Unfortunately, however, the quality of senior-level executive assessment and the board’s involvement in it often leave a lot to be desired. When many of the present-day members of boards were rising in their careers they weren’t exposed to good structures and processes for senior-level executive assessment. So while directors may feel they are on familiar ground when, for example, they’re engaged with financials, they may be unfamiliar with best practices in senior-level assessment. They may even feel a bit uncomfortable with what can seem an amorphous subject. They needn’t. These five principles can help them achieve the clarity that such critical discussions deserve:

Based on 25,000 assessments over a five-year period, we have identified six core leadership competencies: results orientation, strategic orientation, collaboration, team leadership, change leadership and developing organizational capability, which includes developing individuals as well as driving talent management overall.

1. Adopt a behavioral, as opposed to a psychological, approach.Senior-level assessment can have several goals: identifying rising stars, matching people to specific positions, uncovering development opportunities, or planning CEO succession. Psychological assessment purports to tell you who the executive is. We see many clients wanting to use personality tests or employ psychologists to probe the psyches of potential CEOs or senior executives. The approach seeks to gauge such things as problem-solving style, maturity, emotional intelligence, and interpersonal style. By contrast, behavioral assessment seeks to predict what the executive will actually do. Will the executive take swift and decisive action in times of crisis? Will the executive get people on board with dramatic change? Will the executive develop capability within the organization? Although the behavioral approach might include a psychological element, it has the great advantage over purely psychological approaches of being applicable to the business and its results.

2. Use leadership competencies but don’t overcomplicate them.
Assessment rightly focuses on leadership competencies – the abilities that are indispensable for leading people and organizations no matter the industry. These are important because they enable one to go beyond superficial assessments of whether someone is a “strong leader.” However many companies unnecessarily overcomplicate the issue by developing lists of as many as 20 or more competencies they expect in a leader. In fact, far fewer competencies cover the issues of top leadership.

Based on 25,000 assessments over a five-year period, we have identified six core leadership competencies: results orientation, strategic orientation, collaboration, team leadership, change leadership and developing organizational capability, which includes developing individuals as well as driving talent management overall.

Those six things are what business leaders do, unlike people in functional roles where competencies might be more discipline-specific. Beyond these six leadership competencies, lists can become repetitious, unnecessarily detailed, and unfocused. They’re also unwieldy – board members have a hard time keeping them all in their heads and arriving at a clear picture of an individual assessment.

3. Develop a clear sense of what you’re looking for.
Job specifications should be developed in terms of the strategy of the organization going forward. In a time of retrenchment or recession, for example, the role may call for someone with superior operations skills or the ability to do more with less. A growth strategy in global markets may call for someone with international experience and a demonstrated ability to work across cultures. A language of assessment that is behavioral enables you to measure an executive against the results envisioned by the strategy.

4. Develop a common language.
Clear job specifications, a manageable list of leadership competencies, and assessments couched in behavioral terms provide board members with a common language through which they can engage the issues. Tied to action and business results, this language enables them to talk in concrete terms rather than engage in psychological speculation or vague, unfocused discussions. Further, the more they use this language, the more adept they become, continually improving the quality of their participation in senior-level executive assessment.

5. Leverage third-party assessments.
In putting together rosters, top sports teams don’t evaluate only their own players. Neither should companies. They should benchmark internal talent against external talent, continually assessing them against company-specific challenges and behavioral leadership competencies.

Companies that conduct assessment in a vacuum determine only who is the best they have, not the best that they can get, or what “best” looks like from a global perspective. Third-party partners who track talent and are experienced in senior-level executive assessment can bring that wider perspective. Further, third parties that are free of the biases that can inhibit discussion offer a way of surfacing issues that might otherwise go unspoken. And with a behavioral approach, third parties can bring real business discipline to the conversation.

A number of everyday maxims affirm our sense that what people do is more important than who we, or they, think they are: “Actions speak louder than words.” “Walk the talk.” “Lead by example.” A behavioral approach to assessment reflects not only those common-sense sayings, but also the growing empirical evidence that how a person does something predicts success better than his or her qualifications or psychological traits.

In skilled hands, competency-based interviewing probes for competency-related situations and behaviors that are relevant to the job and the company. Instead of simply retracing a person’s achievements, the interviewer focuses on the “how” questions that open windows into the individual’s behavioral characteristics, enabling clear judgment of the candidate’s ability to perform as a leader. Board members who insist on this approach will not only help improve the organization’s capability in assessment but also the board’s ability to oversee it.

Stephen P. Kelner, Jr. and Ashley R. Stephenson are global leaders in Leadership Strategy Services at Egon Zehnder International. They can be contacted at steve.kelner@ezi.net and ashley.stephenson@ezi.net.

At BofA, where investment banking plays a distant second fiddle to the bank’s commercial banking empire, the departures won’t register as deeply as one might expect, according to company employees quoted by the WSJ. While Merrill was among the world’s top five in terms of M&A volume over the last five years, BofA never ranked higher than twelfth during this period.

Some believe the Merrill departures are a result of an adversarial relationship between the two conjoined banks. Says investment banker Peter Solomon, “You have Merrill people going into a place where there are no advocates, and they need to feel they have one.”

The Merrill departures include Alan Hartman, who earlier this year worked on Pfizer’s acquisition of Wyeth, and Eric Heaton, a former Merrill treasurer, who in February defected to Deutsche Bank.

Bankers and their brethren are increasingly leaving behind the former megastars of the financial landscape in favor of smaller, nimbler companies that don’t have to contend with the bureaucracies—either internal or external—that now malign many Wall Street firms. These include boutique firms, start-ups, and foreign companies that don’t have to deal with strict U.S. regulations.

Wall Street recruiters are of course apprehensive about this shift, arguing that the loss of qualified managers could make it difficult to rebound from the recession. Head counts at the world’s largest 12 investment banks were cut by about a fifth in 2008, according to consulting firm Oliver Wyman.

Others argue that the exodus may in fact be a disguised blessing, as it will allow for a healthy renewal of investment bank personnel. As managers and analysts move to smaller firms, it will have the effect of diluting the risk potential, says Matthew Richardson, finance professor at NYU’s Stern School of Business.

“If the risk-taking spreads out to these smaller institutions, it is no longer a systemic threat,” says Richardson. “And innovation is spreading out, too. This is a good thing.”

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