Having a strong, high potential pipeline is critical for companies preparing for success in the future. Korn Ferry’s 2019 Leadership Potential Survey showed that 82% of respondents place greater focus on their high potential programs than they had five years ago. Maximising potential is now truly at the top of the business agenda.
For years organisations have struggled with creating effective high potential pipelines. Critical errors in the identification process have led to dissatisfied executives – and people who have been misidentified as high potential have been unable to succeed in their leadership role.
In 2010, the Harvard Business Review found that nearly 40% of internal job moves made by ‘high potential employees’ ended in failure. In 2013, a UNC Kenan-Flagler Business School Study found 65% of organisations were not confident that they could recruit and fill mission-critical roles. And in Korn Ferry’s 2015 Real World Leadership study, we discovered a similar outcome – only 51% of respondents felt their organisation had accurately pinpointed the potential future leaders they should be investing in.
So how are things looking today?
Global challenges such as the talent crunch, pace of change and new ways of work have only magnified the problem. Our 2019 Leadership Potential Survey strongly suggests businesses are still struggling with their high potential pipeline investments – today only 29% of HR professionals feel confident that their organisation has the leaders it needs for the future.
The pace of change and the global talent crunch
Digital disruption has been forcing business leaders to re-think their organisation’s structure and purpose – and defining their future talent needs is critical. The rapid pace of change in how we do business, how we work and the tools we use make it even more important for leaders to leverage their existing talent to prepare for the future of work.
It has increased the need for highly skilled employees and left organisations competing for an already low pool of existing talent.
Recently Korn Ferry found that, left unaddressed, there is likely to be a global skilled talent shortage which will have drastic impacts on organisations and economies worldwide.
A global labour shortage of 85.2million skilled workers is projected by 2030 – which could result in lost revenue opportunities of $8.452trillion.
Leaders who set their sights on AI and robotic technology as their biggest opportunity for growth also need to consider where human talent will come into play. People with the advanced skills to effectively leverage these new technologies will be just as important as the tools. If leaders don’t recognise this and find a way to upskill their talent, it will likely grow into a problem for these businesses.
New ways of work
Another challenge leaders face is the modern work cycle. Long gone are the days of ‘career-men’ (women or people). To stay in a job for three years is seen as an extensive commitment to many younger people. The winding, non-linear career path is now the norm and executives have had to accept this as a fact when it comes to retaining talent.
To combat this, organisations need to face inwards and focus on the employee experience, developing strategies around attainment, retention and career growth to keep their people stimulated, happy and committed.
Identifying potential is hard to get right
High potential programs are hard to get right. Most are not delivering results, with only 11% of businesses feeling very satisfied with the returns of their high potential program.
A large part of the problem is high potential definitions are usually narrow – and this can lead to hiring the usual suspects and lack of diversity, which limit opportunity.
In most cases there is no clear process, except that high potentials are selected based on tenure and/or performance.
A critical element in getting your high potential program right is to understand the difference between performance and potential.
Distinguishing performance from potential
Performance is defined as consistently delivering results in the past – having a proven track record. But it is important to recognise that ‘being a star performer’ is not an enduring trait of a person. It does not necessarily carry over from one situation to the next. Performance reasonably predicts success only in similar kinds of jobs and then only if the person was primarily responsible for past successes.
Potential is a future-focused, longer term quality that needs to be identified and nurtured to provide leadership in the future. Potential looks at aspirations and the capability to succeed in different future assignments – the ability to respond quickly to diverse, varied and adverse climates. In short, potential is the fit between a person’s current capabilities and possible future roles, taking into account the person’s longer term capacity for personal growth.
What this means in terms of measuring potential, is that organisations need to be clear and objective about both:
- The current abilities of their people and
- The actual requirements of the intended or future role(s), whether it is the next promotion for the person, or a longer term ‘leadership’ role.
Crucial issues in identifying potential include having an in depth understanding of the requirements of the role and second, to gauge the individual’s capabilities and provide support where necessary. Giving on-going feedback about the person’s strengths and weaknesses against the new role, and guidance regarding the capabilities you hope they will develop in the new assignment, can go a long way to ensuring success in performance and in the person’s development.
Want to learn more about creating an effective high potential pipeline? Register for our webinar: Identifying Potential: Tackling the Top Three Hurdles and learn how to deliver the right talent through an effective high potential program.