High potential employees are seen as almost twice as valuable to their organisations as employees (HiPos) who are not high potential. Their worth is easy to understand when you look at the relationship between leadership bench strength and organisational performance. Organisations with stronger leadership bench strength show double the revenue and profit growth of organisations with weaker leadership bench strength (1). However, according to Hay Group (2), 71 per cent of HiPos are not high performers inside the organisation.
There is a fundamental difference between high performing employees and high potential employees. Organisations need to make this distinction if they want to build strong leadership teams – it is vital to ensure that there is a common understanding of what ‘potential’ means to the organisation.
According to CEB research (1), high potential employees have three key characteristics in common: aspiration, ability and engagement. High potential employees are likely to be successful in more senior, critical positions in the organisation in the future. In contrast high performers are the ones hitting all their targets now – the sales star or project manager who bring all their projects in on time. However, those people may lack the ability to lead larger and larger groups of people or the ability to do increasingly complex thinking – both indicators of future leadership material. This leadership ability is quite different from whether they wrote a good proposal, delivered a sales goal, or kept server down time to a minimum.
There is a widespread temptation to ‘reward’ these high performers with leadership roles. At best, organisations assess both leadership and technical job performance when it comes to recruiting leaders but even when they do assess both, there is a tendency to overvalue the performance aspect. As a result HiPos are often overlooked for promotion.
Creating a successful HiPos development programme
HR managers have had their sights trained on HiPos for some time yet programmes to identify and retain high potential employees are not universally successful. More than half (55 percent) of high potential candidates drop out of their programmes within five years (1). There are a number of reasons why HiPos programmes fail. Some flounder because HR managers make the fundamental mistake of not treating their HiPos as individuals, with different desires and motivations. Others fail because the wrong people are identified as HiPos.
Not all employees identified as HiPos see themselves as high potential, not all are ambitious and want to be challenged and stretched. They will not thank you for giving them more work than anybody else just because they have the ability to do it, although they may well welcome opportunities to learn and grow. One of the best ways to truly assess whether you have HiPos is to ask them questions about what they might be interested in and how they would like to see their careers progress. The answers may surprise you, and engaging your HiPos in these kinds of discussions is an effective way to engage staff and to gauge their interest in future opportunities within your organisation.
A creative approach
HR managers need to develop a creative and personalised approach to their organisation’s HiPos development programmes or risk losing them to the competition. This approach includes asking your HiPos what interests them and then doing what you can to make it happen. Your HiPos do a lot for your organisation so reciprocity here makes sense. Find something valuable to them as an individual. It could be a unique training programme or the opportunity to lead a working group. Or, perhaps it’s take a fresh approach to rewarding these employees – get the salary package right then reward great work with time off. A vacation day in the middle of the week is highly motivational to a busy, engaged employee.
Here are some tips for HR professionals to identify, manage and retain high potential staff:
- Start by defining the talent pools you need. There may be general leadership pools alongside more specific talent pools. The best practice approach is to prepare for succession in all key areas of your organisation, but you can start slowly and consider all the key areas where your organisation needs bench strength. Then identify the competencies and values, personality traits and abilities required for each talent pool. Once you have done this, it is possible to assign HiPos to the right talent pools and assess and develop those people more effectively.
- To identify high potential staff, organisations need to make clear the distinction between performance and potential and be zealous about assessing high potential. That means managers spending lots of time talking to one another about these constructs and how they see members of their teams exhibiting HiPos traits.
- Use the performance management process to identify HiPos. Add a succession planning section to your performance appraisal forms. Managers can rate their employee’s potential, readiness for promotion and the risk of them leaving the organisation. Managers should be encouraged to make recommendations for which talent pools they think the employee should be assigned to.
- To develop high potential staff, create individual development plans that include lots of coaching and mentoring, not just formal classroom training. Regularly reassess high potential employees’ demonstration of the talent pool competencies, track progress towards them and adjust their individual development plans as needed.
- To retain high potential employees, ask them how they want to advance their career and find a way to make it happen. Try to make them part of a meaningful experience.
A long-term strategy to identify, manage and retain high potential employees is most effective when it is evidence-based. Tools that collect performance data relating to HiPos will improve decision-making about selection, development, retention and deployment.
Organisations that have a clear evidence-based strategy to identify and develop their high potential employees are in the best position when it comes to making informed choices when it comes to leadership recruitment. Promoting from within enables the organisation to move ahead quickly in a fast moving world with leaders from within the business who are already engaged with the business’ values and strategy.
About the author
Dominique Jones is Vice President of Human Resources at Halogen Software. She holds a Chartered Institute of Personnel and Development Certification.
1 ‘Improving the Odds of Success for High-Potential Programmes’. CEB/SHL. https://www.cebglobal.com/shl/assets/Talent-Report-High-Potential-2014-USeng.pdf