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How to spot high-potential employees

3 Mar 2021 By Paul Surridge

Identifying talented individuals to fill senior roles is a challenging process, says Paul Surridge, but it can be done successfully if approached in the right way

In various surveys of CEOs around the world, the need to recruit and retain talent is always identified as a critical strategic imperative and this has only been increased since the start of the pandemic. Yet many remain disappointed with their organisations ability to do so. Why is this?

During the 15 years I have worked in the field of leadership consulting, I have seen a huge variety in the tools, models and processes organisations have used to identify their often elusive ‘high potential employees’, all with varying levels of success, often little. 

It has been 50 years since McKinsey developed the nine-box matrix, originally as a framework for multi-business organisations to prioritise its investments among its business units. Only in later years did it evolve into the tool universally used as a means for categorising employees based on their current performance and future potential. 

Prompted by a client wanting to understand more about current best practice, I designed a research project to find out what organisations currently do to identify their high potential employees and which practices yield the most success.

Key findings

My research suggests on average, high potential employees are only identified accurately 45 per cent of the time, meaning that of the relatively small number of individuals that have been identified as being ‘high potential’, less than half of them go on to be successful in bigger, more senior positions. This is in line with broader research, which suggests up to half of leaders’ derail, giving rise to the Peter Principle. 

There are various reasons for this:

  • Potential as a construct is often poorly defined and in around a quarter of organisations that look to identify high potentials, there is no definition at all. 
  • Training for managers on how to spot potential is often superficial and lacks depth in terms of the criteria that should be used, leading to the common confusion between potential and performance.
  • Where clear definitions and models of potential are used, they are not necessarily backed up by scientific evidence. Also, the models used tend to be over-simplified and lacking in rigour.
  • While many firms have specific programmes designed to develop high potential employees, these stop short of supporting them as they transition into more senior roles.

Given the apparent importance placed on recruiting and retaining talent, it is clear the responsibility for nurturing talent should be a key focus for the business and not, as it is too often the case, an HR led initiative. The lack of true engagement from those at the top of the organisation is an underlying factor as to why many businesses fail to implement successful programmes.  

Recommendations

Despite finding many examples of where high potential programmes fail, my research did identify several themes across those organisations that do have high levels of success. 

Define what you mean by 'potential'

Is it about identifying individuals ready for the next move or those with the potential for longer term success? You need to answer the age-old question of ‘potential for what?’. 

Identifying individuals that show the potential to move into a specific role in the short to medium term, i.e. their ‘readiness’ is also much easier than trying to, at best guess, whether someone can move into a role 2-3 levels above their current one in five or so years.

Have clear criteria which describes what potential looks like. Use evidence-based research to determine those attributes and experiences that genuinely indicate potential and ensure it is robust. Something is not better than nothing.

Communicate, educate and train

Executive team buy-in and visible sponsorship is a must as is training for all managers so they can recognise and objectively evaluate their team members and know how to support them in their personal and career development. Without it, they will continue to confuse high performers with high potentials.

Validate your high-potential pool

Cross-organisation talent reviews help to remove bias from the process. Also, consider using a more rigorous process such as assessment to gain a more in-depth perspective and better identify individual development needs.

Develop individuals not just cohorts

Having specific programmes to support the development of high potential employees is a valuable exercise, but they need to be tailored to suit the individuals as much as possible and be relevant to their next career move. Programmes that work best are those with a combination of experiential learning supported by individual coaching and/or mentoring, the latter also helping them navigate their own career path.

Create movement

The identification of high potential employees should not be the end goal. The mechanism for moving such individuals up or across the organisation also needs to be well thought through. 

Although distinctly different processes, high potential identification and development needs to be aligned with succession planning, resource management and talent acquisition. All of this should be focused on ensuring organisations have the right people in the right roles and they have a clear pipeline of talented individuals ready to move into them at the right time. 

Identifying talented individuals with the potential to fill critical or senior roles in the future is a vital and challenging process, but it is certainly doable if approached in the right way. However, there are significant risks of getting it wrong. Either commit to doing it properly or don’t do it at all.

Paul Surridge is managing partner at Target Leadership Consulting

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