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Talent Assessment | 10 Min Read

The Ultimate Guide to High-Potential Identification

Introduction

It is a well-accepted maxim that the greatest asset of a company is its people. Employees play a critical role in driving organizational growth. The primacy of continual employee growth and development opportunities has been a chief concern for human resource professionals. Not only is continuous growth beneficial for the individual, but also in the best interest of the organization. L&D professionals often stand on opposite ends of the spectrum – the ones who believe that learning and development opportunities should be available to all, and the others who feel that special programs or attention should be accorded to high-potentials of the organization for better returns. It is, therefore, essential for organizations to be future-ready, with a talent pipeline prepared to take on more senior responsibilities and face future challenges, irrespective of their stance on the subject.

While organizations expect all their employees to function to the best of their caliber, it is a generally accepted premise that an organization is driven and sustained by a select few high-potential employees.

The top 20% of your workforce accounts for 80% of organizational output”, as stated in the Harvard Business Review in its case study titled “What Science Says About Identifying High-Potential Employees,” 2017.

Thus, identifying employees who drive the organization towards success is becoming crucial to optimize the workforce and undertake better people management. With an increasing need to continually evolve in times of rapid transformation and limited resources, identifying and developing star performers is a pressing priority for HRs and line managers.

What is a High-Potential?

A high-potential is an employee who possesses the intellect, drive, agility, and leadership orientation to successfully undertake broader and complex roles in the future. HiPo employees are part of a larger pool of the best talent in an organization. They drive the overall business performance by making significant and consistent contributions, delivering superior levels of performance while outperforming others, and exhibiting behavior and skills that align with the company’s culture and vision.

What are the Characteristics of High-Potential Employees?

Some of the characteristics that distinguish HiPo employees from others, and that should be assessed when identifying high-potentials, are:

  • Strategic Thinking
  • Strive for Excellence
  • Learning Agility
  • Decision Making
  • Proactiveness
  • Adaptability
  • Leadership Orientation
  • Relationship Building
  • Stakeholder Management
  • Ambiguity Management

How Do You Identify High-Potentials?

High-potential employees can be identified through a process that intends to discover individuals who possess competencies essential to succeed in more evolved roles for personal and organizational advancement. 

Identifying high-potentials involves a series of steps, starting with:

  • Sensing exercise to gauge the core competencies organizations are looking for in their HiPo employees
  • Identifying the right tool(s) for accurate HiPo assessment
  • Conducting high-potential assessments for the identification of HiPo employees
  • Creating individual development plans for each employee to help their speedy growth
  • Validating the results to find employees who demonstrate a higher possibility of outperforming others in the same role and depict a differentiated leadership/role potential. 

HiPo employees display not only high levels of competencies for their current role but also exhibit a high future propensity for taking up bigger responsibilities and challenges. The process of identifying high-potentials plays a significant role in making your workforce future-ready and helps your organization prepare to plug future talent gaps.

What are the Major Roadblocks to HiPo Identification?

To classify employees as highly capable and carry out a successful process for high-potential employee identification, organizations typically rely on individual performance along with managers’ feedback. While these might be conventional practices, they are not without limitations.

i) Unclear Definition of ‘High-Potential’

Organizations often don’t focus on future competencies. Their competency framework, if at all they have one in place, usually focuses on present business requirements and fails to acknowledge the changing business landscape and the aligned future competencies. The absence of a clear definition of a HiPo employee for your organization, and it could vary based on the industry, size, etc., leads to ambiguity in which employee and what competencies qualify as high-potential. Most organizations arrive at a loosely defined competency framework based on the subjective opinions of only a handful of people within the organization. They, therefore, struggle to objectively identify specific attributes/competencies they would need their HiPo employees or future workforce to demonstrate. As a result, no one has a clear picture of the characteristics required for creating a dedicated high-potential assessment that truly assesses potential.

ii) Performance Versus Potential

Performance_versus_Potential_high_potential_identification

Yet another commonly found method of identifying high-potential employees is evaluating the current performance. Many organizations confuse performance with potential, two concepts that are often used interchangeably but don’t always mean the same thing. While performance takes into account past accomplishments, potential, on the other hand, is forward-looking.

Considering that the expectations and demands of the future role might be starkly different from the one being performed currently, organizations can put their HiPo employees in a position that might lead to unfavorable results. These results may stem from their inability to cope with the transition or the lack of skills required to excel in that particular role. While performance and potential are not mutually exclusive as potential includes elements of performance, a high performer, however, doesn’t guarantee a high-potential.

Confusing performance and potential can be an expensive miss for an organization, pushing HiPo employees to look for alternative roles or even switch jobs, due to the absence of challenging roles and associated recognition or placing high-performers in positions they might not be equipped to handle.

iii) Subjective Assessment of Candidates

Organizations often rely on the manager’s feedback to assess an individual’s performance for appraisals and promotion-based decisions. That this practice is mostly subjective, prone to bias, and can be detrimental to the process of high-potential identification is well-known. Relying solely on the manager’s feedback means that candidates are being nominated for subjective reasons rather than scientifically-validated results based on using standardized tools. 

The convergence of these factors has left many organizations struggling while designing a successful strategy for high-potential identification for organizational planning and talent development.

Why Do Organizations Need High-Potential Employee Identification?

Regularly assessing your internal talent pool is critical for better people management. While some people may argue that new talent can be recruited for the same position for which an existing employee can be trained, it often comes with the caveat that a recruit would take more time to attune to the needs of the business, before he/she can be productive. From an organizational perspective, recruitment is always more expensive than development. 

HiPo Identification, Succession Planning, Leadership Development, and Training Needs Identification go hand-in-hand with the broader construct of future readiness. While the objectives may differ based on the organizational requirement at a given time, all of them stem from the same need, which is the identification of a talent pool and deployment of developmental interventions to ensure organizational success in the longer run.

HiPo employees prefer to be challenged at the workplace and are often aware that they are outperforming their peers. Often, acknowledging their contribution, by providing them better learning opportunities, promoting or appraising them, placing them in strategic or more challenging roles, training them to be future leaders, etc., can help retain these individuals.

High-potentials make sizable contributions to the present and future success of the organization. Therefore, organizations must ensure that they nurture and utilize this talent pool appropriately.

i) To Build a High-Potential Talent Pool

Investing in your HiPo employees can help you build a talent pipeline when faced with a loss of talent owing to attrition, retirement, or any such issues. HiPo identification can be done on a need basis to fill a critical business position, create a new business unit or team, consider employees for leadership pipeline, or carry out succession planning. 

ii) To Develop High-Potential Employees

Identifying high-potential employees provides organizations with the opportunity to develop them through advanced developmental programs to prepare them for future roles, expose them to better opportunities, put them on fast-track training programs, or assign them to special assignments that provide advanced growth opportunities.

iii) To Retain High-Potential Employees 

When performance is the only criteria employees are evaluated on, high performers will be the only ones moving up - and your high-potentials will be moving out.

Brian Kight
Director of Performance, Focus 3

With attrition being one of the most prominent challenges confronted by organizations, losing a HiPo employee can be a significant setback for any organization. High-potential employee identification provides organizations with objective data to focus their efforts on retaining the right people.

By engaging HiPo employees, organizations acknowledge their need for achievement and advancement, giving them a reason to stay in their current organization.

iv) To Recognize & Reward HiPo Employees

Promotions and appraisals are powerful tools to reward high-potential employees and keep them motivated. Traditionally, performance has been the central focus of appraisals. While performance has and should always be rewarded, identifying high-potentials and rewarding them appropriately is equally critical. 

Potential data serves as an enabler for better people’s decisions. Since HiPo employees are often driven, agile, and ambitious individuals, promotions become an extremely important measure to motivate them to continue working to the best of their ability and delivering consistent results. The addition of potential to already existing performance parameters, thus, allows you to make appraisal decisions more objective and accurate.

Tools to Measure HiPo Employees

With the focus shifting on combining potential and performance, conventional methods are giving way to more dynamic ones. High-potential employee identification is an essential component of the shifting global work environment filled with new challenges and uncertainties. 

These high-potential identification tools are designed considering the present business environment. While high-potential identification is often carried out for select employees based on seniority, these highly flexible and customized tools allow your organization to implement HiPo identification at scale across all employee levels (from frontline to managers) timely and cost-efficiently.

Assessment & Development Centers (ACDC)

Assessment and development centers combine roleplays, situational judgment tests, presentations, group discussions, interviews, simulations, psychometric and aptitude tests, and other such techniques to make critical talent decisions, such as matching an employee to a particular role or for employee development purposes. This allows assessors to objectively evaluate candidates in situations that imitate real-life workplace scenarios and observe skills and behaviors specific to the defined competencies.

ACDCs can be undertaken in the following ways:

Virtual ACDC

A complete suite of online programs that simulate traditional ACDCs for a holistic understanding of employees, virtual assessment and development centers are time and cost-efficient without any logistical hassles. The biggest USP of virtual ACDCs is their instant and automated reports, along with reduced overhead expenses. These are best suited for mid-level managers and individual contributors. 

Traditional ACDC

Conducted in an offline setting with a dedicated team of assessors, traditional ACDCs are on the decline because of high cost, complex logistics, and the time taken in implementation and obtaining results. 

Blended ACDC

A better alternative for traditional assessment centers – blended ACDCs combine the best of technology and human touch by bringing together on-field programs and online assessments for an integrated approach to talent management. These are best suited for mid to senior-level leadership profiles.

360-Degree Feedback

A holistic process where an employee’s superiors, peers, direct reports, and, sometimes, even customers, evaluate an individual’s performance and potential. 360-degree feedback tools are often used for performance appraisals and promotions. They can, however, be adapted to look at potential as one of the metrics, through additional indicators of potential on which stakeholders evaluate employees.

Assessment Battery

A comprehensive battery of assessments can quickly help organizations zero in on their high-potential employees by evaluating employees on their personality and ability. Best suited for entry-level employees and first-time managers, the assessment battery can be used as part of advanced tools for a holistic understanding of an employee’s potential.

Conclusion

High-potential employee identification contributes heavily to the future readiness of organizations and hence is critical to the overall organizational strategy. Identifying, developing, and retaining future potentials can significantly add to an organization’s capacity to cope up with a transition in the present and future. High-potential identification needs to be driven by a comprehensive view of performance while taking into account an extensive understanding of a person’s future role in the organization.

With skillsets, roles, and technologies becoming obsolete in as less as three years, businesses realize the significance of high-potential employees in this volatile, uncertain, complex and ambiguous (VUCA) world. The current war on talent due to the shortage of skills adds more weight to the importance of high-potential identification of existing employees. The right strategy, tools, processes, and partners can help organizations to identify untapped potential and make high-potential employee identification an indispensable part of their business strategy.

How Mercer | Mettl Can Help in Identifying High-Potential Employees?

Mercer | Mettl’s high-potential assessment framework is the foundation on which organizations can build their HiPo identification strategy. With a variety of tools to offer, Mercer | Mettl designs quality assessment solutions tailored to your organization’s needs of complexity that are quick, reliable, and cost-effective.

Mercer | Mettl’s high-potential solution is scalable. It can be customized for all levels of your employees throughout their employee life-cycle.

Mercer | Mettl’s deep analytical rigor and specialized expertise come together to provide every organization with a developmental plan for its current and future needs.

Mercer_Mettl’s_High_Potential_Assessment_Framework_high_potential_identification

Mercer | Mettl’s solution for high-potential identification helps organizations to accurately recognize high-potentials through a structured process:

1. Sensing Exercise

A sensing exercise is the first step towards a coherent strategy for high-potential employee identification. It involves understanding the building blocks of the program, the roles, the levels, and the competencies under consideration. 

Mercer | Mettl handholds organizations by interacting with key stakeholders vested in the process of high-potential identification. Focused group discussions and visionary workshops are integral to the sensing exercise to identify essential competencies and tool composition.

2. Employee Evaluation

Once competencies have been identified, our suite of tools is best matched to the organization’s complexity and cost requirements. Mercer | Mettl’s customizable and scalable tools, namely virtual and blended assessment and development centers, 360-degree feedback, and a comprehensive battery of assessments, etc. can be used independently or in conjunction to identify untapped potential.

3. Talent Pool Finalization

Mercer | Mettl’s swift and automated reports help organizations identify the accelerated talent pool, initiate talent mobility, and implement developmental strategies.

4. Individual Developmental Plans

Given that potential cannot be equated with readiness, the organization must invest in developmental initiatives through Individual Development Plans (IDPs) for the identified pool to equip them to take on future roles and responsibilities. Mercer | Mettl provides organizations with IDPs that help bridge the gaps obtained from employee evaluations.

5. Result Validation

Mercer | Mettl’s end-to-end solution for high-potential identification of employees helps organizations validate results through predictive modeling and correlation exercises.

The process of HiPo identification can be different for different organizations, just like the meaning of HiPo. Organizations need to undertake a two-fold approach for identifying high-potentials – one that enables them to reflect inwardly for their business vision and goals and the second that takes into account the external business environment.

Originally published April 9 2020, Updated August 19 2020

Bhuvi Kathpalia

Written by

Bhuvi is a content marketer at Mercer | Mettl. She's helped various brands find their voice through insightful thought pieces and engaging content. When not scandalizing people with her stories, you’ll find her challenging gender norms, dancing to her own tune, and crusading through life, laughing.

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