Herb Greenberg  and believing in the power of potential

Caliper CEO Herb Greenberg
Photo Editor: Neil Harris Assignment: © Reed Young
Photograph by Reed Young for Fortune

Herb Greenberg knows what discrimination feels like. Blind since age 10, he became a summa cum laude graduate with a Ph.D. in psychology — but could land few job interviews. He eventually decided to carve his own path. Greenberg created the Caliper profile, a pioneering personality test that aims to predict how well a person will do a job. It taught many companies that potential matters more than experience. Today his global management-consulting firm, Caliper, headquartered in Princeton, N.J., has worked with 35,000 companies — including Prudential (PRU), Avis Budget Group (CAR), and Wal-Mart (WMT) — and generates annual revenues in the $25 million to $50 million range. Greenberg, now 84, has taken Caliper’s tests. The verdict: He’s an “intense entrepreneur” with “high ego drive,” “high urgency,” and “ high idea orientation” — but he doesn’t give much attention to detail or organization. His story:

My parents were from Poland and escaped during the 1920s because of persecution. They came to the U.S. separately, speaking no English, and met in New York. They married and moved to Detroit, where I was born, then moved back to New York. I grew up in Brooklyn. My dad made orthopedic shoes for people and earned, at most, $100 a week. He always wanted to do things for others. It was about making a better world, so that’s the philosophy I grew up with.

I had three sisters. In 1938 one died at 13 months old of strep throat. I had to have an operation a day or two after Roslyn died because the mastoid bone in both my ears was infected; the doctors weren’t really sure what caused it. I was 9 years old, underweight, and close to dying. The bacteria spread to my eyes, and I gradually lost my sight over the next year. I was reading a Don Sturdy adventure book when my father realized I wasn’t seeing correctly because he saw me holding the book upside down. The doctor said I was going blind and there was nothing he could do. The big thing was that Roslyn had died. So we coped with it.

The authorities pressured my parents to send me to a school for the blind. We fought for me to be educated with everyone else and not segregated because of my blindness. We finally found a way for me to go to a regular school and have a homeroom where Braille was taught.

As a kid, I wanted to be a lawyer, a combination of Clarence Darrow and Perry Mason, helping the downtrodden. But I went to City College of New York and fell in love with psychology and sociology. The power of psychology to make a difference in people’s lives turned me in that direction.

When I finished my master’s in clinical psychology in 1951, my first job was working as an employment counselor at the New York City Department of Welfare, helping people on welfare get jobs. In 1955, when I got my doctorate in psychology and human relations at New York University, I graduated summa cum laude and had all the credentials. I applied for 600 jobs and had 85 invitations to talk. But after I mentioned my eyesight, the interviews dwindled down to three, and none of them hired me.

Finally I got a job teaching at Texas Tech, where I stayed for two years. Being a young Brooklyn boy in Texas, I had problems with some of the social attitudes in the South back then. When the opportunity came to teach psychology at Rutgers University in 1957, I grabbed it.

It was at Rutgers that a colleague asked if I knew much about psychological testing. A large insurance company, which I promised never to name, was looking for a test to predict sales success. Our research found that no such test existed. I then met David Mayer, who was running a small company called Market Psychology in Manhattan. Seeing a need, David and I decided to become business partners and developed a test to predict whether someone could do a job. It took four years to design it.

Caliper CEO Herb Greenberg
Greenberg in his office — Photograph by Reed Young for Fortune
Photograph by Reed Young for Fortune


In 1961 we incorporated as Marketing Survey & Research Corp. [MSRC]. We were able to borrow $15,000 from Bob Schwartz and Morris Gittleman, two guys who were selling mutual funds and penny stocks, and moved into the back of their office at 37 Wall Street. After a couple of months they were seeing no revenue, so they asked us to move out. We found an inexpensive apartment in a building that offered three months of free rent and moved there.

There was no money to live on, so I packaged life insurance and mutual funds and sold them. I started a barter company and sold wholesale furniture as well while running MSRC.

Trying to sell our test wasn’t easy. We were a couple of young guys saying, “Forget how you’ve been hiring people. Trust us with our test.” In the early days we got thrown out of some of the best companies in the country. They laughed at us. Finally Gail Smith, vice president of merchandising for GM (GM), agreed to try our test at 30 Buick dealerships across the country. We’d almost used up the first three months of free rent, so the contract came just in time.

In 1963 we changed the name of the company to Personality Dynamics because that described what we did, assessing personalities and relating it to job performance. The key in developing our test — the key to whether someone succeeds at a job — is not what he did in the past, but who he is as a person and his motivations in the present.

Too much hiring is based on work experience. It’s easier to look at past experience than dig into who people are and their personalities. I ask managers, “How many times have you hired a person with 10 years’ experience, only to find out that what you had was a person with one year’s bad experience, repeated 10 times?”

Seventy percent of workers are in jobs to make a living; they don’t love what they’re doing. We say, “Let’s find out what you love doing, then get you the training to do it.” The mind is the most important muscle in the body, and if your brain is not working at something stimulating, it’ll become flabby and not work very well. If someone loves his work, the whole production cycle goes up.

In 1964, David and I had a big article in the Harvard Business Review, which got us a lot of attention. By that November we were making about $300,000 annually, and grew steadily. In 1968 we got a $200,000 grant from the Office of Economic Opportunity to help find employment for unemployed people in Puerto Rico. We were so successful, they doubled the grant the next year. We’d made it, if you will.

Following that, we got a grant from the U.S. Department of Labor for $2.88 million to place hardcore unemployed people in New York City in jobs. The grant increased to $4.69 million the next year. That was part of President Johnson’s War on Poverty.

In 1970, David and I had a friendly parting of the ways. I bought him out, and we continued progressing. In the early 1980s everyone was using “dynamics” as a term, so we decided to bring in a specialist to change our name. He came up with Caliper. A caliper is a precision measuring instrument, and we measure people and what they can do with precision. So we changed our name to Caliper in 1987.

There aren’t many jobs we haven’t assessed for. We’ve done work in the major sports as well. In the ’80s we worked with football, baseball, basketball, and hockey teams. We could assess competitiveness, discipline, team orientation — things that, given talent, separate the great players from the also-rans.

I love sports, and in 1999, I bought a basketball team you’ve never heard of called the Trenton Shooting Stars, and kept it for a couple of years. It was a financial mistake because I lost $2 million or more [the team, now defunct, played in the International Basketball League], but I proved to myself that my theories of drafting players worked. The players were my picks, and one year we missed the championship by one shot. I learned that in addition to being a psychologist and scientist, I had to be a businessman. Fortunately I could afford to lose the money then.

We’ve assessed more than 3.5 million people to date. Now we do a lot of executive coaching, some levels of training, and are partnering with other training companies.

Hiring is a lot better than it used to be in terms of discriminating against physical handicaps, race, and gender. But there are still elements of discrimination. For example, why would an inability to walk affect the ability to answer a phone? Forget the disability. Grab the ability, and ride it to death.

I’ll never retire unless my physical health requires it, as long as what I’m doing is fun. We’re profitable, I’m well paid, and our people are well paid. We’ve helped thousands of companies, and we hear success stories from people we’ve tested every day. It’s extremely rewarding.

My advice

Hire with potential succession planning in mind. Does a person applying for a finance role show leadership potential? If so, keep that in the back of your mind and develop him for higher positions in the future.

Sidestep stock interview questions. Instead, for example, ask the person to describe a time he lost a sale … and how he was able to learn from it and move on to the next challenge.

Ask references more than just “Did he do the job well?” Ask “What is he like?” and “How’d he work with people?” You can always teach skills. You can’t train attitude.

Test your entrepreneurial skills by taking the QUIZ below:

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This story is from the June 16, 2014 issue of Fortune.

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