Many organizations are investing time and resources in developing high-potential (HiPo) talent, hoping that these initiatives identify those who demonstrate the attributes to be successful future leaders. Not only are HiPos almost twice as valuable to an organization relative to their non-HiPo peers, but they are also three times more likely to succeed as future leaders. CEB research indicates that, since 2012, 68 percent of organizations have increased their investment in HiPo programs. More businesses than ever before are keen to invest in the next generation of leaders, but just how many organizations are seeing those returns? Our research shows that most HR professionals lack confidence in their HiPo programs, with one in two reporting that they are either dissatisfied or highly dissatisfied with their programs today.
So how do organizations identify HiPo employees? What do they need to do to make programs successful? And, perhaps most importantly, how do organizations realize the returns on their HiPo investments?
Define potential. Many existing HiPo programs fail to deliver the managers and leaders needed to drive growth and performance, simply because too many HiPo programs focus their efforts on the wrong people.
Many organizations confuse current performance with future potential. While high performance is a crucial piece, it’s not the only indicator of future success. To be truly high potential, employees must have a track record of high performance, the aspiration to rise to a more senior role, the ability to manage and lead effectively, and engagement levels that show their commitment to the organization.
Measure potential objectively. As most high-performing employees lack the necessary qualities to be effective in senior roles, relying on subjective evaluations is not yielding the right candidates for HiPo programs. Only one in three organizations use assessment data to identify employees for HiPo programs and nearly half lack a methodical process for identifying and developing HiPos. Relying on scientific assessment and objective evaluation to systematically and accurately measure potential ensures fair and valid identification of HiPo talent.
Ask for commitment. Defining and objectively measuring potential are key elements to identifying the right candidates for HiPo programs. HiPo employees are strong performers and highly marketable. They are often confident in their ability to find work at other organizations and, as a result, flight risk is a significant issue. According to Sandi Edwards’s article, “Maintaining the Delicate Balance When Developing High-Potential Programs,” in April 2012 T+D magazine, one in four organizations fails to retain their HiPos.
With limited resources available, organizations need to ensure that they are directing investments to the employees who are most likely to stay with the company. Yet, only one in nine organizations requires a formal commitment from employees in HiPo programs. Asking for a promise of commitment ensures that the investments the organization is making will provide a strong return over time.
Create differentiated development experiences. Typical HiPo programs fail to prepare employees for realistic future roles. By assigning HiPos to stretch roles and asking them to take on targeted projects, organizations can help high potentials learn new skills. Additionally, HiPos learn to apply existing skills in new or different roles after being exposed to high-impact development experiences.
Recent CEB research shows that more than half of HiPos will turn over in a five-year period, and—of those who stay—nearly half do not meet business objectives in their first leadership role. However, by correctly identifying HiPos and engaging them with the right training and development opportunities, companies can expect to improve the success of their programs more than ten-fold. Doing so will not only return the results that leaders are expecting from their top talent, but will also strengthen succession pipelines and reduce flight risk, positioning the organization for success in the future.
