By Eric Hanson, Ph.D.

Approaches to conducting talent reviews vary across organizations, but most include a process for high-potential identification. High potentials, (“top talent” or “acceleration pool members”) are those individuals believed to have the best chance to rapidly grow their capabilities and fulfill the requirements of advanced strategic roles in the future.
The outcomes of talent reviews and high-potential nomination do not appear to be meeting the needed demand. According to the latest Global Leadership Forecast (2011) from Development Dimension International (DDI), only 19 per cent of Canadian HR professionals surveyed rated their organization as strong in its available bench strength to meet future business needs.

Discussed below are common challenges inherent in high-potential evaluation and recommended solutions to put your nomination process on the right track.

Challenge #1: Too Much Time is Wasted on Rating Too Many

The idea of a top-talent or acceleration pool is to be selective—to identify a relatively small number of individuals as prime investment targets for accelerated development.
While there are situations where people may have potential but are in the “wrong role” for their talents, it still may not be necessary to take the time to rate all of a manager’s direct reports on potential or plot them on a nine-box chart.

Solution: Consider limiting the talent review (or other broad screening) to designating initial prospective high-potential candidates, and then employ needed criteria, tools, and consensus-building techniques to more thoroughly consider their candidacy. Although high-potential nomination “fits” with the spirit of inventorying talent, more due diligence is required to make the best talent investment decisions.

Challenge #2:  Potential is Poorly Defined

Many organizations continue to use either level-based estimates of potential, such as “has the potential to develop and perform at two grades higher than current level” or time-based judgments such as “ready now, ready in one to two years, or ready in three to five years.”  These frames are subject to vast differences in opinion on what constitutes potential.  They also leave out a critical variable:  development (motivation, opportunity, and execution). Motivation and diligence in developing, as well as the development opportunities made available, will have considerable impact on individuals’ ability to reach their potential.

Solution: Replace intuitive definitions of high potential with consistent, research-based factors that are predictive of future potential.  DDI’s research has identified 10 high-potential factors:

• Propensity to Lead,
• Brings Out the Best in Others,
• Authenticity,
• Receptivity to Feedback,
• Learning Agility,
• Culture Fit,
• Passion for Results,
• Adaptability,
• Conceptual Thinking, and
• Navigates Ambiguity.

These factors address motivations, learning-orientation, and propensity to deal with the increasingly ambiguous, complex, and dynamic nature of strategic roles.  Future potential must be based on a solid track record of performance, but these 10 factors are the real differentiators for potential in accelerated development.

Challenge #3:  Potential is Confused with Readiness

There is often confusion between what constitutes potential and what defines readiness. Potential refers to whether the individual has the motivations, development orientation, balanced focus on values and results, mastery of complexity, and other attributes needed for more senior or strategic levels.  Readiness is just that: how ready one is to perform in target jobs or stretch roles when judged against specific business and leadership requirements.  This is a question of whether one has the needed skills/competencies, experiences, and knowledge, along with personal attributes required to be successful.  Judging potential and judging readiness are two different things and demand different criteria.

Solution: Be careful to clarify terms, and utilize the appropriate tools and measures for determining both potential and readiness.  It is helpful to think about the two concepts as sequential steps in a succession or high-potential development process.  Potential operates like a screening process to invite the most promising talent into the acceleration pool.  To determine readiness, more in-depth assessment is needed to evaluate the capabilities required for success.

In addition, current performance and whether an individual is “promotable” is oftentimes confused with potential.  Promotable individuals are usually people who, because of their experience, mastery of work processes, and demonstration of “next-level” competencies, are seen as capable of meeting the requirements of the next leadership level. High-potential designation implies that the individual has the capacity, motivation, and talents to significantly develop into a senior or strategic leader.  The promotable designation is much more incremental and may imply that the individual may not necessarily qualify for roles higher than those at the next level. The concepts of performance, promotability, potential, and readiness should be clarified.

Challenge #4:  Managers are Under-involved
Attracting, developing, and retaining talent has risen to the level of a strategic business priority, and for good reason.  However, there is often a push to make the process as easy as possible, using rating methods that can lack the rigor and discipline required to yield high-quality results.

Sometimes tests and inventories are administered to reduce the administrative burden on managers. Unfortunately, the breadth of testing measures is limited compared to the range of factors needed to determine potential. In addition, testing often results in manager skepticism from lack of involvement.

Solution: Be sure to engage leaders and managers from the start. As with any other implementation, communication is vital to attain buy-in, set expectations, and establish processes, roles, accountabilities and metrics. Leaders need to be oriented to the prescribed criteria for high-potential leaders. They must understand the rating process, the tools they will use, and the consensus-building process required to effectively and objectively discern potential in the individuals begin considered.

By adopting the language and definitions into their observations and dialogue on a more ongoing basis, managers will be better equipped to spot potential more proactively (including identifying hidden talent that may not otherwise be discovered by only thinking of potential once a year).

Final Thoughts

The high-potential identification process is vital to filling an organization’s leadership pipeline.  Beyond routine internal promotion processes or development efforts, this nomination process really represents an investment decision.  Time, budget dollars, and energy need to be invested in assessing, developing, coaching, awarding assignments, and retaining high potentials.  The due diligence and response to common design and execution challenges, such as those discussed in this article, will no doubt determine the return on the high-potential investment.

Eric Hanson, Ph.D., is an Executive Consultant with Development Dimension International (DDI). His work focuses on helping clients to design executive assessment, development, and succession processes, as well as broader talent strategies. Eric supports business development, product management, and best practices in Executive Solutions. Contact him at eric.hanson@ddiworld.com.

PeopleTalk – Summer 2012