Employees may be a company’s greatest asset, but not all employees are equal. High potential employees have been proven to be 91% more valuable to a business than non-high potential workers. These superstars raise the performance of those around them and increase the productivity of the teams they lead.

Yet, despite decades of literature on identifying and nurturing top talent, the vexing issue of talent management continues to keep CEOs up at night.

In fact, the 2019 CEO Benchmarking Report found that talent strategy was the second-biggest priority for 156 surveyed business leaders, just behind strategy development. More concerning, finding the right talent was identified by the same leaders as their #1 challenge.

Finding the top talent in your organisation

While bringing in talented people from outside the organisation is part of the equation, is preferable. Those hired from within usually perform better in the first two years on a lower salary.

Continually assessing the internal talent pool is fundamental to succession planning and allocation of training and mentoring resources.

Top performers are usually easy to spot. They’re the ones exceeding their targets month after month, taking on difficult projects and able to collaborate despite office politics.

Scratch below the surface though, and these top performers may be good at what they do right now – consider a star salesperson for example – but may not have the potential to continue to develop through the various levels of leadership in an organisation.

So how do managers and HR teams unearth future leaders – those who bring high performance and high potential to the table? There are many talent identification tools, but the most popular is the nine-box talent model, a modification of the well-known GE McKinsey matrix, used to help multi-business corporations evaluate business portfolios and prioritise investments among different business units.

The nine-box talent model

nine-box talent model

The nine-box talent matrix identifies high potential talent by sorting employees across a nine-box grid, from low-performing, low potential talent to high performing and high potential talent.

The process unearths highly effective team players who have emotional intelligence but are too low key to self-promote.

Sorting is traditionally done by business unit managers, in consultation with HR. The executive leadership team then review and agree on the talent with the highest potential across the organisation. Usually only 15% of employees will be identified as high potential, with the majority falling in to the yellow buckets of the matrix.

While this is certainly a helpful tool, it lacks rigour, with the sorting of employees very much a subjective exercise, particularly when it comes to assessing an individual’s potential. Personality preferences, ingrained bias and even different interpretations of the term ‘potential’ may skew results in favour of one employee over another.

What defines a ‘high potential employee’?

The Harvard Business Review, believes organisations should “focus on predicting who is likely to become a key driver of organizational performance. That is, they should define future stars as the people who will “consistently generate exorbitant output levels that influence the success or failure of their organizations.’’”

In other words, managers and HR teams should ensure that those who are listed as high potential have the personal qualities which research tells us indicate high performance, namely,

  • Capacity – demonstrated ability to perform in current role and signs of readiness to progress
  • Emotional intelligence – The ability to manage oneself and manage relationships; be able to influence and persuade
  • Commitment – Motivation, ambition and high level of commitment to the company combined with a willingness to make change

I advise adding values alignment to the assessment of high-potential (HiPo) employees. Future leaders are future brand advocates and spokespeople for your organisation, if their behaviour is not aligned with the values of the company, they are a risk, no matter how strong their performance.

Making informed talent decisions

A plethora of psychological assessment tools have been developed to help organisations assess the personality characteristics, core values, and cognitive style of job candidates and internal staff.

Hogan Assessments is the industry leader, using three assessment tools to create The Hogan High Potential Model, which measures the three dimensions of leadership potential, highlighting individual strengths and ranked areas of actionable development. This produces a report highlighting areas where focus and attention should be targeted, resulting in what they term ‘maximized leadership potential.’

Robust assessments like Hogan are expensive and are usually implemented only once in a candidate’s tenure with an organisation.

Many organisations prefer to implement a more agile HiPo strategy, one which takes in to account the changing behaviours and ambitions of employees over time, as well as the changing requirements of leading in today’s VUCA environment.

This is one of the benefits of The Lighthouse Talent Development System, which allows organisations to track the performance, engagement and alignment of teams and individuals over time, on the benchmarks that are relevant to the organisation and the individual.

With research showing that 73% of traditional HiPo programs fail to deliver any return on investment, now is the time to explore new, agile solutions which use objective data and ongoing, real-time measurement of the talent pool.

In my next article in this series, I’ll be exploring how to manage your high-potential talent by efficiently developing leadership skills and competencies.  This is a key way organisations can distinguish themselves from opponents and extend their competitive advantage in the market.

After all, today’s top talent might be tomorrow’s CEO.

This article was written by Eric Miller, Senior Partner with Lighthouse. We partner with leaders to deliver business outcomes by changing behaviour and improving capability. If you are interested in identifying, and developing high potential talent in your organisation, we have some easy and cost effective ways to get started.  Please contact us at info@lighthousegroup.co  or 1300 244 373 for a confidential discussion.

Lighthouse Group