At a recent CEB workshop in a major Asian city on how to identify, retain, and develop high-potential employees and top talent, the thirteen mid to senior level HR managers were asked how many of their companies had a systematic program for their high potentials (HIPOs).
Thirteen hands shot up; they were then asked, “How many of you are satisfied with the outcome of the program?” Only two hands remained.
This micro survey mirrors a far more scientific and much larger scale CEB survey that showed that only one-in-six HR heads are satisfied with their company’s high potential employee programs. In fact CEB analysis shows that nearly half the HIPOs identified drop out of the program within five years.
There appears to be scant returns for all the enormous amounts of time and money that companies spend on these programs. There are two major causes of this. First, HR teams and others involved don’t do a good job of identifying HIPOs and, second, they don’t have a structured and relevant development programme.
Performance and Potential are Not the Same
A common mistake most companies make is assuming high performing employees to be HIPOs. Managers nominating candidates to the high potential list and subsequent development programmes confuse performance with potential. But high performance at current levels is not an indicator of high performance at higher levels.
In fact, only 15% of high performers are true high potentials, according to CEB data. So by assuming many of their high performers are also HIPOs, companies invest substantial sums in people who may never manage to excel at higher echelons of the company.
In order to identify those who have the greatest potential to be high performing senior executives, companies need to apply three filters to those performing excellently in their current roles. These are employees’ aspiration, ability, and their engagement. Simply put, a high potential individual is a high performer with the aspiration to rise to higher levels, ability to deliver results at senior levels, and has the commitment to stay with the organization over longer term.
Five Motivational Factors to Consider
To find whether high performers have the right aspiration, ability, and engagement, CEB analysis shows that five motivational factors and two behavioral characteristics differentiate those who rose to executive positions from those who did not.
These individuals tend to be motivated by a high level of activity, who like to exercise authority and influence others, enjoy work that requires effort and commitment beyond the normal, like work that provides variety and stimulation, and like work environments that are less structured, less rigid and give them maximum autonomy. And they also demonstrated an ability to take initiative and responsibility, had the drive to achieve results, and invested in their self-development.
Ability to deliver results and succeed at senior levels requires an individual to demonstrate both transformational and transactional capabilities. These comprise a unique set of competencies to be able to, “develop a long term vision,” “communicate effectively across the organization,” mobilize or gain support from the entire team,” and “deliver or achieve results.”
Individuals who have these competencies can be identified early on in their careers through personality questionnaires and cognitive ability assessments.
How to Engage HIPOs
It’s also critical to engage HIPOs to keep them motivated and working towards a senior position in the company – rather than burning out or taking their skills and experience elsewhere.
HIPOs who are highly engaged are twice as likely to stay on as those who have low levels of engagement. Commitment needs to be at both a rational level (e.g. compensation, their title, and whether or not they enjoy their day-to-day work) and emotional level (e.g., whether they enjoy working with their manager, their team, and they believe in their company’s values and vision).
Assessment of engagement needs to be done by the line manager or manager’s manager and this assessment should cover both these rational and emotional commitment levels. A structured questionnaire can be used for this purpose.
Designing Better High Potential Employee Programs
Beyond not selecting the right employees for a HIPO program, the other main reason for their failure is poor design. In fact, 93% of companies do not have an effective HIPO development program, according to CEB data.
Development programmes for HIPOs must provide them with opportunities which motivate them (i.e., assignments that involve high level of activity, requiring effort and commitment beyond the normal, providing variety and stimulation). These kinds of stretch assignments need to significantly help their company and also have a high degree of risk to really develop and retain HIPOs.