High potential employees are 91% more valuable to a business than non-high potential workers.
These prized individuals can raise the performance bar of other workers; simply adding a star performer to a team alone boosts the effectiveness of other team members by 5% to 15%.
Yet many businesses struggle with how to effectively identify, develop and retain high-potential talent in their organisations.
Companies mistakenly misinterpret high performance for high potential, while others don’t address it in an analytical reliable way, relying solely on managers’ instincts or observations about who has future leadership potential.
We’ve scoured the latest research and studies on high potential employees to answer five questions that frequently come up when businesses first start considering a high potential strategy.
1. What do you want employees to have high potential for?
It’s important for businesses to establish what it is that they want employees to have high potential for?
A common error for businesses is defining high potential as the ability of an individual to advance up the ranks.
However, someone who can climb the career ladder to become a leader doesn’t always translate into someone who makes a crucial contribution to the rest of the organisation.
Hogan Assessments, a leader on personality assessments for business, defines high potential as “the ability to build and lead teams that can consistently outperform the competition”.
While Bersin by Deloitte describes a high potential employee as one who has “the potential, ability, and aspiration to hold successive leadership positions in an organisation”.
The exact detail of what your business wants to uncover high potential employees to do will vary.
But in essence, you’re looking to uncover the ability in someone to be an effective senior manager who drives performance and has the desire to move to the top within your organisation.
2. How should businesses identify high potential employees?
Dr Tomas Chamorro-Premuzic, an international authority in psychological profiling and talent management, outlines these tips for how businesses can identify true high potential employees.
- Set clear criteria for promotion that define explicitly what behaviours, achievements and key performance indicators (KPIs) you equate to high potential.
- Use objective and reliable methods to assess performance and be transparent about everybody’s output.
- Provide developmental support for those who fail to meet those targets despite trying – potential can be trained and boosted.
- Don’t just focus on past or current performance. Personality is a better indicator of people’s potential for a new role, especially when it involves managing people.
What’s evident is that performance appraisals and supervisor nominations are not reliable methods for discovering high potential employees.
They uncover people who may ‘look’ like a future leader, but it is based on existing and past performance and an individual’s point of view.
Instead, successful high potential programmes need to be based on science and analytics.
Identifying high potential employees
Hogan Assessments has developed the Hogan High Potential Model that organisations of all sizes and sectors have successfully used.
According to Hogan, personality assessment is the ideal empirical base on which to build any high-potential program.
“These are objectively measured, enduring, stable characteristics that aren’t impacted by politics, relationships, or context,” says Ryan Ross, Hogan’s managing partner.
Hogan’s high potential model identifies leadership potential along three dimensions.
- Leadership foundations: The degree to which people can manage their careers, are rewarding to deal with, and are good organisational citizens.
- Leadership emergence: The degree to which people stand out from their peers, build strategic business relationships, exert influence, and are viewed as leaders.
- Leadership effectiveness: The degree to which people are able to build and maintain high-performing teams, and drive those teams toward organisational success.
Hogan say this multidimensional approach to assessment paints a comprehensive picture of each person – his or her work habits, ideal job type, leadership potential, and probable derailers – far beyond the information available in a traditional process.
3. What are they key personality traits that distinguish a high potential employee?
There are several key traits that business leaders feel set high potential employees apart.
These range from resilience and being goal-oriented, to a passionate and collaborative approach.
Enthusiastic, eager to learn and grow, were other traits business leaders felt were universal among high potential employees, along with growth orientation and a mindset of success.
However, these comments are perceptions rather than proven evidence.
In a study by Harvard Business Review, the experts identified three general markers of high potential: ability, social skills and drive.
- Ability: The potential for performing in a leadership role at an executive level requires strategic thinking and the ability to adapt an organisation for the long-term future. This also involves vision and imagination, as well as an entrepreneurial mindset.
- Social skills: Employees likely to be high potential employees must first be able to manage themselves – to handle increased pressure, deal constructively with adversity, and act with dignity and integrity – but also manage others.
- Drive: This can be assessed by standardised tests that measure conscientiousness, achievement motivation, and ambition but can also be identified behaviourally – how hard an individual works, willingness to take on extra duties and assignments, and eagerness for more responsibility.
4. Once discovered, how do you develop and retain a high potential employee?
Although many organisations do invest in the identification of high potentials, there is less attention paid to the development of high potential individuals.
According to Hogan, some surveys show as many as 95% of organisations fail to follow-through on high potential development plans.
The important fact to remember is that these individuals have been identified as having high ‘potential’ i.e. they are not fully fledged leaders ready to step into senior executive roles.
They need developing and nurturing.
Hogan says: “Virtually every individual identified as having the potential for a leadership role will require some degree of development.
“Personality assessment provides an ideal base for building custom development plans for high-potential employees.”
5. Should you tell high potential employees that they are high potential employees?
“Yes, or they’ll quit,” says Dr Robert Hogan, founder of Hogan.
His view is that real high potential employees will know that they are out-performing their peers and will always be wondering if anyone in the business has noticed their potential.
By not informing them that they are on the company’s radar for future leadership or soon to be enrolled in your high potential development programme, they are very likely to look elsewhere for employment.
However, UNC Kenan-Flagler Business School advises caution when considering whether to inform an employee.
They explain: “Employees may deserve to know that they are excelling, and their performance is reaching high standards with the potential for advancement, but in some cases, this can lead to inflated egos and increased expectations.”
The role of People analytics
A key part of successfully identifying high potential individuals involves knowing your people.
This is where People analytics steps in.
It begins with having accurate and accessible people data, all in one place – a single source of truth, as we like to call it.
With People analytics, organisations can use data to develop stronger and predictive insights about their people and motivations.
These insights can then be used for predictive purposes so managers can start to understand and make decisions based on people behaviour and motivations – which will massively help with the uncovering of high potential people within your business.
With the current skills shortage and war on talent, it makes sound business sense to start identifying the untapped potential already sitting inside your organisation.
With the right strategy and tools in place, uncovering and identifying these talented individuals will become easier and part of your business process.