Potential – for what? What every CEO should know – new insights into selecting the right leaders to secure your competitive futureCEOs at the world’s most successful companies know that they canonly safeguard their organization’s competitive future if they havethe right leaders to develop and implement their strategy >>
ContentsPotential – for what? 2Breakthrough approaches to selecting future leaders 3Is your employee or candidate ready, willing and able 5to take on the next role?The ‘growth’ factors that enable people to develop over time 8Derailers: is it them? Is it you? (It is probably both) 11Potential – for what? A roadmap 13Understanding the job and its context 15Best practices in assessing potential 16Summary – five key steps to identifying and managing potential 17Leadership competencies 18
Our work shows that those organizations affirms similar findings by the Corporateconsidered best practice at talent Leadership Council, where a strategicmanagement by their peers clearly focus on employee potential was seenarticulate what talent management as the single most effective strategy inmeans to them: building a reserve of high quality leaders. Eighty percent of employers saw hightalent management is the process potential employees as half as productiveby which an organization puts the again over the average.right mechanisms in place to delivercompetitive advantage through the Best practice organizations are not only more productive; by constantly gettingeffective management of its people. the management of high potentialIn other words, ensuring the right people talent right, they also survive and winare in the right roles at the right time to on into the future. This is a soberingdeliver on strategy now and in the future thought when you consider that since the inauguration of the stock marketThis definition of talent management indices, few of the companies originallywas used as the background to research listed survive today and even fewer existHay Group conducted in 2006 with in anything like their original form. InChief Executive Magazine. A key short, a strategic and wise investment infinding was that the 20 companies best talent management pays dividends. At theat managing their talent consistently heart of that lies the ability to recogniseoutperform their peers in terms of – and nurture – the long-term potentialreturn on share price. This research of your employees.Breakthrough approachesto selecting future leadersPredicting potential, particularly long term potential, is ahigh-stakes game. You are not just dealing in specifics suchas previous performance record, you are deciding where toplace the organization’s bets in investing time and resourcesto develop future leaders. Because of this Hay Group has developed two new, break-through approaches to help organizations select the right leaders for both the short and long term: 1 A guide to what organizations 2 A selection roadmap to identify the should place their bets on in most suitable process and approach terms of investing in their talent to identifying talent at different levels by assessing the growth factors in an organization. underpinning long term potential.
Is your employee or candidate ready, It is deeper, morewilling and able to take on the next role? personal factors (also known as competencies) thatSome organizations think of potential in terms of immediate provide the foundationperformance in the next role, what we call ‘suitability’; while for performance atothers see it as a latent, longer term quality that needs to be a superior level.identified and nurtured to provide leadership in the future. Whether organizations are assessing short-term suitability or long term potential, there are three questions that must be asked: 1 Are they ready? Does the person have the hard skills, knowledge and experience required for the role into which they will be moved? Developed through education, training and career experience, readiness is necessary for achieving effective performance. This is sometimes referred to as being ‘résumé- ready’ because much of this kind of readiness can be evaluated through a good résumé or career history. 2 Are they willing? Does the person want to rise in the organization? Can the organization adapt to the person’s needs? Given the ever-increasing pace of corporate life and rising standards of living, people are increasingly choosing to balance their work and life, rather than single-mindedly pursue careers. This issue has implications for both the individual and the organization. 3 Are they able? Does the person possess the ‘soft’ characteristics, the underlying personal traits required by the specific role or organization? Some of these are the inherent qualities of the individual, while others can be developed through career experience and coaching. It is these deeper, more personal factors (also known as competencies) that provide the foundation for performance at a superior level. M ost organizations are quite capable of assessing the first question and of negotiating the second. The third question, the question of potential ability, is the focus of this paper.So, what is “Potential”? The formula on the next page captures the critical elements for defining and identifying potential.
Difficult to develop and their own customers. This makes Sufficient development time and them great sales people – but not great resources are never available – so sales managers. Often, the next-best organizations should leverage their sales person, the one who misses an investment by selecting people who occasional opportunity because he or already have those qualities and develop she is coaching someone else on the the knowledge and skills that are less team or figuring out how to help the difficult to learn. These people are whole office do better, will make a more likely to take advantage of the much better sales manager. experiences or training that cultivate the specific credibility and breadth 2 Expressing great personal needed. ambition and drive “I want to be CEO.” Although this Not strongly associated with seems like an obvious indicator of significant derailers potential, it has two drawbacks. First, Characteristics such as driving personal such strongly ambitious individuals ambition may be desirable in some ways may seek their personal advancement but can also become a liability if over- at the expense of the performance developed, leading to arrogance and blind of the group. They may become so spots. You would want to use growth focused on their own career that they factors that do not carry these risks. become blind to other factors. They may also be subject to over-confidenceThe research was also clear on some and the lack of self-questioning thatpopular choices that are, in fact, not goes with that. In contrast, many ofsuch good indicators of growth potential: the most successful executives talk of occasions when they hesitated to1 Being the very best performer accept a promotion, taking time to in the current job reflect and assess their own capabilities. This person may have good growth Often, they went on to do a great job If you had a limited potential. However, the characteristics in a challenging role but occasionally leadership development that make someone ideally suited to they declined an offer that was not a budget, what measurable one role do not necessarily lead to good match to their capabilities and characteristics would success a level or two up the corporate waited for an opportunity where they ladder. The best sales people are a could shine. They did not put driving predict the best returns good example. They are often super- personal ambition first but had the on investment? focused on their own performance maturity to question and consider.
2 Curiosity and eagerness to learnThis natural curiosity and eagerness to these do not represent a promotion; by helps the person take on a broad andlearn and to take on new challenges extensive or diverse reading; or attending challenging range of career experiencesmay be displayed by asking questions unusual courses. It supports thinking and take full advantage of developmentthat push the boundaries of accepted beyond the boundaries by providing the and educational opportunities. Bothnorms; by a desire to take on different and information that makes such thinking this quality and thinking beyond thechallenging assignments, even when possible. This desire to learn also boundaries are not always associated with great grades in school or college.2 Core questionsDoes this person display curiosity and eagerness to learn that goes well beyond what is normally expected in their job?Does this person readily take on tasks or roles that are new and challenging to them, embracing the implicit risk in trying something new?3 Social understanding and empathyThis is the genuine desire and ability to – with the needs, background and people is an essential executive skill andunderstand others, to catch not only personality that affect how they respond is difficult to acquire. After all leadership,their explicit argument but also the – underpins sophisticated influence at its heart, is all about influencing others.subtext and context, the reasons for their skills, as well as many of the leadership Don’t be fooled by charm or polishedresponses, the other person’s perspective. competencies such as collaboration and presentation skills. These can carry aThis ability to see a person as a whole teamwork; developing, motivating and smart person quite a long way in their inspiring others; negotiation skills, etc. career but at some point they are simply This innate understanding of other not enough.3 Core questionsDoes this person listen carefully, ask clarifying questions and not jump to conclusions about other people and their motives?Is this person motivated to understand others?Does this person treat others with respect and see the positive in others more often than they see faults or shortcomings?(Someone who constantly finds the faults in others – however accurately – is NOT showing empathy)Does this person consistently bring out the best in others? “ The ‘growth’ factors are associated with outstanding performance at senior levels by people who fulfilled ” their earlier potential
Derailers: is it them?Is it you? (It is probably both)As we have seen, growth factors have few downsides and actas a multiplier to a person’s leadership potential. Derailers, onthe other hand, are aspects of the person – or the organization– that interfere with growth and performance and detractfrom potential. Most cases of career derailment involve bothindividual factors and organizational complicity.Individual factors For example:A few derailers may exist within a person. being too affiliative can lead to aSome of these are the opposite to the tendency to avoid confronting issuesgrowth factors, as suggested below. being too focused on achieving results A narrow and short-sighted emphasis can lead to a narrow view and a lack of on immediate results and/or technical strategic insight expertise – this is the opposite of lateral being so focused on personal thinking and taking a broader view achievement that one cannot work An assumption of being smarter than collaboratively everyone else – this is the opposite of being so intellectual and cerebral that the desire to learn and such arrogance the person doesn’t or can’t win hearts can work against acquiring any learning and minds An inability to listen and properly hear having such high standards that what others are saying – this is the ‘perfecting perfection’ gets in the way opposite of empathy. This can appear as of on-time, cost-effective delivery a shallow or manipulative charm, or as being so good at everything that sheer lack of interest in other people others are overshadowed and A lack of self-control, depression, unintentionally disempowered sulking and self-centerdness – these or left little latitude to contribute. are the opposites of emotional maturity and resilience. The reason these strengths derail careers is because of the unintended Career derailment canWhile some people who become derailed consequences of over-applying them. be subtle and associatedhave obvious personal weaknesses, with It is difficult to abandon what hasothers, the derailing factor can be more worked, even when circumstances with strengths, where toosubtle and can be associated with their change, and it may be nearly impossible much of a good thing canstrengths, where too much of a good to give up old patterns if no new skills start to work against you.thing can start to work against them. have been developed to replace them.
Potential – for what? A roadmapThe best organizations excel by being aware enough toavoid organizational complicity in derailing careers and byencouraging employees to develop a flexible range of strengths.But they also go one step further. In their mind, the question ofpotential is only partly answered by the identification of growthfactors and derailers.When it comes to making a placement suitability for low or entry level roles.decision, they also look more deeply into long term potential when selecting The question ofspecific factors such as the critical success graduates or entry into management potential is onlyrequirements for different types of role. training. partly answered by theBy knowing this information in detail long term potential for seniorand in having a roadmap of critical roles, leadership. identification of growthit is then possible to start asking a wiser immediate performance for crucial factors and derailers.question, one that is focused around senior leadership jobs.asking: potential – for what? For example, when short term suitability for the next job is the main issue, theOrganizations may also maintain more person’s fit to that job is given primarythan one ‘talent pool’: they may have one consideration, (but even then it may befor technical leaders, another for sales and useful to consider the growth factorsanother for corporate leadership. for future added value). For executive level roles, it is crucial to define theOrganizations will do well to weigh requirements of the specific role withdifferent parts of the potential formula some precision: differences in executivemore heavily than others, on how much roles can have significant consequences.they are selecting for suitability forimmediate performance (‘go fix this However, when you are consideringoperation’, ‘hit the ground running in potential for future managerial orcustomer service’), and how much weight leadership roles, the specifics of the jobsis given for future potential. The factors to be filled in some number of years arethat are important in selection will also necessarily less clear – and there may bevary by the organizational level. The a range of possible roles. In this situationtable on page 14 outlines which selection the person’s long-term potential andcriteria are likely to be most useful in four adaptability (the growth factors and thetypical situations: de-railers) become more critical. Over time, as the person develops, the specific roles for which they are best suited will become more clear.
Understanding the job and its contextMany organizations fall into the trap of seeing potential as apanacea, assuming that someone who is ‘high potential’ willbe good at almost any leadership role, not so.When moving someone into a new role, and leading a small team of highly qualified professionals), to an operations first consider in detail the requirements role (leading a large organization from a of that role and how it contributes to distance, focusing on delivery of results) the overall strategy and business or to an HR role (influencing people, results and collaboration, depth of understanding then consider the fit between the of how processes affect outcomes). person’s current abilities and the needs of the new position – not the needs of Hay Group has identified some core the person’s current role predictors across three role types: then be prepared to provide guidance planning and policy and support to address the gaps. (If there are no gaps, the move is probably shared contributor too easy and provides no development.) straight delivery.The more pressing the organization’sneed for performance from a role, the These hold true across the majority ofmore clear and specific the organization senior jobs. We have written about thesemust be about what it is looking for. earlier in a ‘Leader to Leader’ articleUnderstanding the exact demands of entitled ‘Navigating through the newfuture roles and the challenges they leadership landscape.’ It is availablepresent to each individual is key in the through www.haygroup.com. The moremeasurement of short-term suitability. pressing the organization’s need forIt is not enough to consider whether performance from a role and thereforesomeone is ready for a move ‘to a bigger the shorter term the potential you are The more pressing therole’. Managers also need to look at assessing, the more clear and specific organization’s need forhow individuals will fit into the specific the organization must be about the performance from arequirements of different roles. The requirements of the new role. role, the more clear andingredients for success vary considerablyfrom one role to another, even at the same A flavor of the success criteria to look specific the organizationlevel of seniority. It is a huge leap from for across role types and different must be about what it isa senior strategy role (broad, conceptual organizational levels, is shown on looking for.thinking, sophisticated communicator pages 18 19.
Summary – five key steps toidentifying and managing potentialIn summary, we see five key ways to get better business resultsfrom the identification and management of potential: 1 Know what you need from people Start with strategy, use strategy to define which behaviors and qualities you need from people and which roles are most crucial to execute that strategy. Then focus your selection and development efforts on those roles, behaviors and qualities. 2 dentify long-term potential through the growth factors I – not just job-specific abilities, or past performance Include the following characteristics of longer term potential. Thinking beyond the boundaries. Curiosity and eagerness to learn. Social understanding and empathy. Emotional balance. 3 Potential – for what? Don’t mistake performance for potential or potential for readiness for promotion. Distinguish between long term leadership potential and short term job-specific potential. Remember that being a star performer is a state (of a good fit to a job) and not a permanent trait. Sometimes a person with great potential and with the underlying abilities to do a job well, but without the exact experience and knowledge, will take a longer time to get up to speed but will ultimately produce better results. On the other hand, being a star performer today is not a guarantee of readiness for promotion. Instead, give careful thought to exactly what is needed in the next role and ask yourself if your candidate has those characteristics. 4 Fulfilment of potential This is crucial – simply promoting high potentials or rotating them through assignments is not enough; they need significant care and development attention to ensure that their promise is fulfilled. Organizations need to take risks to help people grow, promoting development through stretching career moves, coaching and training. This implies minimizing the organization’s complicity in career derailment. This should be part of the responsibility of line managers, not just HR. The key is to ensure 5 Create enabling systems to effective talent management the business strategy Processes need to help find and promote hidden diamonds and there needs to be is translated into a mechanisms that inject objective data into the decision making processes around best people strategy and deployment of talent. Through good talent systems organizations can ensure their people all HR leaders pull in fulfil their potential and thus contribute to the future success of the organization. These systems also need aligning with other levers such as reward. the same direction.
1800 Potential – for what? AppendixLeadership competenciesThe success criteria varies considerably. More information on the research behind thiscan be found at www.haygroup.com. These summary tables are taken from NavigatingThrough the New Leadership Landscape published in Leader to Leader magazine. Leadership type Operational roles Collaborative roles Advisory roles Global • Symbolic leadership Not applicable Not applicable enterprise • Externally focused leadership • High level of social responsibility • Focused on building top team and organizational capability • Unique competencies related to values or strategy Enterprise If top CEO: Not applicable Not applicable leadership • high level of teamwork • wide range of sophisticated or unique competencies based on organization. Otherwise: • same as level below, plus Strategic • high levels of integrity, coaching, and customer focus. Strategy • Competencies from level • Networks and builds [Insufficient data due to small formation below plus relationships sample size for this role and level.] • Strategic focus with broader, • Takes a strong leadership role longer-term view • Greater level of organization Tactical Levels of work • Higher levels of developing others commitment; models loyalty • Sophisticated influence • Encourages development and strategies bases on in-depth provides feedback understanding of others and • Integrity organization’s politics Strategic • Competencies from level • Seeks information to • Broad and strategic business alignment below plus support decisions, negotiate, perspective (understanding the • Focuses on providing strong and influence others organization in the market) visionary leadership • More likely to seek • Complex influence skills based on • Willing to apply rules flexibly input of others deep understanding of people • Integrity organization, and business • High integrity Strategic • Competencies of level below plus • More initiative than • Continues to focus advice and implementation • Demands high performance preceding level service on the larger organization from the team • More likely than other • Continues to model loyalty to • More likely to act consistently collaborative managers the organization with values and beliefs to set challenging goals • Coaches and develops others • More likely to take a leadership role than at preceding level Tactical • Focuses on business results • Demonstrates responsive • Focuses on service to implementation • Focuses on own team, coaching, rather than proactive initiative the larger organization supporting, gaining input • Demonstrates pattern • Models loyalty to the • More likely to take on challenges than recognition more than insight organization peers in other roles • Manages subordinates one to one rather than as a team • Accepts need for flexibility
Africa Frankfurt Middle EastCape Town Glasgow DubaiJohannesburg Helsinki RiyadhPretoria Istanbul Kiev North AmericaAsia Lille AtlantaBangkok Lisbon BostonBeijing London CalgaryHo Chi Minh City Madrid ChicagoHong Kong Manchester DallasJakarta Milan EdmontonKuala Lumpur Moscow HalifaxMumbai Oslo Kansas CityNew Delhi Paris Los AngelesSeoul Prague MontrealShanghai Rome New York MetroShenzhen Stockholm OttawaSingapore Strasbourg PhiladelphiaTokyo Vienna Regina Vilnius San FranciscoEurope Warsaw TorontoAmsterdam Zeist VancouverAthens Zurich Washington DC MetroBarcelonaBerlin Latin America PacificBilbao Bogotá AucklandBirmingham Buenos Aires BrisbaneBratislava Caracas MelbourneBrussels Lima PerthBucharest Mexico City SydneyBudapest San José WellingtonDublin SantiagoEnschede São PauloHay Group is a global management consulting firm that works withleaders to transform strategy into reality. We develop talent, organizepeople to be more effective and motivate them to perform at theirbest. Our focus is on making change happen and helping people andorganizations realize their potential.We have over 2500 employees working in 85 offices in 48 countries.For more information please contact your local office throughwww.atrium.haygroup.com