High-potential employees, or HIPOs, are supposed to be an organization’s future. However, correctly identifying which employees have the most potential is often a difficult task, due to ambiguity surrounding the term HIPO and the fact that most managers don’t seem to believe their organizations’ criteria for high potential are accurate. Moreover, HIPO selection is easily “politicized”: In a recent Harvard Business Review post, Tomas Chamorro-Premuzic and Abhijit Bhaduri discussed six ways managers often play politics in identifying, promoting, and developing HIPOs, namely the politics of intuition, self-interest, avoidance, favoritism, ageism, and gender:
In short, the politics of potential can prevent organizations from upgrading their leadership talent and make data-driven decisions an anomaly rather than the norm. Too many times we have seen the CEO’s favorite candidate be put through a formal assessment simply as a way of confirming a decision that has already been made in advance, not for merit.
Our research at CEB, now Gartner, has touched on all of these political dynamics, and fortunately we’ve found some straightforward and practical solutions to the problems identified here. Organizations using best practices are ensuring their HIPOs are managed as enterprise assets and not held captive to the whims of a manager. Here are some real-world examples of how organizations are overcoming the six political barriers Chamorro-Premuzic and Bhaduri identify (and CEB Corporate Leadership Council members can click through the below links for more information on our research):
The politics of intuition occurs when managers “follow their gut” when nominating HIPOs based on their own judgement of employee performance and future capability. Instead, all managers within an organization should have standardized, clear, and business-relevant criteria to identify HIPOs. CEB recommends evaluating employees for potential against three key characteristics: Ability, aspiration, and engagement. Critically, managers need to be involved in validating the details of these criteria to ensure that HIPO they are not an abstract HR concept. Our recent study on high-potential employees shared a real-world practice Black Hills Corporation uses to align HIPO identification to changing business needs, in order to identify the best HIPOs to fill emerging leadership opportunities.
Mel Jones believes it is. At the Atlantic on Friday, she examined why many organizations are having trouble developing successful mentorship programs, arguing that they often “don’t have the buy-in they need from executives to succeed, and many people find them to be formulaic and pointless”:
There are many problems with the existing model of corporate mentorship, says Jennifer Labin, the principal partner of TERP Associates, a firm that specializes in creating public- and private-sector mentoring programs. “Mentoring programs have become this band-aid,” Labin says. She adds that, in her experience, programs are often “thrown together by overworked, overwhelmed people who’ve never built mentoring programs.” Many people in these roles have often never even been mentored themselves, according to Labin. …
What makes this so dangerous for companies is that there is more harm to be done by bad mentorship than their is good to be done by great mentorship.
At the Wall Street Journal last month, Wharton management professor Peter Cappelli challenged executives to think differently about their approach to employee performance and potential. The core of his argument is that these talent processes are less dynamic than the speed of the business. Business needs change, who you work with is different from project to project, expectations evolve, and personal circumstances or other factors can affect an employee’s potential contribution at any given time. Rarely, he argues, is an employee always an A, B, or C player:
Broad categories miss a lot of subtleties, so people’s true talents and strengths often get ignored. They also make it hard to recognize when people improve or stumble in their performance. The notion that good performers are always good also contributes to what psychologist Edward Thorndike called a halo effect, the mistaken belief that if you were an A player in one thing, you will be an A player in another. …
That means we assume A players perform better because they have more ability or talent than the others. But we don’t consider that, for instance, they might have gotten a string of easy projects where they could shine. Or maybe we think they’ve done a good job simply because we expected them to do a good job. Likewise, we assume that people performing poorly in their jobs are C players rather than people who are struggling with problems outside of work or have just been given an impossible assignment. Or again, maybe we judged them as performing worse than they actually did because we expected them to do poorly.
The cornerstone of his advice to solve this very real problem is to assess employees more frequently and objectively. He’s right about that, but this is just one of three things organizations need to do in order to improve their performance management strategies. They must also:
- Expand the number of people from whom managers receive feedback. Performance today is more collaborative, interconnected, matrixed and horizontal. In order to better determine the contributions that someone is making, managers need to ask more people.
- Make the feedback more forward looking. Rather than simply telling an employee how well they performed in the past, the best managers use past performance as a vehicle for talking about what they should be doing differently in the future. This approach lets managers use performance feedback as a development and evaluation tool.
Sara Bean at Workplace Insight passes along a global survey from Korn Ferry finding that 63 percent of employees would rather receive a promotion with no salary increase than a raise without a promotion this year:
One reason for this, the research from Korn Ferry suggests, is that many organizations are not doing an adequate job of creating clear advancement opportunities for professionals. More than half (56 percent) of respondents who did not get a promotion within the last 12 months cited “bottleneck or nowhere to go” as the main reason. Nearly one-fifth (19 percent) said office politics got in their way of moving up the ladder, and while 39 percent said they did receive a promotion within the last year, less than half (45 percent) said they expect to receive a promotion in the coming year. Also, 84 percent said that if they were passed over for a promotion, the No.1 action they would take was to identify the reason and work to improve. The vast majority (88 percent) said that if they wanted a promotion, the No. 1 action they would take would be to have a conversation with their boss and identify growth areas that would enable them to move into the next role.
This finding seems consistent with something we at CEB observed in our study on high-potential strategies last year: HIPO engagement depends more strongly on these employees’ satisfaction with their skill development and career progress than on satisfaction with their compensation. Indeed, failure to provide the right progression opportunities can increase HIPO turnover risk by 15 percent.
(CEB Corporate Leadership Council members can read the full study here.)
Hana Schank and Elizabeth Wallace interviewed 37 of their sorority sisters from the early 90s to understand what happens to women’s ambitions in the years following college graduation, and at the Atlantic this week, they examine the career arcs of these women in a series of essays called “The Ambition Interviews.” To understand the divergent paths the women took between college and the time of the interview, they divided the group into three categories:
- High Achievers: women for whom motherhood had little influence on their career trajectory
- Opt Outers: women who left work as soon as their first child was born, and
- Scale Backers: women who moved to less demanding jobs after their first child
While not a scientifically rigorous survey, Schank and Wallace’s project sheds some light on the factors that motivate many women to drop out of the workforce after having children. Throughout the series, they investigate these women’s career trajectories to uncover the choices they made and the factors that led them to become either High Achievers, Scale Backers, or Opt Outers.
This classification of women into these three groups is an accurate way to categorize their past career trajectories. However, the fact that a woman has had a career path that reflects one of the three options does not necessarily imply that she will continue on the same path moving forward, or that men’s aspirations are static. For HR leaders, it’s important to recognize the impact an organization can have on its employees’ ambitions.
Qualified internal candidates are often overlooked in favor of outside hires, Wade Burgess, vice president of LinkedIn Talent Solutions, observes at the Harvard Business Review—and being overlooked for a promotion is a significant driver of attrition. Burgess has some theories as to why this is happening, foremost of which is that hiring managers don’t see their internal candidates as having the right skills:
Hiring managers think existing employees lack the exact skill match they’re hoping to find, or hiring managers are looking for newer skills that aren’t in evidence yet at their organization. Here’s a common scenario when it comes to the former: A hiring manager shares a healthy list of job requirements and asks their recruiter to find someone who fits the bill. But it’s tough to find candidates whose skills fit precisely, especially given the pace of change today. Skills evolve and emerge so rapidly that unless you have an organization-wide focus on professional learning and development, it’s unlikely that your team will be able to perform their day job while staying current on the latest skills — especially when it comes to tech-focused roles.
Jobs themselves are changing quickly, too. As the World Economic Forum notes, “Jobs exist now that we’d never heard of a decade ago. One estimate suggests that 65% of children entering primary school today will ultimately end up working in completely new job types that aren’t on our radar yet.” That’s already happening today. Consider professionals working as app developers, social media managers, or driverless car engineers. Five years ago, if a hiring manager had been searching for those skills in their workforce, they’d be hard pressed to find them. Yet somehow, people with no specific experience with those roles were able to tackle them successfully.
As it happens, my colleagues and I at CEB have been thinking a lot lately about internal leadership candidates and how best to develop them while conducting our latest research on high-potential talent strategies. Most organizations expect at least 40 percent of their senior leadership roles to look significantly different in the next five years. In an environment where leadership requirements are changing faster and in more unpredictable ways than ever, organizations’ high-potential strategies are trying—and largely failing—to hit a moving target. One common strategy is to try and hedge against future skill gaps by rotating potential leaders through different jobs to diversify their skills and experience and improve their agility to cope with changing leadership requirements.
Development is undoubtedly an important component of any HIPO strategy, but our research finds that this particular strategy is not as successful as many believe.
Willis Towers Watson’s latest Global Talent Management and Rewards survey finds that both hiring and turnover are on the rise globally. In the survey of over 2,000 employers worldwide, more than half said hiring had increased in the past year, compared to just 19 percent who said it had decreased, while 35 percent said turnover had increased in the same period. The report also shows that a significant percentage of the workforce is either looking to leave their job, at risk of leaving, or only staying with their current employer because they can’t find a better alternative elsewhere. Among directors, managers, and middle managers, for example, Willis Towers Watson identifies only 44 percent as “stayers,” while 32 percent are “soft stays” (i.e., would take another opportunity if it came by), 9 percent are at risk of leaving, and 15 percent affirmatively intend to change jobs within the next two years.
In terms of hiring the right employees, the report finds that most employers in mature economies are having trouble attracting talent with critical skills (55 percent), high potential (54 percent) and top performance (56 percent). One-fifth of employers in mature economies said it was difficult to keep employees. These figures are even higher in emerging markets. These findings are consistent with signs we’ve seen recently that the labor market is increasingly talent-driven, as even on a global level, employers are chasing a limited pool of highly skilled employees.
A high-turnover labor market is a significant challenge for employers because the cost of turnover can be very high, especially among senior managers. CEB Corporate Leadership Council members can use our Turnover Cost Calculator to measure how much money they stand to save by improving retention rates. Beyond its directly costs, turnover is even more expensive when you consider the potential for innovation that your organization can lose along with a high-performing or high-potential employee. Ben Eubanks of Lighthouse Research tells a story of just such a loss at ATD’s Human Capital blog: