Potential - For What?


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CEOs at the world’s most successful companies know that they can only safeguard their organization’s competitive future if they have the right leaders to develop and implement their strategy.

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Potential - For What?

  1. 1. 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 >>
  2. 2. 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
  3. 3. 2 Potential – for what? 00 Potential – for what? CEOs at the world’s most successful companies know that they can only safeguard their business’s competitive future if they have the right leaders to develop and implement their strategy. While CEOs know they can also hire external candidates, they also know that the track record of outside hires can be very unpredictable. CEOs and HR Directors from those organizations seen as best by their peers for managing talent, prefer to ensure they develop a good bench-strength of talent from inside their own organizations. For many years CEOs at the world’s most And here is the CEOs real concern: successful companies – such as GE, P&G, the ability of leaders to implement one BP – have seen the importance of securing type of strategy may not be the type their long term competitive future by needed to implement another: the skill investing large amounts of money and sets may be different, the behaviors may time in identifying future leaders. Using be different, the experiences needed a whole battery of assessment techniques may be different. For example those and processes they have attempted to needed to lead a nationally based, fully recruit the best graduates and to see, early functional company, operating in a in their careers, which managers had the stable competitive and technological long term potential to make it to the top: environment, will be very different from what the British army has called: ‘finding those needed for a leader in a highly the General’s batten in the knapsack of matrixed global organization facing rapid the new recruits.’ competitive and technological change. But this is the transition many businesses But in recent years CEOs have become are going through. more concerned about their more Best practice immediate competitive future: do we have Some major companies have responded organizations are not the talent and capability to develop and by throwing out or downgrading their only more productive; implement the strategies that will enable programs for building long term bench- by constantly getting success in today’s highly competitive strength because they have lost their and changing business world? Today confidence in their ability to predict the the management of high the pressures for change are greater than type of talent needed. But our research potential talent right, ever – from globalization, competition, shows that it is the companies that can they also survive and technology, break through business models resist this response and combine a focus win on into the future. – which means that the shelf life of both on both the long term and the short term strategies and leaders can be much shorter. which have enduring success.©2007 Hay Group. All rights reserved
  4. 4. 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.
  5. 5. 4 Potential – for what? 00 These twin approaches should help accurate return on their investment in It is important to ensure better decision making in relation leadership development. But growth recognize that ‘being a to talent. However it is still easy to get factors alone do not ensure that a person’s it wrong. Just because someone is doing career will survive a stretch-to-break star performer’ is not an a great job in their current position, it role change nor simply being left to look enduring trait of a person. does not mean they will automatically after their own careers. Organizations It does not necessarily perform as well in another role – and considered by their peers to be best at carry over from one certainly not necessarily as a leader. The talent management get the best return situation to the next. fallout from promoting someone wrongly on their investment by: can be disastrous, both for the individual and the company. They become stressed 1 evaluating who has the growth and demotivated, they underperform and factors that predict long term the people working for them then also potential become unhappy. It is a vicious circle. The company suffers because the role 2 valuating how people’s abilities e is being fulfilled badly – or not at all. fit with specific types of roles, not just at their current level but also Where a company does make a mistake, at higher levels and for roles in it is important to recognize it and take other functions swift action, returning the person to a role that is suitable for them, where they 3 nhancing potential, once e can again be successful. But how do you identified, by giving experiences choose the right person? that act as catalysts to leadership development and growth First, it is important to recognize that ‘being a star performer’ is not an 4 reating processes to ensure c enduring trait of a person. It does not that talent flows through the necessarily carry over from one situation organization in the right sequence of roles to maximize the chances to the next. Great performance is a state, of potential being fulfilled the condition of enjoying a good match between a person’s capabilities and the requirements of the job – and it lasts as This paper focuses on the first step: long as that match stays in balance, with understanding and evaluating potential, challenges that are neither too easy nor and particularly the growth factors. The too hard. second step is addressed by a “Leader to Leader” article entitled ‘Navigating Second, there are character traits that through the new leadership landscape’, enable people to take best advantage of available through www.haygroup.com long term development opportunities. (for a summary, see pages 18 19). The We call these ‘growth’ factors and if third and fourth steps are the subjects of organizations take these into account, upcoming papers to be released by Hay they are likely to get a better and more Group shortly.©2007 Hay Group. All rights reserved
  6. 6. 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.
  7. 7. 6 Potential – for what? 00 Potential is the fit between a person’s current capabilities and possible future roles, taking into account the person’s longer term capacity for personal growth and their possible derailers. Person’s Growth factors Potential = Future Role Current x Derailers Requirements Abilities What this means in terms of measuring demands of the role and, crucially, potential, is that organizations need to be to adapt as role requirements change. clear and objective about both: In exploring these issues further through the current abilities of their people and 1 our global leadership database and with a synposium of talent leaders, we focused the actual requirements of the intended 2 on one question: if you had a limited or future role(s), whether it is the next leadership development budget, what promotion for the person, or a longer measurable characteristics would predict term ‘leadership’ role the best returns on investment? ‘Growth factors’ and ‘derailers’ address a In posing the question, it quickly emerged third – and crucial – question, one that is that to be useful in predicting mid to too often ignored: does this person have longer term potential, growth factors what it takes to grow and develop? The should be: growth factors are deep-seated traits that affect a person’s ability to develop over time. ƒƒ Recognizable early in the person’s career, ideally even in a A growth factor, in abundance, has few recent graduate and in a wide variety down sides and acts as a multiplier to the of situations. Equally you would not first half of the equation. Derailers are want the growth factors to exclude aspects of the person – or the organization good leaders who come from diverse – that interfere with growth and backgrounds. This means they should performance and act as a detractor be defined broadly enough to be to the first half of the equation. recognized in different organizational or cultural settings. Growth factors are akin to the concept of ‘trainability’, this idea has been around ƒƒ Useful in many or most high-level since the 1950s and is defined as a leadership roles Growth factors are all person’s capacity for learning new skills Since future leadership roles are unlikely and applying them effectively. However, to be clearly defined yet (who knows multipliers to ability; growth factors go beyond this, enhancing what the company will need many years they are the enablers the ability of individuals to learn new down the line?), you should look for to development. ways of working and leading, of managing characteristics that will suit a variety of themselves effectively to meet the leadership roles.©2007 Hay Group. All rights reserved
  8. 8. ƒƒ 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 thisƒƒ 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.
  9. 9. 8 Potential – for what? 00 The ‘growth’ factors that enable people to develop over time We suggest four fundamental characteristics that meet the criteria above. These are core qualities that comprise the basic building blocks of potential and that you would want to see in all ‘high potential’ employees. Through our in-depth behavioral These factors are most useful for interviews with a wide range of managers, identifying high potential individuals executives and non-management, we in management positions, who warrant find that these characteristics are seen extra investment in their development; more often in people in higher levels or for choosing employees to promote of the organization (i.e. those whose into management. These qualities potential has already been realized to also come into play when moving some extent) than in those at lower levels. people into executive roles, although These factors are also associated with at executive level, more specific issues outstanding performance, especially about knowledge and experience are at higher organizational levels. They also important. However, at lower levels have broad applicability across a wide of the organization, the growth factors range of leadership roles. However, may not make a major contribution an organization might want to put to performance outcomes. These are special emphasis on one or another of qualities that predict staying power and these growth factors, depending on the eventual growth, not necessarily top organization’s long term strategic focus. performance early in one’s career. 1 Thinking beyond the boundaries This is a broad application of conceptual an obvious requirement for this growth more productive or how to streamline the ability. This characteristic comprises factor, very high levels of intelligence way it deals with suppliers and customers. raw computing power, or I.Q. plus, most do not appear to add extra value. What You might see college students who are importantly, a disposition to apply that makes the difference is the individual’s making connections between what they conceptual ability to broad questions, to disposition to look beyond their role and learn in one course and what they learn make unexpected but useful connections. to make connections between their area in a different subject; or a salesperson This is the early manifestation of the and other, peripherally related, areas. who brings in articles or observations from strategic thinking that leaders need to You might look for the individual outside your industry and talks about provide for their organizations. Although contributor who is thinking about how these ideas, events or developments a moderately high level of intelligence is how to make the whole department might provide opportunities. 1 Core questions Does this person’s thinking make useful connections well beyond the normal boundaries and timelines of their job? Do they think in a fresh creative way or a useful way about the big questions, the big problems and the longer timeframe that properly belong to a larger role? Do they make complex issues straightforward and grounded in reality?©2007 Hay Group. All rights reserved
  10. 10. 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
  11. 11. 10 Potential – for what? 00 4 Emotional balance This is the hardest characteristic to assess Realistic optimism and stability enable Emotional balance also needs to be in an applicant and perhaps the easiest people to bounce back from adversity, assessed relative to the person’s age – we in an employee. This quality embraces to lead under stressful circumstances normally expect maturity of behavior balance, emotional resilience and realistic and help to keep others positive and and perspective to increase with age, and optimism. The question here is how motivated. Without this maturity, the don’t hold a twenty-year-old to the same people respond when things do not best leadership development programs standard of maturity as a fifty-year old. go smoothly in their career or in their will have little effect, as the person will personal life? not take advantage of the opportunity for personal growth. 4 Core questions Does this person have emotional stability under difficult circumstances? Or do they stress out and make things even worse? Do they recover and learn from their mistakes? Or do they sulk or blame others? Do they seek out and take constructive criticism well, learning from it to improve their performance? Or do they become defensive or keep making the same mistake again and again? Do they focus on what is best for the group as whole? Or do they see every issue in terms of how it affects their personal reputation and career? The questions for each growth factor You also need to put in place the right are ones you might want to ask yourself role rotations to provide the experience about a young employee, or ask a referee or catalysts that stretch people, so that about an applicant. A person may be they become more than they already strong on one or two factors and weak or are. For example, taking a leader out of lacking in others. Generally, to consider their comfort zone and asking them to a person as high potential, we would manage a different part of the business, want to see real strengths in at least three incubate a start-up, or merge two of these factors and no major warning businesses, will present challenges that signs in the remaining one. cannot be delivered by personal drive and technical abilities alone. These Although these characteristics are relatively enduring traits, they can challenges provide an opportunity to change over time in response to step back and learn how to lead, not experience. The organization can through one’s own efforts, but through do things that will either encourage the efforts of others. It is important that development of these qualities or ‘high potential’ people learn how to do obstruct it. In coaching or managing this early in their careers, so that they the development of your high potentials, have this skill when they reach a senior you should re-visit and re-evaluate the position. We will discuss these catalysts growth factors every few years. to growth in detail in a separate paper.©2007 Hay Group. All rights reserved
  12. 12. 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. ƒƒ being too affiliative can lead to aSome of these are the opposite to the tendency to avoid confronting issuesgrowth factors, as suggested below. ƒƒ being too focused on achieving resultsƒƒ 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 ƒƒ being so focused on personal thinking and taking a broader view achievement that one cannot workƒƒ An assumption of being smarter than collaboratively everyone else – this is the opposite of ƒƒ 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 mindsƒƒ An inability to listen and properly hear ƒƒ 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 ƒƒ being so good at everything that sheer lack of interest in other people others are overshadowed andƒƒ 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.
  13. 13. 12 Potential – for what? 00 Organizational factors ƒƒ The moving-too-fast mistake: Organizations can The organization can be complicit in moving the high potential person be complicit in the the derailing of careers, most often by from one role to another too quickly, derailing of careers, forgiving rather than dealing with flaws eliminating the opportunity to often by ignoring and shortcomings, as long as the person is learn from experience and from flaws until too late. hitting their targets. However, later these their mistakes; worse yet, moving flaws come back to derail their career. And a high potential person before the by the time someone is a senior executive, consequences of their mistakes become gaps in the ability to understand the clear, rescuing them, rather than subtext of other people’s comments and allowing them to fail. How people cope to predict their responses, or to influence with and learn from failure can very others in a variety of subtle ways, will quickly sort the wheat from the chaff. It seriously limit the person’s effectiveness. is nature’s quickest proving ground. There are other common ways in which Finally, some derailers may be specific organizations unwittingly derail their best to the organization. For example, some employees’ careers – and in the process, organizations require certain styles of handicap their organization’s ability to interaction – more hierarchical or more adapt to change: collegial, more formal or more affiliative. Having a very different individual style ƒƒ The laissez-faire mistake: can be a real hindrance to effectiveness in thinking that the organization’s some organizations. responsibility ends when it identifies potential. By assuming that the cream Apparent unwillingness to relocate is often will rise to the top, the organization seen as a derailer and needs to be handled wastes most of the latent potential in with care. Such unwillingness to move the workforce by failing to nurture and may be temporary, related to children’s develop it. The best way to cultivate schooling, a partner’s career or even the potential talent will be discussed in person’s tax liabilities. Support from more detail in a forthcoming paper the organization can often resolve these ƒƒ The job rotation mistake: problems. Lack of mobility may even be making the assumption that a job assumed but may not be real or may apply rotation or an overseas assignment is, only to certain locations. in itself, a developmental experience, without providing either the framework Relocation issues may be based on the to orient the person to what they are organization’s unwillingness to question supposed to learn from the assignment, whether mobility is even necessary and or a de-brief to ensure that the desired to look at who needs to move or travel development did take place where. For example, resistance may relate to meetings in HQ every month, which ƒƒ The ‘a good manager can may mean three or four days’ travelling for manage anything’ mistake: someone living in Brazil to attend a one- making promotions or lateral moves day meeting in Europe. Executive teams that stretch the person to the point of need to question their assumptions about breaking, without providing support and a these matters. safety net; worse, then blaming the person for failing to adapt quickly enough©2007 Hay Group. All rights reserved
  14. 14. 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 ƒƒ suitability for low or entry level roles.decision, they also look more deeply into ƒƒ 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 ƒƒ long term potential for seniorand in having a roadmap of critical roles, leadership. identification of growthit is then possible to start asking a wiser ƒƒ 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.
  15. 15. 14 Potential – for what? 00 In general, the growth factors are more when selecting for immediate performance important when selecting for potential (suitability). The most critical factors for for the future, while job-specific factors selection, in various different situations, (‘résumé readiness’ plus role-related ability are set out in the table below, in the order or competencies) are more important of priority for each situation. Higher in the organization potential for the future suitability for now 3 Selecting for leadership potential 4 Selecting for immediate performance at the executive group level in mission-critical leadership roles Growth factors/derailers Unique leadership competencies (fit to Bench strength potential for the future The organization’s general organization AND specific leadership role profile requirements) Suitability for an urgent need leadership competencies Appropriate range of prior Growth factors/derailers experience and skills (readiness) 2 Selecting for broad managerial potential, 1 electing for immediate performance S for graduate entry to middle manager in key entry or low-level roles Growth factors/derailers Job-specific skills, knowledge and experience Core, general or threshold competencies (i.e. ‘résumé readiness’) for the whole organization (often based Specific competencies suitable for on organization’s values) the job at hand (i.e. being ‘able’) Growth factors/derailers if intent is longer-term career growth as well as immediate performance potential for the future suitability for now Lower in the organization Potential – for what? Knowing to what extent you are for future roles), can help determine The selection roadmap identifying suitability (a great match which aspects of the potential equation between current capabilities and are most important for the placement at immediate role demands) and to what hand. It can also enable the organization extent you are identifying long term to be discerning and realistic about the potential (likelihood of a good return on capability development to be expected your investment in their development from a person in a particular role.©2007 Hay Group. All rights reserved
  16. 16. 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 operationsƒƒ 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 understandingƒƒ 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:ƒƒ then be prepared to provide guidance ƒƒ planning and policy and support to address the gaps. (If there are no gaps, the move is probably ƒƒ shared contributor too easy and provides no development.) ƒƒ 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.
  17. 17. 16 Potential – for what? 00 Best practices in assessing potential There are many sets of competency requirements for specific roles and many ways of assessing a person’s fit to a role. Just as different areas of potential vary in importance according to the job requirement, so methods of identifying a person’s abilities vary, as shown in the table below. Higher in the organization 3 Assessing for leadership potential 4 Assessing for immediate performance at executive group level in mission-critical leadership roles Typical practice: performance against targets Typical practice: ad hoc conversation between and line manager nomination; tick-the-box CEO and HR leaders and/or headhunters. succession planning Sometimes includes external assessments Best practice: talent review forums supplied Best practice: broader, more formalized with objective survey data, external bench- discussions, future orientated role definition, marking, and competency interview data external benchmarking, linked to prior strategic to enable better decision making, detailed Bench strength for the future succession planning, rigorous debate of fit to Suitable for an urgent need consideration of growth factors/derailers and role, evidence that derailers have been tackled provision of development feedback about consequences for career path 2 Assessing for broad managerial potential 1 ssessing immediate performance A and for graduate entry to middle manager in key entry or low-level roles Typical practice: line manager nomination Typical practice: performance against targets (issues with validity and means of measuring); assessment centers (costly, and/or resource intensive, results may not be applicable if sub- contracted) Best practice: competency based interviews Best practice: additional consideration of key and/or assessment centres, detailed threshold competencies and thought given to consideration of growth factors/derailers and growth factors/derailers diverse survey data, connection between outcomes and real deployment decisions Lower in the organization Typical and best Whatever methods of assessment you Giving on-going feedback about the practice methods for use, the crucial issues are first, to person’s strengths and weaknesses against understand the requirements of the the new role, and guidance regarding the assessing potential role in depth and in detail and second, capabilities you hope they will develop in to gauge the individual’s capabilities the new assignment, can go a long way to and provide support where necessary. ensuring success in performance and in the person’s development.©2007 Hay Group. All rights reserved
  18. 18. 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. ƒƒ Thinking beyond the boundaries. ƒƒ Curiosity and eagerness to learn. ƒƒ Social understanding and empathy. ƒƒ 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.
  19. 19. 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
  20. 20. 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