As aging baby boomers retire from the senior ranks of corporate
America, there are fewer potential leaders ready to take their
places. This dilemma creates a demand for tomorrow's leaders that
is rapidly outpacing their supply. Between the smaller numbers of
Generation X (born 1965-1977) and expectations of higher demands
for recognition and promotion from Generation Y or Millennials
(born 1978-1994), the retention of high-potential employees is a
major concern in many organizations.
According to The Conference Board CEO Challenge, a global survey of
more than 500 CEOs conducted annually over the last six years,
talent-related issues have been one of the greatest concerns of top
business leaders. Still, few organizations are effectively
identifying and cultivating high-potentials.
High-potential employees tend to know their potential and will move
on to another organization if they are not recognized, motivated,
and challenged, while long-term employees often remain with their
organizations without being encouraged to make new contributions.
How can organizations identify and cultivate employees with the
potential to be star performers? What attracts them to an
organization and motivates them to commit to that organization for
the long-term, and how can that commitment produce maximized
results over the course of their careers?
Identifying and developing high-potential
A recent research study shows that chief learning officers are
better off developing a strong base of talent internally. It's
generally less expensive, allows them to motivate and retain key
staff, and, as long as they balance the value of organizational
experience with sustained independent thinking, it reduces the risk
of the unknown. But with minimal resources and self-constrained
budgets, how do we identify and then cultivate star performers -
those high-potential employees right in front of us, but who are
just a bit lower on the corporate ladder?
High-potential employees embody passion and are characterized by a
quick movement through various roles in a company, a carefully
monitored career path, and an elite, but usually secretive, status.
As the future leaders of their organizations, high-potentials slide
into new positions, receive special coaching and mentoring, and are
expected to deliver superior performances.
Ideally, these top performers are identified as early as possible
and benefit from specialized career development plans that ensure
those that are the best and brightest quickly rise to the top. Just
as competitive advantage can be generated by a speed-to-market
product strategy, it also can be created with a firm's ability to
accelerate the development of leadership talent. By efficiently
developing leadership skills and competencies, high-performing
organizations can distinguish themselves from opponents and extend
their competitive advantage in the market.
Supply, demand, and results
The demand for these leaders of tomorrow is rapidly outgrowing the
supply. As a result, most organizations are actively focused on
identifying and cultivating those employees with the greatest
potential to grow into business-critical leadership roles.
Unfortunately, surprisingly few organizations are doing this
A recent Corporate Leadership Council survey found that
approximately three-quarters of companies worldwide are not
confident in their ability to effectively staff leadership
positions over the next five years. Moreover, the Conference Board
report shows that only 34 percent of companies are effective at
identifying capable leaders early in their career.
In contrast, companies that identify and develop high-potential
employees show dramatic shareholder returns. According to a recent
Hewitt Associates study surveying large U.S. companies, only a bit
more than half consistently use a formal approach to identify
high-potentials, yet those that do perform in the 75th percentile
or higher for total shareholder return (TSR). The heightened
results and shareholder returns increase even further when these
organizations go on to formally develop and track the performance
of their high-potentials (See Figure 1). Thus, to achieve
consistent measurable success, an organization must enforce an
effective and sustained identification and development process that
focuses on the desired traits and abilities of high-potential
Identifying high potentials
High potentials tend to make stellar contributions and shine above
other performers. They achieve accomplishments and performance
results far superior to their peers. Identifying them formally
requires that managers recognize how their behaviors, skills, and
attributes differentiate from others.
Identifying high potentials requires an assessment of required
leadership competencies at the next level and a comparison of the
results with known criteria to determine gaps and development
needs. The result of these assessments provides guidelines for
identifying the training and development, coaching, and mentoring
that a high potential needs to develop skills necessary to take on
greater leadership responsibilities.
There are conflicting opinions over whether to inform employees of
their high-potential status or not. Informing employees is a
powerful indication that the company values their contributions to
the business and believes in them enough to invest in their future.
If not told, there is a risk high potentials will resign and move
on to an organization that will recognize and develop their talent.
The rationale for not disclosing high-potential status also is
critical. One reason is that organizations can't afford to make
promises in today's economic conditions for promotions or financial
rewords. Organizations with a union environment risk creating legal
issues if individuals are not treated according to the contract. On
the other hand, it is difficult to motivate employees to take on
additional development assignments without giving them some
indication of the benefits. The choice is up to the employer;
however, it may be a difficult one.
Many organizations wonder what the best criteria is for selecting
high-potential employees besides current job performance. An
assessment of leadership competencies, job performance over time,
and high-potential criteria that evaluates and measures potential
now and in the future is the most common selection method used.
This approach increases the quality of the high-potential candidate
and provides a selection tool for identifying his readiness as he
develops necessary skills. When conducting talent review
discussions, organizations will have more confidence in their
high-potential employees and measure their success with greater
When identifying competencies, recognize specific behaviors and
attributes that reflect the organization's unique culture,
strategic goals, and operating needs as well as the behaviors
needed to grow and sustain your organization's future.
Selecting high potentials
Many managers struggle to select their high potentials. Is it
because they base their assessments on current performance,
intelligence, or drive and determination? The most common
misidentification of high potentials results from confusing high
performance with high potential. Not all top performers have the
potential to succeed at higher levels.
Current performance is an important consideration, but managers
must also sort through external factors that affect success, such
as market conditions and competitive challenges. Better yet, it's
important to find people with track records of success in a variety
of situations and business climates. In fact, the greater the
number of challenging situations a person has encountered
successfully, the greater the chance that she has learned valuable
lessons that can fuel her future performance.
High potentials also need the right motivation and drive, such as
wanting to work with and through others, having an interest in
financial data, and being comfortable with power. Being smart also
is important: The higher a person goes in an organization, the more
likely he will encounter complexity and overwhelming amounts of
data that must be assimilated quickly.
Ironically, some of the qualities most indicative of high
potentials also can signal potential performance problems. In a
recent study conducted by Personnel Decisions International, 27
percent of individuals identified by their bosses as high
potentials were also identified by the same bosses as having a high
risk of career derailment - a likelihood that the person would fail
in a specific role because she reached a plateau of performance,
quit, or was fired. This means managers believe that one out of
every four high potentials may never reach his potential.
Proper identification of high potentials requires a full assessment
of an individual's capabilities, behaviors, and fit with
organizational expectations. These robust measures also make the
identification of high potentials a more objective process.
The most common profile for high-potential leaders who are likely
to derail is someone smart, driven, and accustomed to pushing
through obstacles to meet ambitious goals. This same hard-driving,
risk-embracing style that gets leaders noticed for high performance
also can cause them to experience problems with their colleagues.
They are more likely to derail at some point if they don't learn to
show respect for other people's perspectives and to incorporate
other people's opinions to gain their commitment.
Other derailment patterns include leaders who have brilliant ideas
and solutions but aren't consistent in being able to implement
their ideas through others, and those who get the results their
bosses want to see but alienate peers and others.
Developing high performers
Managers should be mindful of how they treat high potentials in two
particular areas. First, managers need to recognize that most top
performers are rewarded for their results, not necessarily for the
manner in which the results were achieved. If two top performers
achieve the same result, they are often given the same reward, even
if one achieves it through building and aligning a team and one
achieves it by pushing with brute force.
Second, top performers generally consider their work style to be
effective. Even if their role changes, they are often averse to
changing or modifying their behavior. They have received high
praise and recognition for performance and understandably believe
that they will be most effective if they continue to follow that
For instances, an individual who prefers isolation from others,
even keeping different hours, to stay focused on specific tasks
without distractions from co-workers could be effective for some
tasks, but when a role changes requiring the individual to work
with a team and he still prefers to work alone, this behavior now
becomes a derailer. The individual fails to build the strong
relationships that increase the chance for long-term success.
There are several steps managers can take to decrease risks for
- Accurately identify high potentials in your department.
- Provide clear expectations in terms of valued behaviors.
- Provide individuals with specific feedback on how well their
performances and their behaviors (what they do and how they do it)
- Make sure rewards such as promotions and bonuses don't send
mixed messages. Reward high potentials for both the results and the
methods used to achieve the results.
- Ensure that high potentials develop skills for potential future
- Coach employees to decrease the risk of derailment and create
plans that foster development of needed skills and behaviors.
- Shape high potential development through clear communication
and appropriate reinforcements.
- Reinforce the company values, and teach employees to
demonstrate the values of the organization's culture.
High potentials need the right fit - the skills and mindset
consistent with the organization's strategic direction and cultural
values. Most managers fail to help fast rising high potentials
realize their potential. In most instances, they rarely have time
to clearly explain performance expectations for each role, define
goals, and development needs or provide periodic feedback on how
the individual's performance and behavior align with those
High-potential leaders often advance quickly and may not learn some
of the basic lessons that others learn simply from having more time
in each position. That's why it's important to be explicit about
expectations and styles with fast-rising leaders.
Executive coaching is one way to guide high potentials to develop
skills necessary to deliver long-term results. When current leaders
take the time to measure and identify high potentials and work with
each individual to create a custom development plan, these
individuals can transform potential into realized leadership
Best practices for high-potential development
There are two distinct categories of high-potential employees.
Late-stage high-potentials include experienced managers ready to
make their way into the executive ranks. This group is typically
identified as middle or senior managers and participates in a wide
variety of formal training: specialized mentoring, executive
retreats, personal coaching, real-world action learning, global
rotation, and more. These senior managers are among the top 10
percent of an organization, and significant costs are incurred to
prepare them for senior executive roles within the organization.
Early-stage high potentials are different. These new managers and
individual contributors are at the beginning of their careers and
are identified more by their talent and drive than their track
record. Early-stage high potentials are found in the lower ranks of
an organizational structure, and their employers are generally not
yet ready to invest the same amount in their formal training and
development. While historically organizations have focused
primarily (if not entirely) on their late-stage leaders, more
organizations today are adopting an aggressive program for
developing bench strength at all levels. Top-performing
organizations in particular now recognize that the earlier
potential talent is identified and put into the pipeline, the
sooner the entire organization reaps the rewards of more productive
and effective leadership.
At the minimum, early-stage high potentials should be identified
within the first two to four years of employment. Both human
resources and business line managers should be involved in the
identification process so assessments are driven from both
empirical performance of the high-potential and the organization's
ideological criteria and vision.
Implementing a high-potential program
When planning and implementing an integrated program for
early-stage high-potential development, there are many factors to
consider. The first step is critical but often overlooked.
Holistically, the organization must agree on and then support the
goals of the proposed development program. Specifically, the
organization must justify the program by answering the following
- Why do we need a high-potential program?
- How will it support our business strategy and improve our
- How will it benefit the organization, the high potentials, and
the rest of our employees?
- How will we measure the success of the program, and what dollar
value will we place on high-potentials at different stages of
Once the organization's goals for the program are clear, the next
challenge is to develop a relatively larger group of early-stage
high potentials at a fraction of the budget of late-stage
candidates for senior management. Here are some cost- and
resource-efficient best practices that top-performing organizations
use when implementing a successful early-stage high-potential
- Specialized leadership development tracks. In a
recent research study of Fortune 500 organizations, most companies
reported having a well-defined leadership curriculum in place. Yet
a majority of respondents indicated that the curriculum was more
voluntary than mandatory in character. Only a few organizations
referenced having specialized, highly customized, mandatory
leadership development tracks for their high-potential employees.
For those that did, there was a tendency to identify the program as
being distinctive and highly effective in elevating the leader
potential of their organizations.
- Multi-disciplinary rotation program. Another
experience-based leadership development tool is the rotation of
managers across disciplines, divisions, and geographies. The
fixed-choice component of the same study found that less than half
(45 percent) of organizations use rotational or developmental
assignments as a regular component of their leadership development
package. In contrast, significantly more top-performing development
practitioners utilize this technique to provide a more diverse base
of experience and perspectives for their future leaders.
- Unlimited learning opportunities. Most
organizations restrict the number of courses available to all
employees. This helps both to control costs and to reserve coveted
development opportunities for peak performers later in their
careers. While it's important to focus high-potential employees'
attention on priority topics and not waste time on the mastery of
less relevant knowledge, they tend to seek and absorb behavioral
skill building at a much greater pace, and top-performing
organizations provide them unlimited access to self-paced learning
programs that accelerate their growth.
- Leverage technology. Recent studies indicate that
technology-enhanced learning is now independently sufficient to
improve leadership behavior on the job. The combination of
synchronous and asynchronous tools and content, especially when
paired with reinforced group application, can not only improve the
high-potential employee's performance, but can do so at a fraction
of the time and cost of classroom training. (Up to 90 percent
reductions were reported CNA in 2005).
- Action learning. By taking development initiatives
outside of the classroom and putting employees to work solving
real-world business issues, action learning is taking over as the
classroom trainer's interactive simulation. Groups of high
potentials and mentors are put into a situation and must solve the
challenge. Many organizations are migrating to this approach as a
way to expand high-potentials' perspectives on how the business
- Mentoring. According to a recent study by the
American Society for Training & Development (ASTD),
approximately 71 percent of the Fortune 500 use internal mentoring
programs to develop high-potential employees. Through pairing with
internal senior mentors, high-potentials are introduced to years of
knowledge and experience.
According to a recent Accenture study, companies with
forward-thinking learning organizations have a far greater impact
on overall business performance when compared to their peers. Does
this mean that identifying high potentials and deploying a
comprehensive program is a guarantee of success? Not necessarily.
Nowhere is it written that a promising 26-year-old high-potential
matures into a successful 55-year-old executive leader. Yet only by
combining potential talent with access to and time for learning new
skills will an organization consistently and cost-efficiently
develop its high-potential leaders.
It also is important to note that high-potential programs can be
controversial to implement. Lack of transparency in the process of
selecting high-potential employees has been known to cause serious
morale issues. Employees who are passed over or deprived of the
progress may even leave. There also are concerns regarding the
pressure organizations put on high potentials. If the process is
not monitored carefully, high potentials can burn out.
Organizations should provide necessary support mechanisms, such as
counseling and mentoring.
Reflecting on what we know today about programs to systematically
and consistently develop high-performers, a few conclusions have
- While continuing to invest heavily in late-stage high
potentials, the earlier we start focusing on early-stage high
potentials the greater their impact on the organization will be.
- There are now cost-efficient techniques that make it possible
to effectively develop large numbers of early-stage high-potentials
with limited internal budgets and resources.
- If we want to maintain our growth rate and unique competitive
advantage, we can't afford not to implement a formal program for
internal high-potential development. Now it's time to get the rest
of the organization on board.
J Snipes, Chief Learning Officer, ninthhouse.com, November, 2005
David B. Peterson, HR Magazine, March, 2008.
Mike Schick, an HRTALENTPRO consultant with
more than 25 years in the field of talent management and training,
has a track record in helping clients implement succession planning
and preparing high potentials for future critical positions; www.hrtalentpro.com or firstname.lastname@example.org .
Nancy Zentis, an HRTALENTPRO Consultant with
more than 25 years in the field of human resource development,
helps clients develop strategies for succession planning, mentoring
and performance management. She partners with clients to establish
formal career planning, career pathing and leadership development
programs for high potentials. She recently wrote a research paper
on the impact of 360 degree feedback and leadership
development; www.hrtalentpro.com or email@example.com .