Living Up to Your High Potential(s)

We didn't expect it. After all, who has time to worry about high-potential employees these days? It takes considerable effort, patience and planning to focus on HiPos, and a lot of companies are otherwise preoccupied with the day-to-day urgency of surviving in a tough economy.

But good companies have a way of going against the conventional wisdom, and several i4cp member organizations recently came to us with ideas for pulse surveys that focused primarily on the selection and development of future leaders.

There are various reasons for this. First, in tough times, the need for effective leadership is greater than during the good times, when established organizations practically run themselves. If current leaders don't succeed in times of trouble, someone needs to be standing in the wings. Second, as many organizations conduct layoffs, they must identify and retain the people they most urgently need in order to run their businesses. And, in an era of tight budgets, management needs to know who to compensate at higher levels.

Then, of course, there's the matter of the enormous Baby Boom generation getting ready to retire, even as the almost equally large Millennial generation enters the workforce in earnest. Yes, many Boomers may need to put off retirement due to their badly eroded 401(k)s, but if the stock market and the economy continue to recover, this trend might not have a lot of long-term punch, especially when it comes to top talent.

So it shouldn't really be a surprise that i4cp members want more research done in this area, since these companies often take a more future-looking, performance-oriented view of things than others do. One i4cp member company, for example, wanted to gather more information about high potentials in general and "early high potentials" more specifically.

We defined high potentials (aka, HIPOs or HiPos) as those employees for whom there is an expectation of outstanding performance and an aspiration for significant advancement. They show a willingness to do what it takes (travel, relocate, etc.) and an ability to learn and grow from learning experiences. Furthermore, management should have confidence that these individuals can successfully compete for significant advancement, and HiPos should demonstrate the organizational leadership qualities. We further defined early career HiPos as "employees with high potential for leadership, with fewer than 10 years of work experience." Most (88%) respondents agreed with those HiPo definitions, with the number rising to 93% among firms that report higher market performance.

But how are companies actually identifying these workers? As would be expected, the most common criterion is performance. Fully 86% of all organizations and 95% of larger ones (10,000 or more employees) look at the past performance record of workers, and 77% consider "management confidence" in a candidate's ability to compete for advancement. Sixty-nine percent also reported that employee aspirations for advancement make a difference. In short, performance, managerial confidence and worker aspirations all tend to play a role in most programs.

Senior leaders are critical to the process. A full 89% of all participants say senior leadership is involved in the identification of HiPo candidates, a figure that rises to 95% in large companies. Managers and HR are also likely to play a role in the process, with 83% and 72%, respectively, pointing to their involvement in identification of HiPos in large organizations.

But the very involvement of senior leaders, while crucial, can present problems when it comes to early-career HiPos. The most widely cited stumbling blocks to implementing programs for HiPo employees are a lack of talent information-sharing among functions and a difficulty in forecasting future talent needs. The lack of talent information-sharing among functions is particularly a problem for large companies, with over half citing it as a concern.

This problem stems from the sheer size and diversity of large organizations, where standardizing and communicating information can be a major headache. As in any information process, garbage in equals garbage out. So senior leaders might not have the data they need to make the best possible choices about relatively new employees with whom they have little day-to-day work experience. This could be disastrous to a HiPo program and, potentially, the future quality of leadership in an organization.

This is likely one of the reasons many large companies look for a standardized way to evaluate talent. In another recent member-requested survey, i4cp asked, "Does your company use a matrix (e.g., a nine-box performance and potential matrix) to evaluate the organization's talent pool?" Whereas just 36% of overall respondents said yes, the proportion among participants from large companies was nearly two-thirds (64%).

i4cp Recommendation: Organizations should recognize that their competitors are not necessarily going to stumble when it comes to identifying and developing high potentials, even in a lousy economy. Given the relatively low voluntary turnover rates caused by hard times, some leadership talent pools are going to gain in both quality and quantity. Therefore, organizations should work hard on identifying ambitious top performers who can become tomorrow's stars. Large organizations, in particular, need to work out better ways of sharing talent-related information among different business units and functions. Until this problem is addressed, a HiPo program will never live up to its own potential.

Editor's Note: i4cp member companies who are interested not only in reading more about these surveys but also in "slicing and dicing" the data themselves should go to i4cp's Survey Results section, located under the Library tab at the top of the i4cp member homepage. The High-Potential and the HR Matrix studies are available for download in survey portfolios, which include a full survey results report, a survey analysis report and Interactive Data. Interactive Data is a new i4cp offering that can be used to filter data by factors such as company size, organizational performance, job level of respondent and industry of respondent organization. Instructions for the use of Interactive Data are provided with the download.