Potential - For What?

Potential
– for what?
What every CEO should
know – new insights
into selecting the right
leaders to secure your
competitive future

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 >>

Contents

Potential – for what? 2

Breakthrough approaches to selecting future leaders 3

Is your employee or candidate ready, willing and able 5
to take on the next role?

The ‘growth’ factors that enable people to develop over time 8

Derailers: is it them? Is it you? (It is probably both) 11

Potential – for what? A roadmap 13

Understanding the job and its context 15

Best practices in assessing potential 16

Summary – five key steps to identifying and managing potential 17

Leadership competencies 18

2 Potential – for what?
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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

Our work shows that those organizations affirms similar findings by the Corporate
considered best practice at talent Leadership Council, where a strategic
management by their peers clearly focus on employee potential was seen
articulate what talent management as the single most effective strategy in
means to them: building a reserve of high quality leaders.
Eighty percent of employers saw high
talent management is the process potential employees as half as productive
by which an organization puts the again over the average.
right mechanisms in place to deliver
competitive advantage through the
Best practice organizations are not only
more productive; by constantly getting
effective management of its people.
the management of high potential
In other words, ensuring the right people talent right, they also survive and win
are in the right roles at the right time to on into the future. This is a sobering
deliver on strategy now and in the future thought when you consider that since
the inauguration of the stock market
This definition of talent management indices, few of the companies originally
was used as the background to research listed survive today and even fewer exist
Hay Group conducted in 2006 with in anything like their original form. In
Chief Executive Magazine. A key short, a strategic and wise investment in
finding was that the 20 companies best talent management pays dividends. At the
at managing their talent consistently heart of that lies the ability to recognise
outperform their peers in terms of – and nurture – the long-term potential
return on share price. This research of your employees.

Breakthrough approaches
to selecting future leaders
Predicting potential, particularly long term potential, is a
high-stakes game. You are not just dealing in specifics such
as previous performance record, you are deciding where to
place the organization’s bets in investing time and resources
to 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.

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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.


Is your employee or candidate ready, It is deeper, more
willing and able to take on the next role? personal factors
(also known as
competencies) that
Some organizations think of potential in terms of immediate provide the foundation
performance in the next role, what we call ‘suitability’; while for performance at
others 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.

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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.


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 this
ƒƒ 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-confidence
The research was also clear on some and the lack of self-questioning that
popular choices that are, in fact, not goes with that. In contrast, many of
such good indicators of growth potential: the most successful executives talk
of occasions when they hesitated to
1 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.

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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?


2 Curiosity and eagerness to learn

This natural curiosity and eagerness to these do not represent a promotion; by helps the person take on a broad and
learn and to take on new challenges extensive or diverse reading; or attending challenging range of career experiences
may be displayed by asking questions unusual courses. It supports thinking and take full advantage of development
that push the boundaries of accepted beyond the boundaries by providing the and educational opportunities. Both
norms; by a desire to take on different and information that makes such thinking this quality and thinking beyond the
challenging assignments, even when possible. This desire to learn also boundaries are not always associated
with great grades in school or college.

2 Core questions
Does 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 empathy
This is the genuine desire and ability to – with the needs, background and people is an essential executive skill and
understand 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 polished
responses, the other person’s perspective. competencies such as collaboration and presentation skills. These can carry a
This 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 questions
Does 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

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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.


Derailers: is it them?
Is it you? (It is probably both)
As we have seen, growth factors have few downsides and act
as a multiplier to a person’s leadership potential. Derailers, on
the other hand, are aspects of the person – or the organization
– that interfere with growth and performance and detract
from potential. Most cases of career derailment involve both
individual factors and organizational complicity.

Individual factors For example:
A few derailers may exist within a person. ƒƒ being too affiliative can lead to a
Some of these are the opposite to the tendency to avoid confronting issues
growth factors, as suggested below. ƒƒ being too focused on achieving results
ƒƒ 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 work
ƒƒ 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 minds
ƒƒ 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 and
ƒƒ 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 can
While some people who become derailed consequences of over-applying them.
be subtle and associated
have obvious personal weaknesses, with It is difficult to abandon what has
others, the derailing factor can be more worked, even when circumstances with strengths, where too
subtle and can be associated with their change, and it may be nearly impossible much of a good thing can
strengths, 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.

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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


Potential – for what? A roadmap
The best organizations excel by being aware enough to
avoid organizational complicity in derailing careers and by
encouraging employees to develop a flexible range of strengths.
But they also go one step further. In their mind, the question of
potential is only partly answered by the identification of growth
factors 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 of
specific factors such as the critical success graduates or entry into management potential is only
requirements for different types of role. training. partly answered by the
By knowing this information in detail ƒƒ long term potential for senior
and in having a roadmap of critical roles, leadership.
identification of growth
it 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, the
Organizations may also maintain more
person’s fit to that job is given primary
than one ‘talent pool’: they may have one
consideration, (but even then it may be
for technical leaders, another for sales and
useful to consider the growth factors
another for corporate leadership.
for future added value). For executive
level roles, it is crucial to define the
Organizations will do well to weigh
requirements of the specific role with
different parts of the potential formula
some precision: differences in executive
more heavily than others, on how much
roles can have significant consequences.
they are selecting for suitability for
immediate performance (‘go fix this
However, when you are considering
operation’, ‘hit the ground running in
potential for future managerial or
customer service’), and how much weight
leadership roles, the specifics of the jobs
is given for future potential. The factors
to be filled in some number of years are
that are important in selection will also
necessarily less clear – and there may be
vary by the organizational level. The
a range of possible roles. In this situation
table on page 14 outlines which selection
the person’s long-term potential and
criteria are likely to be most useful in four
adaptability (the growth factors and the
typical 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.

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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.


Understanding the job and its context

Many organizations fall into the trap of seeing potential as a
panacea, assuming that someone who is ‘high potential’ will
be 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
ƒƒ 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
ƒƒ 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’s
need for performance from a role, the These hold true across the majority of
more clear and specific the organization senior jobs. We have written about these
must be about what it is looking for. earlier in a ‘Leader to Leader’ article
Understanding the exact demands of entitled ‘Navigating through the new
future roles and the challenges they leadership landscape.’ It is available
present to each individual is key in the through www.haygroup.com. The more
measurement of short-term suitability. pressing the organization’s need for
It is not enough to consider whether performance from a role and therefore
someone is ready for a move ‘to a bigger the shorter term the potential you are The more pressing the
role’. Managers also need to look at assessing, the more clear and specific organization’s need for
how individuals will fit into the specific the organization must be about the
performance from a
requirements of different roles. The requirements of the new role.
role, the more clear and
ingredients for success vary considerably
from one role to another, even at the same A flavor of the success criteria to look specific the organization
level of seniority. It is a huge leap from for across role types and different must be about what it is
a senior strategy role (broad, conceptual organizational levels, is shown on looking for.
thinking, sophisticated communicator pages 18 19.

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.


Summary – five key steps to
identifying and managing potential
In summary, we see five key ways to get better business results
from 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.

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.

18
00 Potential – for what? Appendix

Leadership competencies
The success criteria varies considerably. More information on the research behind this
can be found at www.haygroup.com. These summary tables are taken from Navigating
Through 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 East
Cape Town Glasgow Dubai
Johannesburg Helsinki Riyadh
Pretoria Istanbul
Kiev North America
Asia Lille Atlanta
Bangkok Lisbon Boston
Beijing London Calgary
Ho Chi Minh City Madrid Chicago
Hong Kong Manchester Dallas
Jakarta Milan Edmonton
Kuala Lumpur Moscow Halifax
Mumbai Oslo Kansas City
New Delhi Paris Los Angeles
Seoul Prague Montreal
Shanghai Rome New York Metro
Shenzhen Stockholm Ottawa
Singapore Strasbourg Philadelphia
Tokyo Vienna Regina
Vilnius San Francisco
Europe Warsaw Toronto
Amsterdam Zeist Vancouver
Athens Zurich Washington DC Metro
Barcelona
Berlin Latin America Pacific
Bilbao Bogotá Auckland
Birmingham Buenos Aires Brisbane
Bratislava Caracas Melbourne
Brussels Lima Perth
Bucharest Mexico City Sydney
Budapest San José Wellington
Dublin Santiago
Enschede São Paulo

Hay Group is a global management consulting firm that works with
leaders to transform strategy into reality. We develop talent, organize
people to be more effective and motivate them to perform at their
best. Our focus is on making change happen and helping people and
organizations realize their potential.

We have over 2500 employees working in 85 offices in 48 countries.
For more information please contact your local office through
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