High potential employees: The fatal flaw

High potential employees

High potential employees, or HiPos in some parlance, are what all organizations seem to seek. This is why we hire so much around competence, i.e. metrics like GPA or where you went to school. It’s assumed that a competence-based model will get us “The A-Players” who will subsequently become high potential employees. There are about 131 flaws with this approach, unfortunately. First: the hiring process at most organizations is hideously broken to the point of alienating, as opposed to attracting, the best candidates. Second: we live in a “VUCA” business climate, meaning we actually need curious, adaptable hires. Our recruitment methods should change, but that might take a hot second.

When recruiting is broken, the capacity to have a lot of high potential employees will also be somewhat broken. Garbage in, garbage out. Naw mean? This is not to necessarily say every hire is garbage — some will be great, some will be middle of the road, and some will be awful. But per most research, only about five percent become high potential employees. Maybe if we had better avenues to recognize employee strengths, this number might be higher. Alas, though, many managers love to classify someone who isn’t perfect on Week 4 as “a bad employee” and slap them on a Performance Improvement Plan. Seems like a good way to develop people!

Now we’ve got some research on how big a farce the high potential employees deal really is.

The cooked books of high potential employees

This research is from Zenger Folkman. Here’s some high irony: in graduate school, I did a project about high potential employees — and used research from Zenger Folkman! Everything coming full circle in a meta way.

This research is based on 1,964 employees at three organizations. It’s not a massive sample size, no, but it’s something. Now, remember just above when I said high potential employees are usually the top five percent of an organization? Keep that in your brain and now consider this:

But when we looked at the participants in the HIPO programs, 12% were in their organization’s bottom quartile of leadership effectiveness. Overall, 42% were below average. That is a long way from the top 5% to which they supposedly belong.

OK, so … some high potential employees are actually in the bottom 12 percent of their companies? Ha. I guess this shouldn’t surprise us too much.

Why does this happen?

A few theories:

Unclear definitions of what “leadership effectiveness” is: To higher ranks, it means “generates revenue.” To lower ranks, it means “is not an asshole.” Somewhat of a disconnect there.

Executives minting their friends: This happens all the time. Some CFO meows that “Joel is one of our high potential employees,” and now Joel is in the program. In reality Joel sucks his thumb under his desk all day, but the CFO likes him. That explains how “top five percent” becomes “bottom 12 percent” and no one seems to notice.

We have no idea how to value people: That’s potentially the biggest problem with the modern workforce. Hello, automation!




 

Companies don’t really want high potential employees: Most managers honestly want drones. If you have too many high potential employees, that means you need to (a) pay them more and (b) feel as if your perch is threatened by your direct reports.

HR owns it: The high potential employees program is typically owned by HR, which usually isn’t data-centric. Plus: executives don’t care about it because it doesn’t make money. Nothing coming out of there is typically a top-flight program.

How could we actually identify high potential employees?

Not super hard, but would be a reach for most companies:

  • Clearly identify the priorities of the company, various departments, and various teams
  • Determine what success might look like at the various levels
  • Have 2-3 key metrics to determine employee-level success in a given role
  • When employees consistently over-achieve on metrics related to priority-driven work, they are high potential employees
  • They can be placed in programs, groomed, and given more responsibility

Seems nice, right?

What actually happens?

Usually goes a bit like this:

See the difference between the first list and the second list? That’s why there’s so much confusion about high potential employees. It’s all hair on fire bullshit loosely grouped together as “tasks” or even “priorities,” none of which are anything more than someone’s pet rock “I’m relevant” project. And then add a final little pebble: the same department tasked with “developing people” is also the one that fires them and monitors them, meaning there’s absolutely no trust in the set-up whatsoever. Hard to develop high potential employees that way.

What else you got on high potential employees?

Ted Bauer