Why you had better pay attention to your next Gen High Potentials

Just about every company places a lot of emphasis on keeping it’s people, particularly high performing individuals – and for good reason. High potential employees (affectionately called ‘HiPo’s’) can have a significant positive impact on business results. There are a myriad of approaches to developing high potentials, usually involving some type of nomination process and then a more longitudinal development program than usual for the company.

New research however by Jean Martin and Conrad Schmidt (reported in the May edition of Harvard Business Review) shows that many programs fail, with 40% of internal job moves made by people identified by their companies as “high potentials” end in failure. It also showed that disengagement in this cohort has been remarkably high since the start of the recession. In a September 2009 survey by the Corporate Executive Board, one in three emerging stars reported feeling disengaged from his or her company. Also, Martin and Schmidt found that 12% of all high potentials were actively searching for a new job – suggesting that as the economy rebounds organisations might see their brightest and most promising take flight in large numbers.

Six Most Common Errors in Developing Future Leaders

Mistake 1 – Assuming That High Potentials Are Highly Engaged

Here are some sobering figures:

• One in four intends to leave your company within the year

• One in three admits to not putting all his effort into his job

• One in five believes her personal aspirations are quite different from what the organisation has planned

• Four out of 10 have little confidence in their co-workers and even less confidence in the senior team

So why all the negativity?  One theory is what could be called outsized expectations and lots of choices.  Many set very high benchmarks indeed for what they expect from their organisations. Senior management must increase their efforts to keep young stars engaged by (1) recognising them early and often; (2) explicitly linking their own goals to organisational goals; and (3) letting them solve the organisation’s toughest challenges.

Mistake 2 – Equating Current High Performance with Future Potential

HiPo’s are often given the terms ‘star’ or ‘high potential’.  The reality is however that in the near future they will need to step up into tougher and larger roles which is often overlooked. The research showed that more than 70% of today’s top performers lack critical attributes essential to their success in future roles. It is therefore important to test high potentials for three attributes: (1) ability; (2) engagement; and (3) aspiration.

Mistake 3 – Delegating the Management of Top Talent

It is a bad idea to delegate management of high potentials to line managers. Why?  What tends to happen is that candidates are selected almost solely on the basis of recent performance and are offered narrow development opportunities that fit within business unit requirements. It is therefore important to manage the quantity and quality of HiPo’s at the corporate level.

Mistake 4 – Shielding Rising Stars from Early Derailment

Often HiPo’s are placed in development roles with some stretch but little risk of failure.  While understandable, this can put the business at risk and doesn’t expose the young star to the necessary trials and tribulations of the real world. The authors recommend placing them in ‘live fire’ roles where new capabilities can – or must – be acquired.

Mistake 5 – Expecting Star Employees to Share the Pain

In tough times where salaries and performance-based compensations can be frozen across the board, this is likely to erode engagement levels of high potentials. The research suggests that on average HiPo’s put in 20% more effort in their roles than others in the same roles.  Whether high potentials or not, people will work harder when good things happen (e.g. raises, promotions, etc) to those who deserve it.  The bottom line? An employee’s rewards should be in line with his or her contribution.

Mistake 6 – Failing to Link Your Stars to Your Corporate Strategy

The research showed that the confidence a high potential has in the firm’s strategy and their managers is one of the strongest factors in top employee’s engagement.  Successful firms develop a number of ways to share their future strategies on a privileged basis with their young leaders and to emphasise their role in making the future real.

The 10 Critical Components of a Talent-Development Program

In the research, a core set of best practices for identifying and managing emerging talent emerged:

1. Explicitly test candidates in three dimensions: ability, engagement and aspiration.
2. Emphasise future competencies (more heavily than current competencies)
3. Manage the quantity and quality of high potentials at the corporate level
4. Forget rote functional or business rotations (place young leaders in intense assignments instead)
5. Identify the riskiest, most challenging positions across the company and assign them directly to rising stars
6. Create individual development plans (link personal objectives to the company’s plans for growth)
7. Reevaluate top talent annually for changes in ability, engagement and aspiration levels
8. Hold regular, open dialogue to monitor star employees’ development and satisfaction
9. Replace broadcast communications about the company’s strategy with individual messages for emerging leaders

Drawing on its work with organisations over the past decade, the Corporate Leadership Council has developed several ways  to measure the three core qualities of potential – ability, engagement and aspiration. The researchers combined them in a process called HIPO-ID.

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