Many companies have programs designed to identify and develop high-potential employees—those who have the greatest likelihood of being high-performing senior leaders in the future. But a common mistake most companies make is assuming that high-performing employees and high-potential employees are the same. They’re not.
Only 15 percent of high performers are true high potentials, according to CEB. So by assuming many of their high performers are also HIPOs, companies invest in people who may never make it to a senior leadership role. The average firm spends over a quarter of its learning and development budget on its HIPO program and many HR leaders feel that this is too high a price to pay for limited success.
Agile People Are Not the Answer
Over the past five years as organizations have dealt with an immense amount of internal and external change, the logical response of many HR teams has been to identify HIPOs that have the necessary agility to cope with such uncertainty. Unfortunately, this strategy hasn’t worked. While HR has focused on agile employees, managers’ confidence in the next generation of leaders has gone from bad to worse. The percentage of companies that are confident that their stable of leaders is sufficient to meet current and future demands has declined from 17 percent in 2013 to a meager 13 percent in 2016.
While agility is an important trait for leaders to possess, it shouldn’t be the center of a HIPO strategy. There are a few reasons why:
• There is a supply problem—highly agile individuals are hard to find and difficult to develop.
• Highly agile people are more likely to leave for a different organization, increasing the turnover risk.
• Focusing on highly agile people can hinder collaboration. Data suggests highly agile leaders tend to overestimate their own abilities and this self-focus can limit their inclination to work with and through others.
So what’s the right approach?
A More Agile HIPO Process
Rather than looking for agile individuals, organizations need to focus on two things:
- They need to find employees with the right mix of ability, aspiration, and engagement
- They need to create agile HIPO processes that can change with the needs of the company.
Focusing on agile HIPO processes—not agile people—makes it 70 percent more likely that a company will have a strong leadership bench.
There are three steps HR teams should take now to make their HIPO processes more agile.
1. Look beyond HR to identify future leadership requirements. Success in leadership roles requires a combination of foundational and context-specific capabilities. HR will struggle to accurately identify context-specific capabilities amid constantly changing leadership needs. In fact, 72 percent of HR leaders report that stakeholders don’t believe current HIPO identification criteria are accurate and relevant.
HR teams should partner with line managers, customers or other business functions to get an earlier, different, or better view into changing business needs and leader readiness. This will enable more accurate HIPO identification and evaluation.
2. Manage HIPO aspiration over time. Most HR leaders believe HIPO aspiration is primarily innate and fluctuates over time due to personal factors such as starting a family or a spouse’s career change. However, aspiration can fluctuate by as much as 23 percent over the course of a HIPO’s career and is heavily influenced by organizational factors (for example, major change initiatives), not just personal ones.
Shifts in HIPO aspiration may lead organizations to misallocate resources by either investing in HIPOs who no longer aspire to the leadership roles the organization needs or by failing to invest in individuals whose aspirations better fit where the organization is headed. Because aspiration is fluid, HR leaders should assess the aspiration of their HIPOs regularly to ensure HIPOs still aspire to the kind of roles the company will need in the future.
3. Take ownership of HIPOs’ career progression. HIPOs are keenly interested in and motivated by career progression. Data shows progression matters more than promotion to most employees. HIPOs’ managers are usually expected to play a key role in identifying progression opportunities, yet managers struggle to provide the right opportunities at the right time. This often occurs because managers lack visibility into opportunities outside their department, are not inclined to give away their best people and can’t devote sufficient time to sourcing opportunities.
HR must take ownership of HIPOs’ career progression by creating new opportunities within the HIPOs’ current role and finding additional opportunities in other parts of the company to meet HIPOs’ progression needs.
Companies concerned about having the talent they need for the future don’t need more agile HIPOs, they need more agile HIPO processes, which will enable leaders to better identify, develop and retain the future leaders they need.