HIPO program


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HIPO program

  1. 1. RTS Realtime Systems High Potential (HIPO) Employee Development ProgramThe RTS HIPO program is designed to accelerate and facilitate the career development of highpotential employees to management positions and strengthen the market position of RTS in a fastchanging business environment.Reason for implementing a HIPO program at RTS Realtime Systems:In the new business reality, the marketplace is characterized by high competition and globalization,making HIPO programs more important now than ever. Upon consideration of the turbulent businessclimate, along with the nontrivial replacement costs of company-generated talent, a case can be made forefficiently identifying and developing the firms high-potential employees to ensure that those who bestknow the business, technology, and operations are making the critical decisions. RTS needs to activelyselect and prepare high potential employees to manage the complex environments we are facing.Decisions about who will be the key contributors of the company’s success in the future need to be madeas early as possible and specialized career development will follow to ensure the best and brightestquickly rise to the top.HIPO programs are most often characterized by a fast rate of lateral movement through various roles inthe firm, a carefully monitored career, and an elite but usually secretive status. As future leaders of theirfirms, HIPOs move quickly into new positions, receive special coaching and mentoring, and are expectedto deliver superior performance.Impact of HIPO programs on today’s business world:Just as competitive advantage can be achieved by a fast-to-market product strategy, competitiveadvantage can also be created with our ability to develop leadership talent efficiently. A pressing needexists to decrease the time required to identify leadership needs, assess current or find new talent, anddevelop high performers. By efficiently developing HIPOs leadership competencies in hopes of creating asavvy top management team, we can improve our responsiveness to an increasingly complex businessenvironment in the financial market place.Some real world scenarios outline the reasons for the implementation of HIPO programs in today’sbusiness environment and the positive impact of a well planned and managed job rotation principle todevelop HIPO’s in our organization.Because of concerns about the shortage of executive-caliber talent at McDonnell-Douglas, rotationalprograms were a significant part of an overall plan designed to identify HIPOs and help their careersquickly progress.At PepsiCo, tolerating mediocrity in employee performance demoralized their top performers andencouraged the company to expedite the early identification of HIPOs to develop top management talent.In each case, the corporation aggressively selected HIPO talent and groomed them through a series ofchallenging rotational assignments. Consider Edgar Woolward, Jrs ascent to the top spot as CEO at DuPont, which took him through 20 different jobs in 32 years. Similar "muscle-building" programs, designedto ensure that the best and brightest move to the top, have occurred at firms such as Greyhound FinancialCorporation, IBM, Hewlett-Packard, Marriott, and AT&T, to name just a few. 1|P a g e
  2. 2. As RTS is an organization that promotes the importance of a promotion-from-within strategy and isconvinced about the need to develop top management talent, the business case for a HIPO program arefairly apparent. Nevertheless, if the decision will be made to implement the HIPO program our managershave to be very explicit in defining the program’s objectives.Assessing the need for a HIPO program:Following questions need to be answered by RTS top management in order to reach a consensus on theimplementation of such a program - Why do we need a HIPO program? - How will it support our business strategy and improve our competitive advantage? - How will it help us fulfill our leadership needs for the future? - How will it benefit the organization, the HIPOs, and the rest of the employeesThe general concern is the strategic benefit of implementing a HIPO program. If there is no clear sense ofhow the program will support the company’s business strategy, the program design will be misguided.Therefore the involvement of a variety of key people in this process will ensure the unified purpose of theHIPO program and consequently its success.Design of a HIPO program within RTSAfter identifying the need for a HIPO program and evaluating the high-level objectives, we will enter intothe more complex step of program design. This step is composed of five key decision points:Identifying the criteria for HIPO selection, determining a communication strategy, deciding whether todisclose HIPO status, determining the timing of HIPO identification, and creating a program evaluationmechanism.General aspects that are normally used as HIPO selection criteria are the following - level of education, university where advanced degree(s) were obtained, and grades - previous work experience (industry knowledge and management experience) - assessment center performance - performance in the organization (using standard performance evaluations by supervisors or subordinates); - supervisory assessment of leadership potential (qualitative or quantitative assessments).From subject related publications you learn that most companies rely heavily on the use of directsupervisors to identify HIPO talent based on actual job performance, rather than using a list of attributes orassessments of future potential. Such a performance-based approach, which incorporates severalobjective sources in the evaluation, should help generate valid assessments and enhance employeeperceptions of fairness. This approach, in turn, should increase our confidence in the HIPO candidateswho we will select and avoid the self-fulfilling prophecy explanation for HIPO status.A rework of the employee review and assessment will be required to achieve the best possible resultsduring the HIPO selection process.Determine a communication strategyRTS must decide whether the goals of the HIPO program are to be communicated, to whom thecommunication is necessary and what the content of the message will be. The lack of understanding ofthe program is very often a major barrier to the line managers’ ownership of their HIPO program.In communicating the goals of a HIPO program, we have to make it clear that all employees will beinvolved in the selection of high-potential candidates. A team-based atmosphere will be created in whichother employees participate in identifying high-performing individuals through manager and subordinateinput in the evaluation process. 2 |P a g e
  3. 3. Decide whether to disclose the HIPO statusFrom subject related publications you learn that informing HIPOs of their status has been a difficult issuefor firms to handle, and no easy solutions are readily apparent. Most firms report that they prefer tomaintain a secretive status for HIPOs.There are some documented benefits for informing HIPOs of their status. In Fresinas study (Anthony JFresina & Associates -Executive Knowledge Works), the major positive effects included: - enhanced retention (69 percent); - improved productivity (57 percent); - improved relationship with the boss (42 percent); and - positive impact on the firm (37 percent). Moreover, in an era characterized by self-management efforts, informing HIPOs of their status could allow them to become involved in personal career planning.Such benefits may be more easily reaped when the company culture supports open communication.As RTS is currently working on a more open internal & external communication the recommendation is notto disclose the HIPO status during the early stages of the program. Once we have achieve our goal toestablish an open communication and company culture the disclosure of the HIPO status should berevisited.Determine the timing of HIPO identificationIn general companies identify HIPO talent after three to eight years.As the need for top management talent in RTS Realtime Systems is readily apparent it seems to benecessary that the identification should be done as soon as possible and guideline should be set of five tosix years of actual work experience. This argument can be validated by the high staff turnover and loss ofsenior management that RTS went through the past 18 month and also by the fast changing marketconditions in our industry that we rapidly need to adjust to.Create a program evaluation mechanismImplementing an appropriate evaluation mechanism to track the success of the HIPO program isnecessary in order to ensure that we are meeting the corporate objectives.We will need to specify: - What criteria will be used to monitor and evaluate program effectiveness in terms of benefits for the firm productivity and employee retention and for HIPOs and other employees? - How often the HIPO program will be evaluated - Who or what group will oversee the ongoing implementation, evaluation and modification of the HIPO programA regular feedback mechanism needs to be established which will help to ensure that the desiredoutcomes of the HIPO program outlined in the needs assessment phase are achieved. 3 |P a g e
  4. 4. Suggestions on the implementation and the Management of the HIPO program at RTSThe necessary lateral moves for HIPOs through the various business units within RTS need to bedetermined. These lateral moves or job rotations will be critical for HIPO development and advancement.In a flat organizational structure like the one at RTS Realtime Systems they are also coincident withcorporate opportunities.The business units we divide RTS in are - Sales/Account Management - Support/Product Management - QA - Development - Controlling/Finance - Human Resources - LegalThe business units sales, support, QA and development can be defined as an intra-functional move. Theother business units are considered inter-functional or cross-functional moves. Interfunctional moves, orcross-functional assignments, provide experience in a functional area that does not represent theemployees primary area of expertise.Each type of lateral move should be used in HIPO career management to serve one of two purposes: - to enhance subject-specific knowledge, or to increase the breadth of knowledge -Intra-functional moves should be used when trying to deepen a HIPOs understanding of a certainbusiness unit or function. Cross-functional moves will help the HIPO to develop a breadth of knowledgeabout the companys mission, products, and culture.Given the need for a broad understanding of RTS, interfunctional moves have to be used strategicallybecause they provide a vast array of corporate experience and can better prepare HIPOs for a topmanagement position. In case it is not possible to realize a strategically important interfunctional moveexternal training courses that will deliver the respective knowledge should he offered by the RTS.Appropriate mix of experiencesRTS is currently in a strong maturation and growth process with our strategic goal being clearly set in thisarea. Due to this fact and the dynamically changing environment of our business a more complex strategymaking process will be required from our future top managers.For HIPOs within RTS it will be especially desirable to achieve as many functional experiences aspossible. These assignments include exposure to the international arena as well as sales, finance, humanresources work but also in depth knowledge on the software support, development and QA process.International experience is especially critical for those aspiring to top management positions so that theycan better understand foreign markets, how to motivate foreign workers, and how to form alliancesabroad. 4 |P a g e
  5. 5. Identify the critical skills to developThe two managerial competencies that are considered to be the most important in today’s fast changingbusiness world, are - the ability of leaders to articulate a strategic vision - the unique ability to enact a beneficial company-environment relationshipIn order for RTS to become the recognized industry leader that provides innovative trading solutions toelite financial institutions, we need to put our trust in the hands of managers and leaders that can executeour ambitious business plan and who strive to make all people around them better as well.Regardless of the specific competencies identified, it is important that managers understand how jobrotation (in addition to other human resource subsystems) facilitates the development of such critical skills.In the past many businesses have reported that lateral moves mainly helped developing interpersonal andleadership skills which were considered the most important skills to be developed. Recent studies haveshown that employees perceived job rotation as improving business skills -- knowledge of businessissues, of other functions, and of how the firm operates -- more than administrative skills, such asleadership and communication.Nevertheless, an important implication from these findings for RTS Realtime Systems is that we mustensure the actual skills being developed by lateral moves are those that are being targeted by ourorganization.Length and timing of lateral assignmentsWhen developing the HIPO program at RTS timing and duration of the lateral moves will be an extremelyimportant factor for the success of the program.No research so far has examined or recommended a specific length of time HIPOs should spend in theirrotational assignments. These durations have to be specifically fine tuned on the requirements of ourbusiness field. It is important to keep in mind that we have to ultimately focus on the quality of the HIPOswork experiences, not just the quantity of assignments they rotate through.As an example, at McDonnell-Douglas (at least prior to the recent merger with Boeing), HIPOs changeresponsibilities every three years; at PepsiCo, it is about every year. These companies certainly deal witha lot more complex operations and internal set up than we do at RTS. This example should just outlinethat the durations even between these giant can vary significantly.HIPO programs can also be designed to run for a specific amount of time in total.However we decide to desgin our program these parameters need to be determined before the start of theprogram and the RTS top management needs to be aware of all of these cornerstones of our HIPOprogram. 5 |P a g e
  6. 6. Meaning of a HIPO program for RTS Realtime SystemsThe concept of broad based lateral moves throughout RTS, along with the right mix of functional andinternational experience, are crucial for learning the knowledge and skills essential for future leadershiptalent.Creating mentoring opportunities for subject matter experts and top level managers within RTS will beuseful within the HIPO support mechanisms and a high motivational factor for senior staff and managers.Mentors provide necessary guidance and counsel to support HIPOs in their career progression, enhancetheir understanding of our company culture and politics, and provide direction for how to best maneuverwithin the organization.Most important during the HIPO process, managers assigned with the supervision of the program mustwork to strike a balance between meeting the individuals career needs and achieving long-term corporateobjectives.All of this forms a very ambitious and demanding plan. Of course, there is no guarantee of success at thispoint but if carefully and properly designed and managed the HIPO program for developing the employeeswith the highest potential can go a long way toward creating the best possible leadership -- and future –RTS Realtime System can produce.This can be the foundation for reaching our goal to fulfill our vision„...to become the recognized industry leader providing innovative trading solutions to elitefinancial institutions. “And„...tripling sales with double the staff by 2012. “ 6 |P a g e