Every superstar performer who has ever graced the stage, field, or boardroom was once a kid with vast potential waiting to be discovered and given a shot to take the spotlight. But what about all those other people with just as much potential who never get found? And what about all those people who looked good initially but their potential was simply a flash in the pan?
Every organization desires to identify and develop employees to their fullest potential. Few have a formula to get it done—but that doesn’t have to be the case. With the right tools and model, your organization can be as effective at identifying talent as the best in Hollywood, Bollywood, or the world’s great football teams.
As with all attempts at forecasting the future, there can be many variables to consider when attempting to predict the “runway” of individual talent. At Aon Hewitt, we believe there is a clear path to assessing and developing High-Potentials, one that your organization can embrace and utilize effectively.
Succession planning has long been a priority for savvy organizations, but it’s taken on greater urgency in recent years as organizations find themselves in an increasingly complex and volatile global economy. Companies find themselves faced with short-term succession planning issues, such as high-profile departures of top executives and striving to map out a longer-term strategy to ensure the continued availability of individuals who have been groomed to assume pivotal roles and take on key organizational challenges.
Given the new complexities in the environment, the focus has shifted to identifying and nurturing high-potential talent within the organization in order to provide an accelerated path to take on more senior-level responsibilities. We are talking about those employees who are successful at quickly taking on and embracing new challenges, adapting to changing situations, and achieving great results.
These High-Potentials are an organization’s most coveted resource because they bring new ideas, innovation, and vision, and they get stuff done. Top Companies are deeply committed to ensuring that these immensely valuable individuals are identified, developed, retained, and promoted according to the desired trajectory.
But while “HiPo” has taken its place alongside “engagement,” “bandwidth,” “sustainability,” and “transparency” in the 21st century corporate lexicon, many organizations do not have a firm grasp of what exactly it means to be a High-Potential.
Top Companies Committed to Identifying High-Potentials
- 100% of Top Companies have formal strategies for identifying high-potential talent
- 92% of Top Companies identify High-Potentials in first-level management roles
- 56% of Top Companies formally assess potential in entry level positions
The Struggle with Defining Potential
There are a handful of reasons why organizations fail when it comes to defining potential and thus fail to create effective succession plans.
1. Confusing High-Potentials with High-Performing Employees
There is no question that nurturing the development of high-potential individuals is critical to an organization’s succession planning and leadership development process, but performance and potential are not the same. One is current state; the other is a prediction of the future.
Just because an individual is performing well in a current role does not mean the transition to the next one will produce the same results, nor does it mean high potential for leadership roles.
It seems obvious, but too many organizations promote based on success in a role that is substantially different than the future role. Failing to look at the skills and competencies required at the next turn and preparing the individual for that is a key mistake many organizations make.
It is easy to confuse the two, but they are not one and the same. It is entirely possible for someone to be a high-performing employee—one who consistently exceeds expectations, produces more than everyone around them, and serves as an inspiration to colleagues—yet, for one reason or another, to not be High-Potential material. There are numerous reasons why a high-performing individual may not be a good candidate for broader, more strategic roles, including because they:
- Are unclear on the complex interrelationships between and within business units.
- Find it difficult to anticipate needs and take risks in times of ambiguity.
- May have a personality incompatible with being able to truly inspire and motivate others.
- Do not have the temperament to lead an organization through volatile times.
It is also entirely possible a high-performing employee may simply have no interest in progressing to the more complex leadership roles. In fact, they may have a burning desire to stay out of the leadership ranks.
Whatever the reason(s), trying to put a high-performer into a high-potential role is much like trying to cram a square peg into a round hole: No matter how hard you push, twist, or manipulate the elements, it just is not going to happen.
Erroneously branding a high-performing employee as a High-Potential is problematic in many ways:
- It is financially costly in the form of additional training and development investments intended to groom the individual for higher roles.
- You risk turnover if a misclassified employee decides not to speak up about being taken off the high-potential track for fear of losing their job or losing respect. Instead, they may decide to silently continue along their path and the stellar performance that got them noticed in the first place may begin to falter—and, in many cases, they leave.
Clearly it is critically important to avoid making the assumption that high performance automatically means high potential.
2. Failing to Discuss Aspirations
Managers often assume they know what their direct reports want without ever having a candid conversation about their future plans. Some individuals may express satisfaction with their current role with no desire to take on a new job. Others may be in life circumstances that prevent them from taking on a new role. It is important to teach managers how to have thoughtful, open, and future-focused conversations about their career goals.
At Aon Hewitt, we call this the “Talent Conversation.” Keep in mind that this conversation is not a one-time event. Sometimes the true intention of an individual may not unfold during the first discussion. Someone may initially express an interest in moving up so they appear to be ambitious. As subsequent conversations occur and the responsibilities of a potential higher-level role become clearer, that ambition may wane.
While you do not want to classify someone as a High-Potential when they are not, you do not want to be so cautious you fail to identify true High-Potentials either. Consider the following scenario:
Wayne consistently excels in his job and receives accolades for his performance. His peers— and sometimes even his supervisors—regularly turn to him for strategic direction, and his ideas for improvement have been implemented throughout the organization. Wayne has a clear vision of the direction that will propel the organization to even greater success. He has leadership aspirations and feels his career trajectory is clearly leading him to bigger and better things.
Yet Wayne’s superiors, HR, and senior management seem oblivious. Sure, they appreciate the awesome work he has been doing, but they just never get around to branding him a High-Potential. Frustrated, Wayne begins exploring other opportunities and eventually leaves the company for its top competitor, where he is quickly placed into the leadership development program.
This hypothetical scenario plays out all too often in companies both large and small. In today’s super-fast-paced business world, organizations are quick to hire to fill an immediate need. They rarely take the time to evaluate whether each new person has the potential to ascend to the leadership ranks.
Just how early in someone’s tenure should they be evaluated as a possible High-Potential? We believe the answer is simple: The earlier, the better. It is rare for individuals to stay at organizations for their lifetime anymore, but early identification can provide an incentive to stay, increasing their commitment and engagement in their work. Study after study has shown workers expect to have seven or more jobs in their lifetime. The commitment people feel toward a job is significantly lower than it was even a generation ago. But how often do we hire people who leave without them ever appearing on our radar screen as “That person is amazing, but they’re stuck in that dysfunctional workgroup. I have got to get them into a development program or they are going to leave?”
As leadership development professionals, our goal should be to never let a true High-Potential slip through our fingers. As quickly as possible after acquiring new talent, you need to begin assessing whether they have the potential to lead the company and then take immediate action— moving them into developmental assignments, pairing them with an internal mentor or coach, and providing structured opportunities for peer networking.
3. Neglecting to Clearly and Consistently Define ‘High-Potential’
Too frequently managers do not understand the concept of “high potential” and evaluate against incorrect standards. As a result, bias and organizational politics enter into the classification process. The outcome is poor selection decisions and wasted investments into people slotted in the wrong roles.
It is impossible to completely eliminate bias from the lens through which we view people. We all come to work with our own biases about what led to our own success and we tend to let that influence our view of someone’s potential for future greatness. While a certain degree of bias is an inevitable part of being human, it has no place in a High-Potential assessment process. We must find a way to set aside those biases, not only to ensure that true High-Potentials are being identified, but also to eliminate the perception that future leaders are selected through a process that rewards favorites and sycophants.
One way to move toward eliminating bias is to create a simple definition of “high potential” for the organization that can be easily understood and utilized by managers. When that definition is communicated, measured, and made transparent, enormous strides are made in eliminating bias.
Another effective method is employing a scientifically-driven assessment method to identify high potential. This will not only help you move beyond bias toward an objective assessment of High-Potentials, it will also eliminate the problem of managers who are simply not that good at spotting future leaders.
Many organizations are presented with the question of why some are considered High-Potentials and some are not. The bottom line here is that you want to avoid situations like subjective manager nominations or ratings of potential without standard evaluation criteria or calibration; if you have a clear, consistent, and simple framework against which to evaluate your High-Potentials, the answer to this question also becomes much easier.
The Three Dimensions of Leadership Potential
Assessing for high potential needs to be more than short-term successful performance or managerial opinion. As we have learned from the discipline of employee selection, one person’s view of high potential might be drastically different from someone else’s. It is critically important to move the identification of High-Potentials away from a subjective and perhaps biased “gut instinct” and toward a process that employs solid psychometric instruments and rich talent conversations with managers and their employees.
We believe this holistic approach is most effective, particularly when it centers on three key dimensions: Ability, Agility, and Aspiration. We call it the A3 Model of Potential.
Ability: Can this person take center stage? In business terms, do they have the leadership competencies, such as drive, ambition, social adeptness, emotional intelligence, persistence, tenacity, and influencing skills that contribute to strong leadership performance?
The elements composing this dimension include:
- Technical Skills and Competencies.
- Behavioral Skills and Competencies.
- Leadership Skills, Competencies, and Styles.
- Cognitive Abilities.
- Emotional Ability (EQ)
Agility: It is one thing to be a supporting actor or to play second fiddle. The stakes are lower and the measures of success are different. Does this person have the capacity to take on a leading role that may not rely on the same competencies that made them successful in the past? They need a desire and capability to learn, to adapt to the environment, and to seek new skills and experiences on the job. And all these things need to be done quickly.
The elements comprising this dimension include:
- Adaptation Style, Positivity, and Awareness.
- Change Readiness/Flexibility.
- Cognitive Ability
Aspiration: This is the one that often gets overlooked. Just because a backup singer possesses incredible talent does not mean he wants to become the lead singer; it involves a whole new set of responsibilities. There is no fading into the background. The higher the profile, the more success is shared and failure is owned. In order to effectively create a succession plan, the desire and willingness of your High-Potential to take on leadership roles need to be considered.
The elements comprising this dimension include:
- Motives and Values.
High-Potential Assessment Methodology
So how do you measure whether an employee is a High-Potential? Even if you objectively understand the traits and markers of a High-Potential employee, identifying Hi-Pos at your organization can be challenging. Top-performing organizations take advantage of a wide variety of tools and assessments.
For example, you can measure analytic and cognitive ability through cognitive tests and you can measure leadership competencies through multi-rater surveys, interviews, and day-in-the- life simulations in which trained assessors measure displayed behaviors. Agility can be measured through personality inventories and simulations. Aspiration can be measured through biodata forms, manager 180s, interviews, and by directly asking the High-Potential candidate in a Talent Conversation.
Best practices are to find the tools that make sense for the context and calibrate either the assessment, how the results are reported, or both, and should be done for a target role, position, and context to answer the question “Potential for what?” There is no one-size-fits-all approach for identifying talent. For example, aspiration may look very different for a global functional leader than it would for an entry-level analyst position. What are this person’s interests in taking on global assignments and relocating? Does this person want to lead a P&L? It has to make sense and answer the “Potential for what?” question.
The other important factor is to ensure that your assessments are appropriate in the context of the person being assessed. In order to understand a person’s potential, it is expected that you will stretch them in some way. Still, you would not want to put a junior individual contributor through a P&L exercise to see their potential for leading a business, nor would you want to include items related to building a 5- to 7-year planning strategy in their 360 survey. The assessment must reflect the appropriate level of stretch and potential.
Generally speaking, at lower levels of the organization it is important to assess potential more broadly: ability to take on people-management responsibilities, potential to be a technical specialist, etc. Some instruments are better suited to measure that potential. For example, cognitive tests can identify analytic capabilities. But as you progress to higher levels of leadership, potential becomes a bit more nuanced and fit for role becomes more important.
“...find the tools that make sense for the context and calibrate either the assessment, how the results are reported, or both, and should be done for a target role, position, and context to answer the question “Potential for what?” There is no one-size-fits-all approach for identifying talent.”
High-Potential Assessment: A Phased Approach
In an ideal world we would measure everyone’s potential by having them go through a two-day assessment center and a multi-method, multi-trait assessment approach, tailored to different levels, functions, and contexts.
But then there is reality, where organizations are faced with budgetary, resource, and time constraints. To address these limitations, we recommend a phased High-Potential assessment process, starting broadly with higher volumes and then becoming more targeted as your potential pool becomes smaller.
In circumstances with a high number of candidates, we recommend including a manager nomination process where the manager evaluates an individual’s potential based on standardized criteria or ratings aligned with the target roles. In many cases the manager is in the best position to observe an individual’s performance and make a recommendation on potential.
Assessment & Identification, Feedback, and Evaluation
In parallel or shortly following the nomination process, we recommend use of automated psychometric assessments and 360 tools that measure early indicators of potential. As with any assessment process, we encourage delivery of feedback through assessment reports and discussions with managers or group webcasts to help participants understand their assessment results. These tools produce an abundance of valuable data on your High-Potential pool where you can look at aggregate reporting and heat-mapping to decide where to differentially invest in development and other High-Potential initiatives.
Confirmation & Development
Once you have narrowed down the pool, you will need additional layers of objective assessment, particularly those that are more assessor-driven. These layers should confirm more fit for role or fit for context criteria and in the future will serve as the basis for development discussions and coaching. This is also where you can stretch a person beyond their current or even next role, whether it is through simulations or other methods, to see what their potential is.
Best practice is to couple all of these assessment and development efforts with ongoing analysis and benchmarking. This allows an organization to identify what their core gaps are, whether they are meeting their talent strategy needs, and if there are core strengths they didn’t know they had.
To Tell or Not to Tell
Should High-Potentials know of their status? In large part the answer is a reflection of the organizational culture. If the culture is known for transparency, the answer is inevitably yes. If it is not, we hear much more discomfort with sharing status with employees.
Some companies keep the designation secret because they are concerned it will create a sense of entitlement and lead to otherwise promising employees resting on their laurels, confident the High-Potential status will allow them to coast to the C-suite. One of the other concerns regarding transparency we often hear is, “Once we tell them, they will expect something in return.” Well, yes—and they should. In not telling, you run the risk of talented individuals, who have been secretly branded a High-Potential, leaving the organization because they had no idea they were valued so highly. Believing they will find more opportunities for advancement elsewhere, they seek out alternative employment.
Research shows that when High-Potentials are informed of their status, they are far more likely to stay with the company and to be more highly engaged. It is not surprising that Top Companies err on the side of sharing the good news with those identified as High-Potentials, as well as with the entire organization. Additionally, many organizations opt for telling people they have been assessed as a High-Potential because they believe it validates and inspires them, which bolsters employee engagement and improves retention among this key talent pool.
"High Potential” is Not a Permanent Label
To avoid the pitfall of High-Potentials falsely believing their status is a lifetime appointment, you should be certain to remind them it is not an entitlement, but a responsibility and a shared commitment. Potential is just that—potential. Their ultimate success hinges on their willingness to take on stretch assignments, develop their leadership capabilities, and learn from those who came before them. Only then will they truly live up to being a High- Potential. Having a thoughtful talent strategy that focuses on the development and career paths of your High-Potentials will help explain to managers what to do with their High-Potentials.
“Additionally, many organizations opt for telling people they have been assessed as a High-Potential because they believe it validates and inspires them, which bolsters employee engagement and improves retention among this key talent pool.”
So—should you or shouldn’t you? The graph below shows the level of transparency demonstrated by companies whom Aon considers to be one of the Top Companies for Leaders.
There is no question that identifying high-potential leaders is an important part of any mature organizational succession plan. Confusing high performance with potential, failing to discuss the topic of potential, and bias are three of the biggest barriers that stand in the way of the creation of effective succession plans with a segmented cast of High-Potentials.
By using a scientifically-validated tool to assess whether your employees have the ability to step up and take a leading role at your organization, the agility to move from the supporting actor position to superstar, and the aspiration to take on the extra responsibilities and attention that go with being in the spotlight, you will be able to very effectively identify who should stay where they are and who is ready for their close-up.
How Aon Can Help
Using the most innovative set of scientifically-driven tests in the industry and our bench of 90+ professionals that includes award-winning industrial psychologists, Aon assesses over 20 million candidates each year, allowing organizations to accurately identify individuals who have the agility and leadership potential best suited for High-Potential candidacy.
To learn more about our consulting on High-Potentials, please contact one of the contributors to this article on the following page or e-mail us at firstname.lastname@example.org.