A practical look at building and implementing your perfect performance management process.
Leading businesses need more than hard work and solid results right now. They also need a pipeline of talent that will drive future success.
That is why many organizations evaluate employees on not only their current performance, but also their future potential.
According to one study from Mark Huselid at Rutgers University, programs for developing high-potential employees can lower turnover by 7% and deliver a big boost to a company's bottom line.
Not only that, research from the Journal of Applied Psychology found that star performers can bump up a team’s performance by as much as 15%. And as you would imagine, the reverse is also true. A 2017 Glassdoor survey found that keeping employees confined to one job without a clear career path gradually increases their chance of leaving. Turnover is never fun, especially when it's your high-potential faction of talent heading for the door.
But how do you identify high-potential? Isn't it the same thing as high performance?
Let's take a deeper look at the difference between potential and performance, and what characteristics to look for to help tease out your future top talent.
Future leaders, rockstars, high-pots...
Potential is that elusive — almost magical — HR intangible that separates a good employee from your next gen business visionary.
Performance, on the other hand, is simply how well (or poorly) a person is doing their job.
While potential and performance are definitely related, they aren’t perfectly correlated. For example, a member of your IT team may perform job tasks only a little above average, but they consistently rock at bringing out the best in all the teams they interact with. They could be perfect for a project management role.
On the flipside, a star performer might totally nail their job tasks with consistent speed and quality, but they bring a negative attitude and don't care about the company. Move them into a leadership role and they could easily pull the company in a bad direction.
Don't get us wrong, we're not saying you should overlook performance. Past performance is always the best indicator of future performance. But there is more to future performance.
The point we're trying to make is that, as much as we wish there were a clear-cut path to bringing out the best in our people, it's just not as simple as, "Promote X employee after 5 years of solid work". The truth is, in order to reach peak performance, everyone needs opportunities to stretch and test their skills — and they deserve them, too.
But how do you know which high-pots are truly up to the challenge? Here are the fundamental signs to look for.
While many high performers may be totally satisfied in their current roles, a high-potential employee is much more likely to seek out a totally new task, or be eager to take a much bigger step forward (or upward) into management or another role where there’s plenty of room to learn and advance.
If you're wondering whether a specific employee might be ready for growth, here are some of the core traits to think about.
Most high-potential employees are highly engaged in their field, industry and/or company.
Whether that extra layer of passion comes from an intrinsic drive, a set goal, or just a genuine interest in their work (hopefully, all three!), high-potential employees are like hot air balloons — to reach new heights, they need a little fire inside.
These individuals want to be the best at what they do. They're often the ones thinking more deeply about the job and asking the hard questions. In fact, Douglas Ready, former head of leadership talent management company ICEDR (along with several other experts) took a good look at the characteristics of high-potential candidates across a variety of different workplaces. They found that high-potential employees can be so ambitious, they “realize they may have to make sacrifices in their personal lives in order to advance.”
You'll recognize your high-potential employees as the ones who are always willing to stay late or come in early. But beware. Burnout is like kryptonite for employee engagement, even among your high-potentials. Employees with a bit too much drive might need some help keeping a balance, before they burn out and head for the door.
Relationships matter. If they didn’t, Gallup wouldn’t have found that having a best friend at work can bump up profit by 12%.
A high-potential employee might not be everyone’s best friend, but they probably won’t be lone wolves either. But let's pause for an important distinction here, in HR circles, when we talk about "high-potential employees", we're often talking about candidates or employees who can move up the ladder into a leadership role — and as with any leadership role, your ability to work with people is crucial.
While your typical high-pot employee would ideally be able to socialize in order to get the internal skills, tools and buy-in needed to excel in a role, this characteristic might not actually apply if you're looking for someone who can perform at a high level within a set role.
In fact, organizations like the Israeli Defense Force have high-performing teams of neurodiverse talent that are fantastic at what they do, even though they may not check the box for "sociable".
There's just no cure for incompetence.
Beyond being good with people, high-potential employees are undeniably capable.
Tomas Chamorro-Premuzic, Professor of Business Psychology and Chief Talent Scientist at ManpowerGroup, found that high-potential employees are not only able to do the job, they can also handle more complex tasks and questions, and are able to step back and think critically about those tasks. According to Tomas, “creativity and a knack for systems thinking” are hallmark signs of high-potential talent.
This characteristic can be phrased many different ways, depending on who you ask.
Douglas from ICEDR calls it, “catalytic learning capability” — basically, an individual's ability to take on new ideas and turn them into action. Claudio Fernández-Aráoz, a Senior Adviser at global executive search firm Egon Zehnder, calls it “seek[ing] understanding”.
Whatever you call it, at the core of the idea is a person's interest for deep growth. Employees who are eager to uncover new knowledge and opportunities beyond an established capacity or business "comfort zone" are typically excellent at finding profitable areas to expand into.
Curious, able, sociable, and driven are all wonderful things to be — but for many, these characteristics can come with a hidden tendency to bite off more than you can chew.
Enter the "dynamic sensors."
According to Douglas, individuals with dynamic sensors have the uncanny ability to see the difference between the tasks that yield reward, and those that are pure risk. “Their enterprising spirit might otherwise lead them to make foolish decisions, but these sensors help them decide, for example, when to pursue something and when to pull back,” he says.
At the end of the day, achieving high performance on the right things, is what moves a company forward. Some of your most practical employees will likely have the ability to sniff out the difference between the critical and the frivolous, without being overly skeptical or risk averse. (Either way, you'll want to make sure you give your people enough room to learn — even if that means embracing the occasional failure.)
If you google the words “the smartest guys in the room” you’ll find a documentary about Enron right at the top.
A culture of reward and recognition is a beautiful thing, but let's not forget: The only thing worse than wasted potential, is potential that's abused or misused.
Rewarding potential based solely on results only invites trouble. A high-potential employee might be great at consistently hitting performance outcomes, but if they use immoral or illegal tactics to achieve those outcomes, is it really worth it?
In addition to having their own moral guidelines, high-potential employees will boldly embrace the values of the organization. It's important to never look the other way on this one. Employees who cut others down just to pull themselves up won't make the best leaders once they’re at the top.
No matter what doors you’re trying to open, context is always key.
Though the above characteristics translate well to many organizations, the factors your business looks for in its people and leadership will depend on your unique culture.
In some roles and companies, speed is a priority, so “quick thinker” may need to be on your list. In other places, thoroughness matters more. In that case, you may be looking for your “detail-oriented” individuals. Compassionate, competitive, experienced — there are so many more characteristics that may need to enter into the equation depending on your organization's unique goals.
And your definition of "high-potential" should change just as frequently as your goals do.
The same way you look for specific characteristics in the people who will take us to the next level in our business, you've got to look at the characteristics of your talent management systems as well. Are your systems for hiring, coaching and promoting reflective of the goals and actions you need to take in order to reach your peak? Or is it time for an upgrade?
Develop a high-potential talent system worthy of your highest performers and you'll be surprised how many eagerly step up to the plate.
PerformYard drives employee performance for the enterprise through our intuitive web-based software platform. PerformYard software enables executives to better leverage their most important resource — people.