their performance just as much as they do for hiring advice. He added that assessing candidates accounts for about 40% of the company’s revenue, while helping teams collect and analyze information, come up with plans, execute talent strategy, and develop leadership makes up the other 60%.
Smart said clients typically spend $500,000 to $5 million a year on ghSmart’s services, but some spend over $10 million a year. Smart said the firm had grown by about 20% per year for the past decade — in 2022 its total revenue was $105 million.
The company’s success is a reflection of the inherent flaws in the traditional interview process. Companies often make expensive bets on job candidates with only limited in-person interaction, much of it spent sussing out whether they have the necessary skills and experience for the job rather than how well they’d fit in at the firm.
“The hit rate of that process is, not surprisingly, not that great,” said the hedge-fund executive, who requested anonymity because he was not authorized to speak on behalf of his company.
In the most competitive echelons of finance, it can be hard enough to find someone with the right technical ability and performance track record. When someone with compelling experience comes along, firms are apt to talk themselves into the hire and underestimate whether the candidate can truly meet their needs, the hedge-fund executive said.
Having an independent expert determine the likelihood of a strong match is useful, especially for high-stakes hires. “There is something to be said for the idea of having somebody who has a somewhat systematic, repeatable, disciplined way of evaluating people’s fit,” the hedge-fund exec added.
How the test works
The interview is rigorous and thorough. Candidates discuss their entire life, including their childhood experiences, dreams, and ambitions, Smart said.
The assessment starts off exploring candidates’ early influences, including high-school and college extracurriculars, accomplishments, and failures, Smart said. Then candidates walk through their entire career, detailing each role they’ve had (more on that later). At the end, Smart said, candidates spend 15 minutes talking about their dreams and goals for their careers and lives.
The process usually takes four to five hours, though it can take longer, depending on the candidate and the job, Smart said. He acknowledged that it’s a long time but said it’s necessary because each interview results in about 600 data points on the applicant.
“The best hope we have isn’t by giving psych tests. It’s not by bonding over sports. It’s not by asking hypothetical questions,” Smart said. “It’s by digging in and doing the work, the hard work, to gather data from the person directly, as well as from people that they’ve worked with.”
There are breaks every 90 minutes, or whenever the candidate wants, Smart said.
The assessment is usually one of the last steps in a hiring process, he added, so if a candidate arrives at it, they’re probably a finalist.
How to prepare for the test? Don’t
The goal of the interview is to determine whether a candidate is the right cultural fit for the company and the role, and that understanding is based on work ghSmart does with clients ahead of time to determine their goals, Smart said.
That means the ghSmart interview isn’t something you can necessarily prepare for in the same way you might, for example, read up on certain stocks or industry trends. The assessment is about telling the story of your life and career — and if it’s not a fit, it’s just not a fit, Smart said.
One senior hedge-fund recruiter said he’s gotten calls from candidates asking how to prepare for the test; his only advice is to avoid formulaic answers.
“I’ve gotten calls in the past: ‘What is this thing?'” the recruiter said. “I tell them, ‘Just answer the questions honestly.'” The recruiter requested anonymity because he was not authorized to speak on behalf of his clients.
Smart said that while “people do grow and change,” they “don’t change and grow to such an extent that you’re going to be stunned about how they perform if you really do understand how they’ve performed throughout their career to date.”
Anyone can embellish their experiences and accomplishments in an interview. But psychologists who spend hours with candidates tend to sniff that out, Smart said.
“It’s hard for them to meander from the truth too much because we don’t let them just tell us canned answers. We’re constantly asking follow-up questions,” Smart said.
The interviewer will ask these 5 questions about every job you’ve had
Smart said he cringes at the thought of being lumped in with stereotypical psychological or personality tests. He added that ghSmart’s assessment doesn’t categorize people with a “type” or “style.”
“The handbook of my entire field academically says you shouldn’t give senior executives psychology tests,” he said. “They’re biased, and they don’t really predict behavior. They get it wrong a lot.”
The company’s team of psychologists spends hours drilling into each candidate’s job and life experiences. He said candidates will be asked these questions about each of their jobs, which take up the bulk of the interview and are part of why it takes so long:
- What were you hired to do?
- What did you accomplish?
- What were your low points and/or mistakes?
- Who did you work with? What would each say were your biggest strengths back then and your biggest areas for improvement?
- Why did you leave?
What you don’t say is also important. Smart said that when talking about why a candidate left a certain job, his assessors have a way of measuring the degree to which the candidate was pulled to something better (a positive sign) or pushed out of the job (a more negative sign).
Smart said the assessment is looking to glean patterns of successes and failures from the candidate’s answers.
Negative experiences don’t necessarily count against the candidate, Smart said. What’s more important is how the candidate has responded to and handled work environments they’ve been in.
After the assessment, Smart said, the company talks with each of the candidate’s references mentioned in the interview. Later, it compiles a 30- to 50-page report detailing the interview and what it learned about the person, including what makes them tick, their patterns of performance, and how they might fare in the job and at the client’s firm.
Smart emphasized that ghSmart is distinct from recruiting firms that find candidates to apply for roles at companies. He said ghSmart doesn’t search for candidates but rather consults with companies on those already in the running. In doing so, Smart said, it analyzes how each candidate might fit into the culture of the hiring company and expresses support or opposition with either a thumbs-up or a thumbs-down.
The high-performing ‘lone wolf’ who didn’t get the job
GhSmart’s services aren’t for everyone, Smart said, and it selects its clients carefully. For starters, its services don’t come cheap. And its assessments aren’t available on a one-off basis — a firm has to become a client and work with ghSmart to explain its culture and performance ambitions.
In an effort to put prospective clients at ease, Smart financially guarantees its services, meaning clients can request a refund for any work they deem not valuable. Smart said he’s turned down would-be clients because of concerns about ethics and diversity, equity, and inclusion, as well as doubts about whether ghSmart could meet a client’s needs.
People familiar with its assessments are quick to point out that hiring ghSmart or any talent-assessment service doesn’t guarantee a flawless workforce. “It’s better to have somebody do that for six hours and give that opinion than not, but it’s not perfect,” the hedge-fund executive said.
While ghSmart stands out from other personality and psychological tests, it isn’t alone. Some executive-search firms, in addition to sourcing candidates, offer a very similar vetting service when filling senior roles.
But by specializing in the company-fit assessment, ghSmart provides distinct advantages.
“Given the construct, they do it so efficiently,” the senior hedge-fund recruiter said, adding that a headhunter may piece together the same profile over the course of years rather than in a single sitting. “That’s, I think, the great thing about their business model. They can bring all that information to the hiring manager in one sitting.”
Unlike some executive-search firms, ghSmart disconnects its fee from whether it fills the role. That puts Smart and his team in a position to offer a service to A-list clientele that few others can or will: telling them they’re wrong and saving them from their own flawed judgment.
Smart said he once had a private-equity client who wanted to hire someone who ghSmart had determined was not a good match for the company’s goals.
“There was a pattern of this person being a lone wolf — sort of, like, don’t bother me, head down — whereas my client clearly was building a very team-oriented culture,” he said.
“This person was a good match for this very harsh, individualistic culture, whereas the client’s desired culture was one of collaboration and teamwork and more of a gracious, gratitude-oriented vibe.”
Smart said the client offered to pay him $1 million to coach this person to be a better fit, though Smart wasn’t sure whether the offer was serious or just a test of conviction. Smart said he declined.
“Without hesitating, we said, ‘No. They’re a toxic hire,'” Smart said. “‘Don’t hire people who are talented but not a good match with the culture.'”
Smart said the firm took his advice.
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