Many distributors have initiatives aimed at developing high-potential employees. However, identifying the employees with high potential (HiPo) can be challenging and is highly subjective. This is partially because different organizations may define high potentials differently. As a result, the characteristics and abilities that an employee must possess to be classified as a “HiPo” is largely up to individual interpretation. How can your HiPo program truly benefit your company and your employees?

One popular understanding is that potential is “the probable upper-bound trajectory of what an individual may achieve during their career.” Typically, the HiPo designation process consists of three steps: pre-designation, designation, and post-designation. Pre-designation addresses how organizations define potential and decide who is responsible for identifying HiPos. Designation deals with how organizations make decisions and determine which employees are designated as HiPos. Post-designation is concerned with whether organizations communicate HiPo status, how often they evaluate their HiPos, and how said designees flow in and out of the HiPo status.

Because potential impacts HiPo designation, it is possible that employees with potential are designated as HiPos, and those without it are not. However, it is also possible that organizations could make mistakes, seen as false positives (employees without potential are designated as HiPos) and false negatives (employees with potential are not designated as HiPos). Given these possibilities, three pre-conditions need to be created first for your HiPo program to truly benefit your company and your employees.

1. Define the meaning of potential. Generally speaking, high-potential employees are individuals who are proven high performers and are considered the rising stars in an organization. However, since each organization has its own interpretation of potential, it’s important that your company establish a consensus across all levels about what high potential means to your company. Having a clear and shared understanding upfront will help reduce confusion, inconsistency and biases later on when your supervisors, managers and HR staff engage in annual performance evaluations and talent reviews of your high-potential employees. It will also help clarify to your employees what it takes to be classified as HiPos in your company.
2. Identify the indicators of potential. Only one in seven high performers are truly high potential. And, nearly 40% of internal job moves involving high potentials end in failure. This is because potential is a complex, multi-dimensional concept, and should not be measured with one single indicator. Three commonly known dimensions of potential include foundational, growth and career. Foundational potential looks at the established characteristics that are specific to individuals, such as personality and cognitive skills. Growth potential involves the abilities that an individual may possess or which can be developed, such as learning ability and motivation. Career potential includes job-specific characteristics, such as leadership ability and functional capabilities. Each of these dimensions can be used as an indicator for potential. However, to get an accurate assessment of an individual’s potential, all dimensions should be considered. In addition, there are some non-potential indicators that can also impact HiPo designation decisions; examples are decision makers’ perceptions about leaders, similarity and attraction biases, and employees’ impression management tactics (such as putting your best foot forward to be recognized). These factors may moderate the relationship between potential and HiPo designation, raising the possibility of both false positives and false negatives. Therefore, it’s necessary to use multiple potential indicators as checks and balances.
3. Assess potential over time. Research shows that high-potential people share three attributes — aspiration, ability and engagement. Aspiration is the desire to take on responsibilities, challenges and rewards; with aspiration, a person has the internal drive to rise to higher-level positions. Ability is a combination of innate characteristics and learned skills; ability enables a person to be effective in more responsible and more senior roles. Engagement is the person’s emotional and rational commitment, discretionary effort and intent to stay with the same employer; engagement drives a person to go beyond expectations and persevere in challenging times. These three traits are most frequently identified with high potentials, regardless of the industry or location; however, they may change over time due to changes in personal circumstances. Therefore, it’s desirable to assess an employee’s potential at prescribed intervals.

In our new NAW book, Optimizing Human Capital Development: A Distributor’s Guide to Building a Sustainable Competitive Advantage Through Talent Strategy, my coauthors and I devoted a section in Chapter 7 to addressing how to identify, develop and retain high-potential employees. We invite you to read on!

George Pattee, Chairman of the Board at Parksite Inc., said:

“This is the best book I’ve ever read on human capital strategy, and it’s customized to the distribution industry! Love the process map and explanation as well as the specificity of the action plans. All people managers, the HR staff and senior executives need to read this book.”