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Talent Management Insights - How Can Organizations Improve Their High Potential Programs

Two  colleages discussing ideas using a tablet and computer.jpegIdentification and nurturing of high-potential employees have long been a cornerstone of succession planning. Typically this involves senior management identifying what they see as the most capable and promising employees who they believe will become the future leaders of the organization.

Two very interesting articles have been recently published by recognized human capital management leaders that point to the problems that exist with the management of most high-potential (HIPO) programs.

Both articles point to the mistakes that are often made where the wrong people are selected for HIPO programs because of a flawed set of evaluative criteria.

What are the mistakes being made and how do organizations address them?

Jack Zenger and Joseph Folkman in a February 20, 2017, post in the Harvard Business Review titled “Companies Are Bad at Identifying High-Potential Employees” framed the problem this way:

And yet, according to our data, more than 40% of individuals in HIPO programs may not belong there.

We collected information on 1,964 employees from three organizations who were designated as high potentials, measuring their leadership capability using a 360-degree assessment that consisted of feedback from their immediate manager, several peers, all direct reports, and often several other individuals who were former colleagues or who worked two levels below them.

On average, each leader had been given feedback from 13 assessors. Previous work we’d done with these organizations had shown that this assessment technique was highly correlated with organizational outcomes such as employee engagement, lower turnover, and higher productivity. The higher the leader scored, the better the outcomes. 

But when we looked at the participants in the HIPO programs, 12% were in their organization’s bottom quartile of leadership effectiveness. Overall, 42% were below average. That is a long way from the top 5% to which they supposedly belong.

Dr. Tomas Chamorro-Premuzic in his October 16, 2016, Forbes Article “Four Things You Probably Didn't Know About High Potential Employees” added further context to the challenges facing HIPO programs today.

So, how well are companies executing their HiPo programs?

Not so well. A recent industry report by the Corporate Research Forum indicated that 53% of organizations are not satisfied with their HiPo programs.

Given that self-evaluations are usually more optimistic than they should be, and that the companies surveyed – top global corporations – may be expected to have some of the most sophisticated and cutting-edge talent management practices, it is fair to interpret this estimate as a rather lenient reflection of the real efficacy of typical HiPo interventions.

In fact, the same industry report found that for a whopping 73% of these top global businesses the most common method for identifying HiPo's was a single rating or nomination by the candidate’s direct line manager. If the leading organizations in the world are relying on subjective and politically contaminated ratings for identifying tomorrow’s bright stars, there is surely a great deal of room for improvement.

Why does this problem exist?

Here are some of the reasons that the authors of both of these articles cite as the most common causes.

Performance Is Not A Great Indicator Of Potential Leadership

Zenger and Folkman point out that one of the most common factors used for selecting a high-potential candidate is their ability to deliver results. This is no doubt a strength but sometimes a high performer is better left in an individual contributor role rather than moved into a management position. 

Tomas Chamorro-Premuzic  frames up the problem of moving high contributors into HIPO roles this way:

First, organizations are not very good at measuring performance (once you eliminate subjective ratings, there are very few reliable metrics left).

Second, even when they measure performance well, many top performers will fail to perform well at the next level.

Most notably, when you transition employees from individual contributors to managers, or from managers to leaders, the pivotal qualities or competencies that drive high-performance change. Furthermore, many strong individual contributors are not even interested in managing or leading others, preferring instead to focus on independent problem-solving or being a team-player.

Political Savvy Is Not A Good Predictor Of Management Effectiveness

Another reason the HIPO candidates under-deliver is because they may have been selected due to their self-promotion, political skills, and networking skills that help them catch the attention of senior management. These skills help position them as having leadership potential.

The problem is that charisma and confidence do not necessarily equate to effective management where empathy, reasoned judgment, and emotional intelligence is required. This then leads to high performers being put into management roles where they find they lack the tools to effectively motivate others.

Companies Are Bad at Identifying High-Potential Employees

 Chamorro-Premuzic makes an insightful observation that organizations invest far more in development than selection. He then reasons that this is because organizations do not do selection well. In his words:

That said, even when you identify the right people and effectively measure potential, there is always room for development. In fact, to possess potential means to have an advantage for displaying high levels of future performance, IF that potential is nurtured or harnessed.

Consider the fact that the key predictors of leadership effectiveness – IQ, EQ, ambition, and altruism – are already observable at a very young age. In fact, early manifestations of temperament during childhood will predict those competencies with a fairly high degree of accuracy.

And yet, that does not mean that we can lock people in a basement or forget about developing them. On the contrary, it is because they possess those that they will benefit the most from training and development.

Where does this leave the HIPO selection process?  The authors suggest the following:

  • Employees who are in the HIPO program need careful examination to determine if there are any leadership gaps that exist. Too often it is assumed that once someone is identified as a high-potential they then need to focus their attention on their performance targets and less on their leadership acumen. This is where these HIPO’s  can fall short when they are put into roles which require leadership rather than technical expertise.
  • Organizations also need to critically review their high-potential selection process to see what inherent bias and shortcomings they have. They need to take a step back and take a broader look at their talent pool to see if there are any less obvious candidates that have leadership potential.
  • Finally, organizations need to explore ways to provide career growth options for high performers who may be very strong individual contributors but lose their effectiveness when they are placed in manager/leader roles. Organizations make mistakes where they reward and recognize high performance with giving someone a managerial role. This may not be the best option.

I want to give special thanks and recognition to the following contributors that provided the material that helped to develop this blog:

Dr. Tomas Chamorro-Premuzic is a Professor of Psychology at UCL and Columbia University and the CEO of Hogan Assessments. 

Jack Zenger is the CEO and Joseph Folkman is the President of Zenger/Folkman, a leadership development consultancy.