Although psychologists have evaluated human potential for over a century, it is only recently that HR practitioners became obsessed with the identification of high potential employees, also known as HiPos. While definitions of potential vary, they generally concern probability, in particular the likelihood of making a substantial contribution to organizational output in the future. Thus a HiPo is someone who will probably become a key player in the future, meaning they are worthy of special care, development, and retention. To identify someone as a HiPo is to make a strong bet on their future, or expect them to have a bright future.
Importantly, no matter how effective today’s key players may be, they will not be around for ever, so having strong HiPos in place will ensure a long-lasting talent pipeline and healthy succession plan for the organization. The alternative would be to replace top employees with external candidates, which tends to be more expensive and have lower chances of success: even when you hire people with the right skills, they often fail to adapt to the new culture because of incompatible values or style. And it can cost a small fortune to replace them.
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 HiPos 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.
In addition, there are four common mistakes organizations tend to make in their HiPo programs, namely mistaking performance for potential, and emergence for effectiveness; undermining the importance of development, and ignoring the dark side of personality. The following section expands on these points.
• Performance is not potential: One of the main reasons why HiPo programs fail is that they focus too much – sometimes exclusively – on performance. This is problematic for two reasons. 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. The result is a paradoxical system that removes people from a job they are rather good at, and re-positions them in a role they are neither able nor willing to do. In short, performance is what you do, and potential is what you could do. When the context changes, the overlap between the two diminishes. Being great at X does not imply the potential to be great at Y, when X and Y are very different. Thus if I wanted to predict your likelihood of doing Y well then the key task is to evaluate the determinants of Y rather than your historical performance on X. Of course, there are people who perform well at all levels but they come in such small doses that you wouldn’t be able to fill your entire talent pipeline with them.
• Emergence is not effectiveness: Over 90% of HiPo programs focus on potential for leadership. This makes sense, as leaders control a disproportionate amount of resources, set key strategy decisions, and create culture and engagement in their firms. However, it is one thing to emerge as a leader, and another to be effective. In fact, the key attributes that contribute to emergence are not just irrelevant when it comes to effectiveness, but often detrimental. For example, self-promotion, political skills, and networking skills will play a major role in getting people into leadership positions – this is why many leaders are confident and charismatic, if not narcissistic. However, in order to lead effectively people need good judgment, empathy, and self-awareness, and these qualities are rarely found in individuals who are self-focused and obsessed with getting ahead as opposed to getting along. The result is that many designated HiPos end up being fake HiPos or faux-Pos, while many individuals who possess the critical characteristics that are needed for exceptional leadership end up flying under the radar and remaining hidden gems.
• Development is universal: Organizations spend more money on development than on selection, mostly because they don’t do selection well. Indeed, when selection fails, there is always training and development. 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 qualities that they will benefit the most from training and development. In addition, it is also important to acknowledge that no matter how talented and promising your HiPos seem, they will always have some less desirable and potential disruptive characteristics (see next point).
• Every HiPo has a dark side: As the famous Pareto principle predicts, 20% of individuals in an organization will account for 80% of the collective output (e.g., performance, revenues, and profits). It is also true that 20% of individuals in an organization tend to cause 80% of the problems. And they are often the same people! Thus the vital few are often the painful few: high maintenance people with diva-like complex, who are arguably aware of their value and therefore quite difficult to manage. In fact, many brilliant leaders have clear problems with authority so they are often indomitable and insubordinate, particularly when they have an entrepreneurial profile. And regardless of how brilliant a person’s bright side is, it will always co-exist with some maladaptive or undesirable tendencies – the dark side of personality. When HR interventions focus only on strengths, attempting to augment the positive qualities individuals already display, they will likely leave their derailing tendencies unchecked, creating problems for them and for others. In fact, overused strengths tend to become weaknesses, not just in Donald Trump.
by Tomas Chamorro-Premuzic
in Forbes, October 19 - 2016