Employees are the principal driving force of organizational growth. Individual employee development is intrinsically linked to organizational growth and, therefore, is a significant concern for human resource professionals. With the need to continually evolve in times of rapid transformation and limited resources, organizations are looking inwards to tap into the existing workforce potential. This process is known as high-potential identification.
Close to 50% of organizations have an established, formal process for high-potential identification. However, almost an equal number have only an informal understanding among the senior leaders about the organization’s high-potential employees. It is evident that organizations across geographies, industries, and sizes, are stressing on the HiPo process, whether formally or informally. Continually advancing in times of rapid transformation and limited resources is now a necessity for organizations. Identifying employees who will steer organizations towards future growth and success, while continually evolving and updating themselves, is why businesses are investing in the HiPo process.
Performance, alone, is not enough for evaluating potential, since performance is not equal to potential and thus a formal process becomes necessary in identifying HiPos.
In this volatile, uncertain, complex, and ambiguous (VUCA) business environment, organizations are highly concerned about future-proofing their businesses, which reflects in 70% of respondents choosing identifying future leaders as the primary goal of their identification process. Identifying people for investing in them for the long-term business continuity is the core focus of organizations. Risk mitigation is a critical step to ensure business continuity. Identifying future leaders for critical roles is emerging as a key business strategy as it enables organizations to prepare for future contingencies.
Cognitive and aptitude skills are clear differentiators of a high-potential employee. 67% of respondents chose problem-solving, critical decision making, business acumen, etc. as the accurate indicators of high-potential in an employee.
Cognitive skills and an exceptional aptitude, when developed in the right manner, increase the chances of present and future success at work. Employees with cognitive ability exhibit a natural flair for more complex tasks, making them ideal candidates for a high-potential program, where their strengths can be identified and utilized in the right direction. They can be offered opportunities to learn, unlearn, and upskill, considering future competencies.
77% of organizations prefer to invest in mid-level employees, given their knowledge and experience. Mid-level employees can be groomed to meet the future objectives of the organization. They also help in building a culture of learning and growth that often translates into improving the overall performance of the organization.
Conversely, entry-level employees are more likely to leave the organization. They are usually in the formative years of their professional journey, and higher studies or unclear career objectives, among others, can contribute to their decision of parting ways.
The optimal success of your HiPo identification program is dependent not just on identifying them but developing and preparing them for future roles. Thus, 37% of organizations invest all resources to develop and groom their designated high-potential employees (in the form of special or stretch assignments, greater responsibilities, work or team management, job rotation, and suitable training opportunities) to ensure maximum ROI from the process. High-potential employees prefer to be challenged in the workplace. Developing them in the right direction ensures they share the organizational vision and goal, which helps in aligning their growth plans with that of the organization, ensuring a more prolonged association.
The readiness duration and follow-up development plans for the identified employees are determined by mapping them on a nine-box performance vs. potential matrix. According to 44% of organizations, one to two years is the average duration needed by employees to scale up and equip themselves to take on future roles. Other employees may take longer, depending on their standing on the matrix. Organizations must especially emphasize customized developmental plans to ensure the minimum required time for the maximum impact.
The absence of a clear definition of a high-potential employee is a challenge for 32% of organizations. Most organizations struggle at the very first step of the process and are unable to objectively identify specific competencies needed by high-potentials or the future workforce. This results in an unclear picture of the characteristics required for assessing ‘potential.’ It further affects the choice of tools needed by organizations to evaluate the desired competencies.
For many organizations, it is difficult to isolate the concepts of ‘performance’ and ‘potential.’ However, in a digital world where new challenges are routine, differentiating potential and performance are pressing priorities for a successful high-potential identification program.
25% of organizations highlighted letting go of internal bias and looking beyond performance as their most significant challenges. This reflects in the tool of choice for many organizations. Almost 30% of organizations rely on the manager’s recommendations, which is often based only on performance.
An increasing number of subject matter experts believe high-potential identification should be measured using more than one tool, considering it accounts for leadership competencies, behavioral factors, personality attributes, and cognitive skills, etc., along with an underlying component of performance. For instance, assessment and development centers deploy psychometric tools and behavioral simulations to measure a broad set of competencies. If combined with 360-degree feedback, they together make for an integrated and holistic approach, also offering higher precision and reliability.
Close to 40% of organizations didn’t know whether the results of their HiPo program were successful. This can be a result of the lack of expertise, as attributed by 22% of organizations as a challenge, or the unavailability of a scientific method to validate the result over a prolonged period. A massive amount of data needs to be analyzed to calculate the ROI of a high-potential identification program. Every stage in the process should feed data into the final calculation and validation of the effectiveness and ROI of the program. Use of advanced data analytics and predictive validation of the assessments could be further useful in determining the long term benefits of the program.
Organizations need to undertake a two-pronged approach for programs aimed at the identification of high-potential employees – one that enables them to reflect inwards on their long-term business vision and future goals, and the other that measures the prevailing business environment, which is a challenge for 24% of organizations. Much like the competencies that define a high-potential employee, the process of high-potential identification is different for different organizations, and thus the process requires a customized approach. With a lack of internal expertise, 25% of organizations succumb to the one-size-fits-all approach.
Mercer | Mettl’s High-Potential Identification Toolkit can be tailored to your organization’s needs of budget, scale, seniority, or role. According to our scientific framework, the key factors that indicate high-potential in an employee are Intellect, Drive, Agility & Leadership Orientation. This framework is woven into our evaluation methodology to design the right tools that are reliable, quick, and cost-effective. We handhold you through the process to provide you with follow-up assessments and developmental plans, considering current and future business needs.
Mercer | Mettl’s expertise and analytical rigor, together, provide every organization with a high-potential identification plan, in line with its current and future needs. These plans offer solutions irrespective of your challenges in the high-potential identification journey, whether defining competencies, choosing the right tool, industry benchmarking, calculating ROI, or creating a developmental strategy.
Originally published April 23 2020, Updated August 9 2021
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.
High-potential identification, also known as 'Hipo,' are employee development initiatives undertaken to identify the most valuable employees and develop them. It helps organizations identify leadership potential, build critical teams and retain top talent.