Identifying potential
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What is potential in HRM?
Potential is an estimation of the likelihood of an individual being able to do or become something in the future within a specific context. In the world of work, potential is a way of estimating the future potential of candidates in one or more organisational streams within a businesses. What good potential looks like in one business may be quite different to another, so employee or candidate potential must always be measured in context to their place of work.
This definition is intentionally vague for two reasons:
The first reason is that it seeks to define potential for what it really is, i.e. not a psychological construct but a referential concept, not something that can be identified, measured or predicted, but an estimation, an attempt at predicting.
The second reason is that anything more precise needs to be defined in context. Potential for what? To be a specialist? To be a leader? A leader in general or a specific kind of leader? How far in the future? The further in time the more variables interplay and we can no longer call this anything but guessing. And then we need to understand where. Is talent context-dependent? How transferable is it? What does great look like now? What will it look like at this or that organisation in the future?
How to assess potential?
The process of identifying high potential talent is not always definitive. What can be measured are characteristics that are likely to enable people to do or become something in the future. For example, if you believe that in order for someone to be a successful leader in your organisation in the future they need to be able to process complex data quickly and accurately, demonstrate confidence and ability to influence others, and be able to effectively deal with their and other’s emotions, then it would make sense for you to assess cognitive ability, personality and emotional intelligence. This, of course, leads to some challenges and questions, such as “How do I know what characteristics will be required from my leaders in the future?”, “How far in the future?”, “How can I ensure I’m embracing diversity and not ‘cloning’ people?” In any case, a lot of careful thought is required before even deciding what tools and methods will be used to assess individuals.
The pros and cons of working with potential?
Potential-related talent practices are supposed to:
Motivate those not labelled as ‘high potentials’ to work harder to be considered as such.
Increase commitment, engagement, motivation and loyalty in employees labelled as ‘high potential’.
Generate sense of obligation and reciprocity in individuals labelled as ‘high potential’, driving them to improve their performance.
Help organisations reduce costs by not investing in the whole workforce and guarantee higher return on investment.
- Decrease commitment, engagement, motivation and loyalty in employees not labelled as ‘high potential’ (usually 80-90% of the workforce).
- Increase perceptions of injustice and favouritism while decreasing diversity in the workforce, as labelling processes are usually based on subjective, biased judgements.
- Hide elitist and discriminatory behaviours. Because of this, transparency levels tend to be low and strategic ambiguity high.
- Increase the expectations of people labelled as ‘high potential’, driving them to change jobs if these are not quickly met. This, of course, causes organisations to lose their investment.
- Discourage personal development organisation-wide, undermine teamwork, increase jealousy and create an atmosphere of negative internal competition, all this in part due to over-reliance on individual performance.
Read our interview with an expert to understand what you need to know when identifying high potential talent.
What should be considered before implementing a potential-related initiative?
It’s recommended to consider the following points and answer these questions:
Purpose
It should be clear why organisations would like to work with potential and what outcomes they expect. If potential-related initiatives are not being instrumented carefully, negative implications can easily outweigh benefits. It’s also important to consider the population that will be examined. For example, will it focus on a specific level or involve different levels? If people are going to be assessed, will the process to be open to everyone or to a few pre-selected individuals? Organisations also need to ensure that they understand their own organisational context, what great looks like at the company today and what it will look like in the future.
Assessments
Potential cannot be assessed or measured, instead the characteristics to be measured will need to be defined in advance. In order to do so, organisations need to identify “potential for what?” It also needs to be considered how many tools and methods will be used for this purpose.
Insights
What we do when we work with potential is to aim for the best possible estimation, and in order to increase the level of our estimation, we need to take into account as many data points as possible. In a way, this is like forecasting weather; you can use thermometers, barometers and other tools, or you can just put your finger in the air. The more tools and methods you use, the higher the level of complexity you will have to deal with, but the higher as well the likely level of your estimations. Ask what level of complexity the organisation is equipped to deal with, how the data will be collected, and who will interpret it. Using people analytics can certainly help with this.
Actions
Intentions must be very clear about the kind of decisions that will be made and what the next steps will be. Organisations need to explore ways to ensure that they can manage the expectations of some individuals and will avoid as many of the potential-related issues mentioned above as possible.
Communication
It is important to ensure that communication is clear and transparent, not just to avoid increasing lack of trust and low perception of fairness, but also for legal reasons linked to discriminatory behaviours and use of data (GDPR).
Outcomes
It can also be useful to assess how successful the potential-related initiatives have been. In order to do so, organisations need to consider ways to measure their effectiveness and determine if the outcomes justify the investment. Demonstrating return on investment around potential-related initiatives is challenging mainly because of development programmes and self-fulfilling prophecies, and also because people favoured by potential-related assessments tend to leave their companies when their high expectations are not met. Ironically, a way to evaluate how good the estimations have been is to assess people and not do anything. After a couple years, check to see if your estimations came true without intervention, and if that happened because of the individuals’ characteristics and not due to unrelated factors.
Should organisations use employee potential assessments?
As highlighted above, there are certainly some benefits associated to potential-related practices, but it is not as easy as to assess a group of people, label them and expect that a few employees will unconditionally commit to driving success in the future while the rest of the organisation happily follows them.
There are different ways of dealing with the many issues mentioned above, but the first two things to consider when deciding to implement potential-related practices are:
1) define potential for what it really is, i.e. just an estimation,
2) move as much as you can from exclusive to inclusive talent management.