HiPos create more value than other employees
It is important to establish the value of high potential (HiPo) employees before looking at how to identify and develop them.
Gartner’s research shows that HiPo employees are 91% more valuable than other employees. This should be no surprise and is in line with several accepted truths:
- People are different and individual differences have a major impact on performance.
- The difference between best and average performers is about 2:1.
- The difference between best and worst performers is even higher, up to 10:1.
The 2:1 difference is seen in the speed of checkout personnel in supermarkets (you can observe that for yourself the next times you are in a supermarket) or marathon running times. Folkman (2014)1 looked at manager ratings of productivity of good (30th-70th percentile) vs. best (above 90th percentile) performers. The figure below shows the difference, again, to be about 2:1.
The gap between best and worst is of course considerably larger than between best and average. As an example, researchers have been measuring the efficiency of software development staff in terms of coding and debugging times for over 50 years. A research summary2 shows that the difference between best and worst programmers is about 10:1.
Given that HiPos are so important to the organisation’s performance, it follows that the organisation should make every effort to support and retain them.
Today’s HiPo programmes don’t work
Gartner has shown that 73% of programmes designed to develop, utilise and retain HiPos fail to provide business outcomes or measurable return on investment (ROI). Indeed, half of the HR Managers running these programmes lack confidence in their value, and 5 out of 6 are dissatisfied with the results. 40% of HiPos actually fail3.
This should be no surprise for experienced HR people. There are many very real challenges to getting such programmes to work, for example:
- Most obviously HiPo programmes explicitly tell those who aren’t defined as HiPo that they have more limited chances for advancement and reward. This is, for many, demotivating. The organisation has to find a way to handle this dilemma. The normal approach is to ignore the problem, fudging communication and thereby reducing the impetus in the programme.
- Identifying HiPos can be difficult. Many of the ‘40% of HiPos actually fail’ may not be high potential at all. One HBR study shows that 42% of HiPos are below average in leadership effectiveness. Focus on the two or three key competences that drive achievement and advancement tends to be drowned out by the multitude of competencies and principles included in competence management systems.
- Running the complex dialogue necessary between HR, the HiPo, the HiPo’s line manager and other stakeholders is more complex and time consuming than many organisations can manage. The result is often unclear expectations, disappointment, and disillusionment.
- The organisation is often poorly equipped to provide the extra support needed for the HiPo to succeed. The HiPo is simply left to sink or swim in their new, challenging assignment.
And, of course, HiPo programmes are run in our over-busy times, where organisations do far too many things half-well, rather than fewer things well.
Whatever the causes and challenges, the 40% failure rate should be seen as unacceptable. The question is what to do about it.