CritiCal thinkingHigh PotentialsFa c t s a n d F i c t i o n
www.hudson.com                                                                        High Potentials: Facts and Fiction  ...
High Potentials: Facts and Fiction                                                            www.hudson.com          www....
High Potentials: Facts and Fiction                                                              www.hudson.com   www.hudso...
High Potentials: Facts and Fiction                                                               www.hudson.com   www.huds...
High Potentials: Facts and Fiction                                                              www.hudson.com          ww...
High Potentials: Facts and Fiction                                                              www.hudson.com   www.hudso...
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High Potentials - Critical Thinking

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10 Guiding Principles for installing a High Potential Programme

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High Potentials - Critical Thinking

  1. 1. CritiCal thinkingHigh PotentialsFa c t s a n d F i c t i o n
  2. 2. www.hudson.com High Potentials: Facts and Fiction Why the survival of the fittest assumption doesn’t work. Current leaders often wrongly assume their in- be necessary as the current leaders believe house potential will emerge without any regard for they can best identify the future leaders. hr-policies. this ‘survival-of-the-fittest’ assumption pictures the high potential as a lonely warrior, who there is a significant danger that utilising informal fights his way through the jungle with a machete. selection systems promote employees on the basis the business environment is considered as a kind of of similarities they display and the network they test, with only the ‘lucky few’ finding their way to the build: i.e. those who attended the same educational top. this may, however, cause leaders to overlook and training institutions, apply the same leadership in-house potential, while boosting derailments style, belong to the same social background and in the evolution of identified high potentials. come from the same ‘old boys club’. applying the ‘natural-selection-technique’ implies a number of Current leaders are keen to regard the ‘survival- risks, however, which can have an impact on the of-the-fittest’ assumption as true, because they frequently regard themselves as ‘survivors’ too. continued, long-term existence of the company. according to this assumption, it would appear informal and often self-designed ‘ad hoc’ systems to be perfectly feasible to select high potentials do not constitute an effective strategy to identify based on values, norms and personality traits and develop the company’s future leaders. it is similar to the current leaders. only modest a luxury which companies can no longer afford, investments in hr-policies then appear to since the arrival of the second ‘war for talent’. Second war for talent has arrived it is often claimed that the demographic shortage of population by 2010. By 2050, the situation will labour will make the first war for talent (announced look even more dramatic: by then as much as in the late 1990s) look like a ‘minor and temporary 60% of the total European working population will irritation’. the future shortage of labour is presently be older than 60 years. this demographic trend a fact well documented by statistics. By way of serves to underpin the rationale that investment illustration, here are some figures: even if the made in attracting, selecting, developing and “The business environment is considered as a Us economy were to grow over the next fifteen retaining in-house talent is a pressing need. years by only 2% for instance, the demand for kind of test, with only the ‘lucky few’ finding senior managers would still rise by about one some companies will consequently push aside this imminent problem of a structural shortage of third. Meanwhile, the total potential labour force labour. it is true that until the year 2010, companies their way to the top. “ in the Us is declining: in 2005, the total of 5- will hardly notice any change, as a consequence of year to 44-year olds decreased by some 15%. increasing female participation, large restructuring a similar phenomenon is happening in Europe: operations and continuous economical fluctuations. the number of employees aged 55 or older is however, demographical statistics suggestHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH set rise to 47% of the total European working the long-term trend is clearly a continuous andHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH
  3. 3. High Potentials: Facts and Fiction www.hudson.com www.hudson.com High Potentials: Facts and Fiction 10 guiding principles for installing a high potential programme HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHever-quicker tightening of the labour market. more attention to attracting and retaining their hUdson dEvElopEd 10 gUiding prinCiplEs For installing a high potEntial ManagEMEnt human capital and develop potential internally, prograMME, BasEd on hUndrEds oF assEssMEnt and dEvElopMEnt CEntrEs, ContaCtsthere is, a growing awareness that companies rather than ‘buying’ it externally. increasingly, with BUsinEss lEadErs, hr ExpErts and aCadEMiCs in all parts oF thE world, anmust develop a long-term strategic hr policy in companies are translating this awareness into an ElaBoratEd litEratUrE stUdy and qUantitativE rEsEarCh on high potEntials:order to win the war for talent: they must devote in-house ‘high potential management programme’. 1 Align the programme with can then be used as the guiding principles duringHigh potential management the workshop. it is important also to benchmark the company strategy with other companies, in order to see whatprogramme as an answer to the initiatives the competition is taking to develop its “The problem of our times is that the future no in-house potential. the CEo and the management longer is what it once was” — Valerynew war for talent should be challenged to define a clear definition, the unified commitment of the company to invest programme principles, objectives and role in in-house potential is decisive for the success distributions. in principle, the owner and sponsor of of the high potential programme. the programme the high potential programme should be the CEo. should therefore be placed on the management the role hrM has to assume is not a minor one,in contrast with the phenomenon of ‘cloning the development of latent in-house potential at entry agenda and clearly aligned with the company however. the role of hrM is to help put in placecurrent leaders’, hudson advises companies to level. a formal high potential management program strategy, ensuring all personnel decisions made the systems and processes and to monitor thesedevelop a formal high potential management implies that organisations must look ahead andprogramme: an in-house ‘pool of high potentials’, with the long-term future of the company in mind. process and safeguard their continuity and quality. 2 tackle their leadership development proactively.which are closely monitored and developed Companies should opt for a wider approach high potential management presupposesin line with company strategy and company towards talent management, by identifying future sufficient awareness of the company strategy and Hold the managementneeds. Consequently, companies need to free leaders early on in their career. it is indeed, ‘the the strengths and weaknesses of the company responsibleup the necessarily resources that will enable leaders, both today and in the future. in that early bird that catches the worm’. Companieshigh potentials to perform at their best and sense, the profile of the future leaders of the mustn’t be afraid to evaluate their employees “I used to select jerseys, now I select people”grow step by step towards a next job level. company comes forth — in an almost natural way and designate their high potentials in a formal — Wexner, CEO of The Limited.Up till today, companies are temped to play it safe: manner. the strength of successful companies is — from the dialogue on the strategic imperativesthey confine resources only to the ‘established and associated challenges the company will be Engaging the management in the identification their courage to differentiate and to be consistenttalents’ at the top and invest little in the facing. hudson recommends organising a ‘high and development of the high potential pool is only in the application of a high potential policy. potential workshop’, where the CEo and the senior possible when they are held formally responsible. management sit around the table and reflect on they are the ones who can provide high potentials leadership and challenges future leaders will face. with the appropriate in-house and external training, the acknowledged current and future challenges let them go through rotational assignments and 4 5
  4. 4. High Potentials: Facts and Fiction www.hudson.com www.hudson.com High Potentials: Facts and Fictionact as mentors. responsibility can be assigned tomanagement by linking development goals to an required to map the actions they have taken and the actions they will be taking to further develop Hipo Identificationannual bonus system. the basic principle underlying high potentials. this is also an opportune timethis bonus system is that behaviour pointing to to provide information on the high potentials’active participation in the development should be reaction to certain experiences, to assessremunerated. the objectives relating to the in-house retention risks and implement or suggest possibledevelopment of potential can account for 20% or changes in the development track based on themore of the manager’s bonus. the time and energy executive committee members’ discussions. 4invested by management in the development ofhigh potentials thus becomes an integral part Identification criteria linkedof the managers’ objectives. in this respect,management is seen and deployed as a ‘discoverer to transition phasesof burgeoning talent’. only the managementcan free up the talent of the organisation by “Failure to learn new things results almost inevitablytreating them as an organisation-wide resource, in failure to perform in a management role in thewhich has to be fully developed over time. long-term” — Kovach3 it seems as if there is a widespread need to believe Organise a high potential that there is a magical ‘set’ of generic qualities executive committee for identifying high potentials. the list of qualities high potentials are endowed with seems endless, and — in some cases — even contradictory. But“The challenge a company is facing consists in what if there is no such magical success formula?having talented employees who change along Furthermore, there is a common believe that this setwith the organisation as and when technology, of competencies remains constant over time. whatcompetition or the entire industry changes” if high potentials, like white knights, have to learn — Allaire, CEO Xerox Co. how to ride their horse and handle their sword?putting in place a ‘high potential executive Even intuitively, it seems absurd to assume that acommittee’ which takes over the ownership of 25-year old has the same knowledge, skills, andthe high potential pool, constitutes an essential attitudes as a 45-year old. to benchmark a young 5element of the development programme. there is high potential against successful acknowledgedstill too much evidence that nepotism, and actions talent, is a bad way to identify potential. in line of ‘phases of transition’. Each step on the career Keep high potentials and ladder requires the high potential to acquire a newtaken out of self-interest, affect the correctness with this reasoning, identification criteria should high performers separateof high potential pre-selection and selection. the shift according to different career stages. set of competencies. Each phase of transitionappointment of a group of selected ‘equals’ in assumes a leap in responsibility and autonomy. if the idea that a basic set of unequivocal once high potentials have mastered a certain job “What’s in a name?” — Shakespearea high potential executive committee will in any competencies is decisive for the identification ofevent enhance the objectivity of any ‘propaganda’ or competency level, they will go in search of ways Companies might be tempted to look at high potentials were to be abandoned, it wouldor ‘killing’ tactics. Each business unit or division to raise the bar once more and look for a new performance in the current job, rather than open the way for seeing high potentials for whatcan have a ‘subcommittee’ where the information challenge. if there is one element that is decisive in potential when identifying high potential. Excellent they are: high performing employees with theabout each high potential is collected and making a distinction between high potentials and performance is often an identification criterion potential — in time — to grow. hudson advisesdiscussed. ideally, one day per quarter should be other employees, it has to be the exceptional speed companies to start spotting the high potentials of high performers quite simply because it isspent on discussing the individual cases and on at which they are able to develop the knowledge, based on three basic criteria: learning ability (lq), the most easily observable criterion. in addition,preparing and monitoring the individual tracks. emotional (Eq) and intellectual intelligence (iq) skills and attitudes needed to assume a new politically it is simpler and less sensitive to putregular follow-up and reporting by the and attitude (a). in-depth interviews with high position. one should not benchmark a 25-year old employees on a list of high potentials based onsubcommittee to the executive committee potentials in various age categories show that on to 45 year old, but to a ‘norm’ of what is expected their exceptional performances rather than theirensures management is, each quarter or half year, their way to the top, they go through a number of someone given his age or work experience. latent potential. when only having eyes for the 6 7
  5. 5. High Potentials: Facts and Fiction www.hudson.com www.hudson.com High Potentials: Facts and Fictionperformance of employees, companies could formally or informally — has a positive implication interview data) as a ‘zero measurement’. in the deep-mile-wide’ manager. also, informationbe in for some unpleasant surprises when the on the work satisfaction of the employees. the very first career phase, organisations can opt first that can prevent the ‘peter principle’ fromhigh performer is promoted at a higher level with label is regarded as a proof of the faith and to invest in the build-up of expertise of the young manifesting itself often comes to the fore.different duties and responsibilities. a study shows engagement of the company in their development. potential or to let him rotate through a numberthat nearly all high potentials (9% to be exact) of business activities. a more in-depth follow-up hudson recommends one more formal when organisations are in doubt about whether measurement can best be made after a period of measurement (‘end assessment centre’),are also high performers: performances seem tobe a must for high potentials to be perceived and to award a hipo label or not, the question is not: approximately three years, from which a proposed to evaluate and validate whether the highidentified as such. the same study shows that shall we inform employees about their potential? career and development plan is drawn up resulting potential will ultimately be admitted to theonly 29% of the high performers effectively were But rather: how shall we inform them about their in active development of the high potential. highest decision-making body of the companyhigh potentials as well. this suggests there is a potential? the risks related to allocating labels or not, and in what capacity. at the end of are often linked with perceived promotion pledge: a second and crucial measurement is thereal danger of terminology confusion regarding the day, spread over the total career of a high the label is often considered as a guarantee development centre that takes place betweenhigh potentials, causing strong performers without potential, there should be at least four important of future success and it is this assumption that the ages of thirty-five and forty years. it is thisgrowth potential to contaminate the pool of high brings employers into problems. no responsible measurement that has a truly fundamental measurements, which will impact decisively onpotentials. the inconsistent use of the term ‘high manager or hr professional -responsible can impact on the final and detailed arrangement the high potentials track. Companies can — atpotential’ has resulted in contamination of the gaze into a crystal ball to predict the future, of the hipo track from a long-term perspective, regular intervals — adjust the high potential track,term both in the literature and in business. therefore allocating a label makes it more difficult in order to avoid the syndrome of the ‘inch- based on the development centre results.6 to manage the expectations of high potentials. Communicate openly on the status of the high For this reason hudson advises companies to potential set a time constrain on the label. high potentials need to become aware that their label is not“The question is not whether or not we will tell high a ‘wild card’, but an acknowledgement of their potential at a certain moment in time. By adding Overview Chartperformers that they are high potentials, but how a time constrain to the label, the status is ‘up for we are going to tell them” — Young discussion’, creating the possibility of stimulating aas a rule, high potentials are not formally told frank debate between hr, the management andnowadays about their special ’status’. More the high potential: ‘what do you want and whereoften than not, the individuals whose names do you want to go?’ as against: ‘what do we want,are on the secret list receive a few hints about and where do we want you to go?’ testing onetheir status: they know that they have been another’s needs can be regarded as a first step indefined as high potential by the people they the development and retention of high potentials. 7have lunch with, the mentor who supportsthem and the exposure they receive. Use development centreFormally allocating a high potential label is techniques to identify highconsidered to be tricky: in regard to communication potentialson the label, as many advantages as disadvantageshave been defined. in a tightening labour market, “You can only keep track of what has beenhowever, communicating on the label can form measured” — Old Dutch proverbpart of the strategy aimed at retaining thistarget group. it could potentially encourage high an evaluation of high potentials early on in theirpotentials to remain with the company for longer, career enables a follow-up trail, covering theeven if a head-hunter contacts them and they development of the high potentials over the years.are offered a job in which they can earn more ideally, as from the start of the high potentialsimmediately. a hudson study (2006) revealed career, organisations use the data available fromthat allocating a high potential label — whether the selection phase (such as personal data or Overview Chart 9
  6. 6. High Potentials: Facts and Fiction www.hudson.com www.hudson.com High Potentials: Facts and Fiction8 Manage the tailor made and is adequately monitored while learning. in makes the ongoing monitoring of high potentials expertise, and are perceived as pedantic as a addition, hudson advises open communication and continuous feedback loops throughout the result. they merely continue to build on their high potential track channels between management and the different transition periods key elements to keep ‘strengths’ and lose sight of their ‘weaknesses’. high potential about the type of development high potentials on track. Many young potentials this causes them to make mistakes, which they“Don’t judge each day by the harvest you reap, but practices that both parties regard as efficient. clearly feel confused and frustrated when they then painstakingly try to cover up in the hope 9 by the seeds you plant” — Wilbur find out that competencies, such as ‘assertiveness’ that nobody will ever find out that they are notthe high potential track is a flexible path, its Embrace derailment of and ‘self-confidence’ are suddenly described quite as ‘special’ as they thought they were.direction being continuously adjusted, either based high potentials as ‘aggressiveness’ and ‘self-glorification’. generally, with each transition of a high potentialon changing external circumstances or on the high the success of a high potential often brings about to a new role or job level, the chance of derailmentpotentials’ personal development needs. it must “It is not a question of whether the high potentials a kind of blinding arrogance as a result of which is real. derailment doesn’t have to be a badbe ensured that management are responsible for will derail, but rather of when they will derail and colleagues no longer want to work with them. thing, however. on the contrary, the loss of thedeveloping high potentials in the right direction, how they will react to this failure” — Kovach Based on the belief that they are special and high potential status forces them to practicealigned with the strategic objectives of the business. Monitoring high potentials over time, brings up stand apart from the mass, the high potential’s introspection, learn from their mistakes and soFor years, stretch assignments have been a painful contradiction: the competencies high ego inflates to bursting point. this self-image to reinvent themselves. Failing is a worthwhilean important technique to develop potential. potentials often rely upon to be identified in an exposes them to the risk of not wanting to listen lesson and can be instructive for high potentials,stretch assignments are issued based on the early stage, are often the same as those that to others anymore. they no longer ask for input because handling it gives them the chance toinherent belief that offering high potentials a new hamper their growth to a subsequent phase in of others, and no longer check their ideas with discover their own limitations. this event canexperience allows them to acquire new skills, their career. the behaviour that is endorsed and others because they rely too much on their own. therefore bring the high potential back to the highknowledge and attitudes. an essential condition is, rewarded by the management in a certain career they start extrapolating their capacities to different potential track. Just like the hipo status, derailmenthowever, that the hipo receives sufficient support phase is admonished in a subsequent one. this activities and topics about which they have less is not a permanent but a temporary state. HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH 10 11
  7. 7. High Potentials: Facts and Fiction www.hudson.com www.hudson.com High Potentials: Facts and Fiction10 Remunerate high level’ broadband. neither benefits, nor general job environment conditions should be used to potentials by investing differentiate in investments in development. in their development remunerating high potentials by investing more in their proper development has a dual effect: on“If you want one year of prosperity, grow grain; if the one hand companies offer high potentialsyou want ten years of prosperity, grow trees; if you challenges and opportunities to learn new skills andwant a hundred years of prosperity, grow people.” on the other high potentials grow to a subsequent — Old Chinese proverb job level more rapidly, and — as a consequencein an ever tightening labour market, retention of — their fixed salary will rise without having totalent is becoming increasingly important. Many depart from formal company salary policies.companies and their leaders offer astronomical some high potentials are blinded by the trappingssalaries to secure themselves to maintain high of success rather than by the process that leads topotentials in the company. hudson advises it. the high potential executive team has to supportcompanies to consider the remuneration high potentials in this. while rapid promotion andpackage as the combination of compensation, high salaries can be dazzling, opting for this routebenefits, environment and development. means that high potentials are not always able to do enough ‘swotting up’ for a subsequent challenge. it does not allow for sufficient time to assimilate the competencies they need in a subsequent job or role. a more successful approach is to go COMPENSATION BENEFITS for a well thought-out and sufficiently detailed development plan which gives the high potential time to acquire new competencies, allows them to grow and prepare for a subsequent, more complex roles with more autonomy and a wider scope. DEVELOPMENT WORK ENVIRONMENT Reward Quadrants Marc timmerman Charlotte sabbeCompensation by way of salary should be basedon an employee’s performance: in line with thisassumption, a high performer will receive similar High Potentialspay to a high potential. Both turn in performances t h E Co M p E t i t i v E Ed gE w i t h i n yoU r Co M pa n ythat are exceptional compared with the averageemployee and for these performances they should “people are seeking out organisations that offer them development opportunities …be remunerated. the remuneration policy of most they seek organisations where there is a winning mood, a strategic angle which makesorganisations provide for the possibility of paying the organisation successful whether it is a small or large entity, and very importantlyhigh performers and high potentials a slightly also they seek organisations with confirmed a-players from whom they can learn. whenhigher than average salary, within a certain ‘job your brand reflects all this in your specific sector, then you have a good chance to be at the top of the talent Food Chain.” Marc Timmerman 12 1
  8. 8. HudsonAsia Pacific | Europe | North Americawww.hudson.comwww.jobs.hudson.com

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