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.
How to make programmes for High Potentials (HiPos) work
The recommendations for how to overcome the challenges identified above are rolled into a story about the conglomerate Orkla. JensP, the CEO, is central to the story. He built the company from a turnover of $30 million when he took over, to $5.5 billion and 35,000 employees when he resigned.
Orkla had a fantastic HiPo programme long before the term HiPo was coined. It was driven from the top through the annual performance review process. JensP would be involved, especially at the end, asking what had happened with John or Jane the last year, and what plans had been laid for them for the future. The HR function administrated the process, ensuring that performance discussions were held, and that line management then met to discuss the results and identify HiPos together. The unions were involved throughout the process, which could perhaps only have happened in a German or northern European company.
The active involvement of the CEO in Orkla is key and ensures that the organisation spends time on the process. The process is open: everyone in the company understands and is involved in the performance review process. Union involvement reinforces openness, information flow and trust. However, the HiPo part of the process is not trumpeted or made explicit. Orkla found their own effective solution to how to differentiate by identifying HiPos without demotivating non-HiPos (challenge 1).
Ensuring that groups of line managers meet to talk though their assessments of their people leads to better calibrated appraisals (challenge 2) and common identification and ownership of HiPos (challenge 3). HR can support the line by providing good assessment tools and strong facilitation of the process.
In such circumstances HR would normally sit back after having done their bit in running the performance review process, expecting line management to provide support and guidance for the HiPos in their assignments (challenge 4). That would be missing a very real opportunity.
Getting the first 100 days right
Getting a good start is key to succeeding when starting something new. This is true of everything we do, whether it be love-relationships, a slimming regime or a new job or project. Once we have succeeded in getting the first 100 days right, there is a high likelihood of the rest going well.
In worklife a lot of energy is spent defining a job or project, and in recruiting or staffing. Once the scene is set the organisation tends to step back and let the new person or team get on with it. This approach is incomplete. If 40% of HiPos fail, as the research quoted above shows, it makes good sense both to set the scene AND to make every effort to ensure that the first 100 days go well.
HR should treat the first 100 days as a focus area in and of itself, providing the HiPos and line management with best practice for how to succeed in 100 days, whether this be in the form of coaching, workshops, or digital support programmes. Such an approach would lead to the organisation mastering challenge 4.
The identification and support of the talent of the future will be discussed by an expert panel in a webinar on January 12th. The topic is wider than HiPos, but the thinking in this article will also be discussed. All 3 panelists have at least 20 years’ experience in HR and talent development. Liz Rider is Head of Talent in Volvo today; Mike Guglielmo is Academic Director of an MBA programme; and Richard Taylor is co-founder of 100 Days AS that has developed a digital coach for a manager’s first 100 days.
Primary Sources: HRtechX & 100 Days
Other Sources Include:Harvard Business ReviewForbesConstrux Blog