Gaining Value from High Potential Employees
By Richard Boston, Consultant, OPP®
Introduction
What is 'high potential'
Finding high potential
Utilising high potential
Deploying critical resources
Retaining and maintaining high potential
Enhancing performance
Managing the process
Introduction
The much talked about War for Talent is constantly evolving, forcing its protagonists to adapt in order to maintain and strengthen their position on the battlefield. However, all too often key fronts are neglected, leaving organisations exposed and their intellectual assets vulnerable. Once you have found talent you need to utilise it. This is the middle phase of the 'Find it, Use it, Lose it' cycle of talent management.
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What is 'high potential'?
Potential is notoriously difficult to pin down. Perhaps the clearest way of looking at it is that potential is the difference between an individual's current performance and their maximum performance (i.e. what they could achieve given every opportunity and no constraints). Most of our clients have adapted this concept to mean those individuals who have 'what it takes' to get to the top – or at least very close to the top. Naturally, this is extremely hard to measure or predict: two managers might be equally effective in their current role, but one might have a far greater positive impact as a member of the board. Similarly, it's important to remember that high potential employees are not simply those who are performing well in their current role.
When evaluating potential, OPP® targets a person's underlying aptitudes, personality traits and motivations. Key factors are their willingness to take the initiative and their abilities and attitudes with regard to learning and adapting. This is increasingly the case in a business environment that changes constantly and requires 'bigger leaps' of staff rising through flatter management structures.
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Finding high potential
Historically, the focus of talent management has been on recruiting high potential staff (HIPOs), that is, identifying and attracting those individuals with the highest potential value. This can be expensive and take a long time. As with any hunt, success is highly reliant on knowing what you are looking for, where to look and whether you have brought the right equipment. This means ensuring you have identified competencies for the role, conducted a targeted search and designed relevant, effective and efficient assessment processes.
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Utilising high potential
Attracting and selecting HIPOs is essential to maximising organisational success. However, organisations need to take a strategic view, considering high potential at all stages in the employment and organisational cycles. The business priority is that HIPOs' skills and talents are fully utilised for the benefit of the organisation. If all that potential is never translated into top-flight performance, the heavy investment in securing this valuable resource will be wasted.
Successful utilisation of talent is dependent on the organisation's ability to:
- Deploy these critical resources effectively
- Ensure high potential individuals stay with the organization
- Maintain their peak performance
- Stretch their capabilities to increase their value as a resource
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Deploying critical resources
Like capital, strategy and technology, high potential must be used correctly if it is to make a positive contribution to the organisation. Just as capital is easily wasted, strategy can be poorly operationalised and technology can be misused, HIPOs can be placed in the wrong job, team or department and consequently fail to utilise their key talents. This can happen for any number of reasons, including lack of a person-job fit, changes to the job role and limited consideration of the team's or department's requirements. This can be avoided by taking a broader, forward-looking perspective when defining the job and person requirements and selecting appropriate individuals.
Short-term optimisation of talent needs to be balanced with long-term gain for the individual and the organisation. All too often, HIPOs in high stake roles are moved before they can have the required effect. Organisations in crisis often replace key decision makers annually when anecdotal evidence says it can take three to five years for someone in this position to have a measurably positive effect. Essentially, this is an investment decision: there are times when we need to reap a short term return or quick win, and there are times when we need to sow some more seeds for tomorrow.
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Retaining and maintaining high potential
Research has shown that 40% of companies are unable to pursue the majority of their growth opportunities due to a lack of sufficient talent resources1. Unfortunately, the supply of HIPOs in most industries has fallen and the pool of potential talent is draining faster than it is being filled. Millions of Baby Boomers are leaking out of the pool and there are not enough Generation X-ers to replace them. Based on the notion that tomorrow's managers come from the current crop of 25-44 year olds, in 1990 the UK pool was 12% deeper than it was five years earlier.
This 'talent boom' is now over and the pool is shallower than it was in 2000 by some 419,000 people2. The law of averages tells us that around 16% of these could be regarded as highly talented, while 2% will be truly exceptional. This means the supply of highly talented people has fallen by 67,000, of which about 8,400 would probably have been truly exceptional. Over the next five years, we are expecting to see twice the drain.
This shortage of supply in the face of increasing demand not only makes the hunt for HIPOs harder, it also increases the value of those already in the organisation. Changes to the psychological contract during the 'talent boom' years have created an environment where it is natural for staff voluntarily to change jobs every two to five years. The economic climate means neither employer nor employee makes long-term commitments to the other, explicitly or otherwise.
In the Financial Services industry alone, OPP research found that 24% of respondents believed their organisation had problems retaining its top talent3. This effect is seen to be particularly prevalent at junior and middle management levels, which will leave these organisations vulnerable when their top management retires.
Realistic job previews and managing expectations at the selection stage can increase tenure. However, retention in the face of tempting competition requires a fuller understanding of what employees want from their relationship with the organisation. At a general level, for instance, people say they join organisations to learn and grow, that they want recognition and meaningful work and that they leave their jobs primarily because of lack of career opportunities, lack of identification with the culture or because they feel overworked4.
Still, there is little point retaining high potential employees if they lose their impetus. To help improve retention and realise people's potential, employees need to be looked at as individuals. One approach taken by OPP clients is to use the OPP VORT-X model to identify which area is of most importance to individual employees and to show whether they feel that their expectations are being met. Managers can also use personality tests to more fully understand the styles and needs of their staff, which helps to motivate and manage them.
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Enhancing performance
Few organisations have an inexhaustible budget for staff development. Most have far less than they would like and many allocate less than they need. Consequently, once they are satisfied that their HIPOs are effectively deployed, relatively well-secured and operating at capacity, it can be difficult to know how or whether to allocate funds to their development.
It is easy to assume that the high potential cream will rise to the top, but less talented people can also rise to the top in an organisation: it is an unfortunate truism that some managers and directors have reached the top by default or length of tenure rather than by virtue of their capabilities. Talent needs to be nurtured in order to bloom fully. Fortunately, some of the most effective ways to develop HIPOs are also the most cost-effective.
OPP advocates development within the organisational context, either through action learning sets or identifying specific job activities or assignments that will expose the individual to the variety and challenges they need. These are best used alongside coaching or mentoring, a structure that can be supplemented with relevant training where necessary and in some cases has been developed into a fully integrated leadership development model.
Different types of leadership development will suit different people. People whose Myers-Briggs Type Indicator® (MBTI®) preferences are for Extraverted Feeling are typically more ready to address development of higher level interpersonal skills. Those with a Thinking preference are more likely to embrace more technically-oriented activities. True growth will only come if HIPOs can be encouraged to prioritise activities that are contrary to their preference, requiring them to flex their approach to development.
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Managing the process
Ultimately, the entire programme should be owned and championed by the highest echelons of the organisation – those very people who have realised their high potential. The decision as to which employees to focus on should be based on the needs and aspirations of the organisation, the identification of employees who are critical to organisational success and the impact selective development activities will have on key stakeholders.
Given the nature of high potential employees, it might be argued that they are likely to forge their own opportunities and that it is other employees who would benefit from development. Certainly they are typically self-starters who will take the initiative and seek out opportunities to develop themselves. It is also vital to avoid de-motivating other staff by focusing exclusively on HIPOs. However, it would be unfair and unhealthy to reward self-development behaviours by directing development budgets elsewhere. Whatever the approach, the expectations of all those who are and are not involved in high potential programmes need to be carefully managed.
Another important aspect of managing talent is being prepared for the day it leaves the organisation. Losing talented staff is a natural part of the process. There is a lot that can be done to delay this but all employees will eventually move on, whether because they are changing jobs or careers or because they are leaving the workforce altogether. It is important to plan for this, to treat it as would be done for any other threat or risk, for instance by ensuring ongoing knowledge transfer and succession planning.
Research shows that organisations using integrated talent management strategies that align people with business needs tend to perform better financially5. The approaches outlined in this article should help your organisation achieve similar results, developing and deploying your high potential for maximum returns on that initial recruitment investment.
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1 'The War for Talent', Michaels, Axelrod & Handfield-Jones, (McKinsey & Co) (2001)
2 Analysis based on figures from the Office of National Statistics website
3 'The Leadership Challenge', OPP (2004)
4 See, for example, 'The Management Agenda', Roffey Park (2002)
5 'Changing Times', OPP (2004)
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