Majority of Companies Misidentify High Potentials

Posted April 28 2014

high-performerIn a recent study, CEB reported that more than two-thirds of companies are misidentifying their high-potential (HiPo) employees, jeopardizing long-term corporate performance. Talent Management Magazine highlights some major findings of the study.

 

  • To keep top talent around, organizations need to re-evaluate their HiPo programs.
  • Major corporations spend $3 million on leadership and development for HiPos, but 55% of these HiPo employees will turnover in 5 years time.
  • "The inability to establish a strong, diverse leadership pipeline impairs bottom-line performance since organizations with weak leadership generate roughly half the revenue and profit growth as those with strong leadership."
  • Companies can improve the caliber of leaders by redefining potential, measuring potential objectively, asking for commitment in return for career opportunities, and creating differentiated development experiences.

 

While retaining 100% of HiPos is an unattainable goal, there remains a great deal of improvement with a staggering 55% turnover ratio.  CTK believes much of the misidentification issue stems from subjective HiPo assessment criteria.  We've seen the four-pronged approach mentioned work effectively provided:

 

  • Redefine "potential" - CTK suggests using an objective, competency-based approach, defining the skills, abilities, knowledge, traits, behaviors, etc. required for successful performance.  Organizations should not restrict themselves to 'what currently works' and ensure HiPo competencies also reflect 'what takes the organization and HiPos to the next level'.  We also advise using a mix of core, cross-functional and technical competencies.
  • Measure potential objectively - Employ behavioral-based questions aligned with your definition of HiPo.  
  • Ask for commitment in return for career opportunities - Through the flight risk evaluation process, organizations should include questions around desired competency development.  While 'I don't like my boss' and 'I want more money' are often driving forces, we've also often seen lack of desired competency development attributing to turnover.
  • Create differentiated development experiences -  To avoid 'HiPo programs...fail to prepare HiPo employees for realistic future roles', organizations need to include 'what takes the organization and HiPos to the next level' in their definition of potential.  An effective, unique approach to high impact development we've seen is an organization who shared an inventory of part-time opportunities throughout the organization (e.g., assist marketing develop marketing plan) where employees can either (in their discretioinary time) develop new competencies or leverage strengths they're not currently using.
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