Lately, i4cp has received inquiries concerning an increase in the turnover of high-potential employees (HiPos). For many companies, this exodus represents a lot of money walking out the door. The investment in the development of HiPos is substantial, and in many cases, HiPos are also high-performers. The loss of this valuable talent is so detrimental that in some cases it could impact a company’s performance and stock value.
So, how do you mitigate HiPo turnover? What if it’s as simple (in part) as eliminating the term “high potential” from your company’s lexicon?
Before we get to that, here’s a reminder of why people tend to leave (and stay with) organizations, based on research conducted by i4cp and other credible sources:
Why people leave
- Pay and benefits. For varying reasons, new employees may become dissatisfied with either the current pay and benefits, or their perception of the possibility of increases.
- Development opportunities. For some reason, employees don’t see evidence that the company will invest in their development. Maybe they were misled in the recruitment process, or once employed, they found that their boss was not a developer of talent
- The boss effect. In addition to not being a developer of talent, they find that their boss is a SOB.
Why people stay
- They fit the job and the organization. Employees stay because the job is aligned with their abilities and they believe they are contributing to the organization’s success.
- They feel at home in the community. In addition to becoming part of the company’s culture, they assimilate into the community over time—their kids attend the local school, their spouse has a local job, and they may volunteer in activities in their neighborhood.
- There is a sense that if they leave, there will be consequences. They have progressed and grown in their roles. If they leave, they will have to start all over. In addition, they may have to sell their home, pull their children out of school, and move to a strange new environment.
These are the standard recognized reasons why employees leave or stay; high-potential employees are influenced by additional factors that influence their decision making in this area. Often, a high potential will have a substantial pay and benefit package, have been provided with many development opportunities, and usually have a boss who is a coach or mentor. In addition, they tend to like their jobs, have relationships in the organization, and realize that there is a significant sacrifice if they leave.
So what is causing so many high potentials to leave?
There are several reasons:
- First (and this brings us back to the title of this article), is the designation of “high potential.” This designation is motivational, but with it comes a lot of expectation. HiPo employees are placed on an exclusive list that presumes there will be exciting new promotions in the future.
Consider this scenario:
Another reason for dissatisfaction among high potentials is when the organization decides to hire externally for key positions. There are many good reasons for determining to hire an external candidate, but there are unintended consequences for the high potentials you have been investing in in the forms of loss of confidence in the company and the promises it made when they were designated as highly promotable or ready now candidates. If you’re not recruiting your high potentials and high performers every day, someone else is. In this hyper war for talent, everyone is trying to steal your talent, both competitors and non-competitors. Companies should be conducting “stay” and “exit” interviews for all their top talent (that’s why we launched
ExitMetrix earlier this year—to do just that).
- You start with identifying 100 HiPos for development because they have the potential to be future leaders.
- Over the next couple of years you decide that 25 of those HiPos are so good that they are highly promotable.
- A couple of years later you determine that of those 25, three are “ready now.”
- That’s good, but what’s happened to the 97 who didn’t make it? They have turned into PoPo employees—passed over and pissed off. They are either disengaged or leave the organization. What a waste of valuable talent.
The solution to at least limit the exit of desirable employees is easy but hard to do: manage expectations.
How? Consider changing the designation of “high potential” to “top talent.” The term “top talent” comes with none of the ratification expectations of the term “high potential.” Also, be relentless about communicating that top talent is valuable to the organization—regardless of who gets the coveted positions in the organization.
Jay Jamrog is i4cp’s co-founder and SVP of Research