Strategic review sessions tend to include a deceptively simple question: who are our high-potential leaders? Finding the answer to this question and backing it up with quantifiable data is paramount in the quest to attract and retain top talent.

Identifying hi-po talent

High-potentials typically make up only five to 10% of an organization’s employee population. They are often defined as leaders who can step up one or two levels within 18 to 24 months. Or sometimes as individuals who can quickly switch from one leadership role to another in a different function and quickly add value.

As McKinsey found in an April 2018 study of 600 organizations called ‘Linking Talent to Value’, these “fast talent reallocators were 2.2 times more likely to outperform their competitors on Total Shareholder Return (TSR) than were slow talent reallocators.”

So how do you identify high-potential individuals, and what are the qualities that these individuals display early in their careers?

With millennials slated to make up ¾ of the global workforce by 2025, being able to spot hi-pos and encourage their development will be key to any organization’s success.

Yet a 2017 Oracle white paper found that “only 20% of our respondents report being Very Satisfied or Satisfied with the ability of their organization to track metrics associated with their Hi-Pos, including where they are sourced”.

Panning for talent gold

Given this dilemma, we’ve gathered some best practices and lessons learned from the dozens of organizations where our Leadership Practice has been assessing leaders globally to find those rare nuggets of talent. Here are our four key takeaways.

  1. Cast a wide net

Clients often ask us if they should only assess employees who are seen as high-potential by their business leaders. Invariably, the answer is no. People who are labeled as high-potentials without a formal assessment are either simply high performers in their individual roles or people who stand out from a very short talent field. In many cases, pressured business leaders nominate people who would never be selected on a high-potential list through an objective assessment process.

  1. Focus on future leadership potential

Performance ratings are situational and limited to a certain time period, with lots of external contributing factors.

To properly assess potential, you need to look deeper and determine what an individual’s passion and inner leadership talent truly look like.

It is striking how often, once you identify and redeploy a high-potential employee, you multiply that individual’s contribution to the organization.

  1. Recognize diversity

Not all strong performers are alike. Likewise, not all high-potentials are alike. Some high-potentials will thrive when presented with opportunities to deepen their expertise in their field. Others would rather sample multiple experiences and learn about different parts of the business. Not all will follow identical career paths.

  1. Provide guidance and feedback

There is a general misconception that high potentials are self-guided rockets that can naturally achieve their goals. In fact, many are still in the early stage of their leadership development. Structured development and coaching are thus required to help ensure that the individual doesn’t burn out during his or her ascent.

One final thought

The debate over whether or not to disclose high-potential status to employees is largely over.

Harvard Business Review authors Douglas Ready and Jay Conger reported in a June 2010 article, “the percentage of companies that inform high-potentials of their status has risen from 70% about a decade ago to 85% today”. Letting high-potentials know that the organization values them and is willing to invest in their development is a good indicator of how robust your ability to spot high-potential talent really is. Ultimately, that benefits your entire organization.

This article is from the latest ‘Talent and Potential’ edition of the Odgers Berndtson magazine, OBSERVE.

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Eric Beaudan

Eric Beaudan is the Global Head, Leadership Practice at Odgers Berndtson, based in Toronto. Using the proprietary LeaderFit assessment method he designed, Eric works with organizations to assess an...

Philippe Cavat

Philippe heads the Leadership Consulting practice in France. He has more than three decades of consulting experience in the areas of Executive Assessment and Development as well as Top Team Effect...

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