High Potential Management-Ajju Revised

HIGH POTENTIAL MANAGEMENT

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IndexIntroduction 3

Identifying High potential employees 6-7

Leadership Development 8-11

High Potential Management Programs 12-19

Case Study with conclusion 20-49

Questionnaire 50

Articles 51-69

Bibliography 70

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Introduction

Definition

Performance management is an ongoing, continuous process of communicating and clarifying job responsibilities, priorities and performance expectations in order to ensure mutual understanding between supervisor and employee. It is a philosophy which values and encourages employee development through a style of management which provides frequent feedback and fosters teamwork. It emphasizes communication and focuses on adding value to the organization by promoting improved job performance and encouraging skill development. Performance Management involves clarifying the job duties, defining performance standards, and documenting, evaluating and discussing performance with each employee.

Objectives

The objectives of Performance Management are to:

1. Increase two-way communication between supervisors and employees 2. Clarify mission, goals, responsibilities, priorities and expectations 3. Identify and resolve performance problems 4. Recognize quality performance 5. Provide a basis for administrative decisions such as promotions, succession and strategic

planning, and pay for performance.

Principles of developing a performance management plan

Development of a performance management plan should be consistent with the following principles:

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1. Performance management is considered a process, not an event. It follows good management practice in which continual coaching, feedback and communication are integral to success.

2. The Performance Management Plan is primarily a communication tool to ensure mutual understanding of work responsibilities, priorities and performance expectations.

3. Elements for discussion and evaluation should be job specific – not generalized personality traits. The major duties and responsibilities of the specific job should be defined and communicated as the first step in the process.

4. Performance standards for each major duty/ responsibility should be defined and communicated.

5. Employee involvement is encouraged in identifying major duties and defining performance standards.

6. Professional development should be an important component of the plan.7. The formal evaluation period should be long enough to allow for full performance and to

establish a history such that evaluations are fair and meaningful. One year is a common evaluation period.

8. Documentation of performance will occur as often as needed to record the continuum of dialogue between supervisor and employee.

9. If formal ratings are included, they should reflect the incumbent's actual performance in relation to the performance standard for that major duty.

10. The supervisor should be evaluated on the successful administration of the plan and ongoing performance management responsibilities.

11. Training for supervisors and employees is encouraged and will be provided by University Human Resource Services.

12. The Performance Management Plan should be consistent with federal and state laws which address non-discrimination.

Supervisor's responsibilities

The supervisor's responsibilities are to:

1. Communicate and clarify major job duties, priorities and expectations. 2. Establish and communicate performance standards.3. Monitor employees' performance through observation, discussion, etc. 4. Document good and unacceptable performance. 5. Provide continuous coaching and constructive feedback in a timely manner. 6. Hold performance discussions (at least annually).7. Correct poor performance and reinforce good performance. 8. Help employees to develop skills and abilities for improved performance. 9. Provide necessary information, resources and opportunity to allow accomplishment of

key results.

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Available resources

Employee and Organizational Development, University Human Resource Services, is available to provide consultation with supervisors interested in developing a Performance Management Plan. Individual and/or group training on all aspects of Performance Management is provided upon request.

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Identifying High potential employees

How do companies identify their high potential employees?

MEASURING HIGH POTENTIAL EMPLOYEESCouncil research finds that a high-potential employee is defined as one that has the potential for development and has the ability to move through development stages at an accelerated speed and be promoted several levels. In identifying high-potential employees, profiled companies often rely on nomination, data collection, review and selection by supervisors and other management personnel.

Companies such as A.C. Nielsen and Verizon indicate that talent inventory serves as a way to identify high-potential employees. Nielsen measures high-potential employees by tracking reviews of talent profiles and when employees are scheduled to move into other assignments. Verizon currently assesses the skills and leadership potential of its employees.

Past Council research indicates that profiled automobile companies support a formalized process for assessing and identifying high-potential employees in a performance review process. Companies often evaluate employees based on a specific set of skills and behaviors. The most common criteria in which to meet or exceed expectations include:• Business acumen• Communication skills• Corporate thinking• Desire to serve• Drive for results• Entrepreneurial spirit• Innovation• Integrity• Leadership skills• People development

Investing time and resources in young talent is critical for companies wishing to cultivate powerful future leaders. According to a 2001 report from benchmarking firm Best Practices, LLC, companies that design an integrated succession planning process ensure that high-potential employees are promoted into the upper echelons of theorganization.4 Though HR plays a role in succession planning, line managers must have final ownership in the executive development process, as the examples below indicate:

• At Fuller Company, senior management teams, supported by a team of department heads, HR professionals, an outside consultant and other senior managers, review the company’s Targeted Employee Development Program (TEDP) and the progress of each TEDP participant. An HR professional is responsible for ensuring that individual development matches corporate goals, for creating and delivering appropriate developmental activities and for overall management of the program.

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• At PepsiCo, line managers take the lead in “game planning” career development assignments for designated individuals designed to build overall organizational strength and to accelerate individuals’ development.

• American Express relies on 360-degree assessments and manager feedback to identify competencies and areas for development. Managers at Kraft use a similar process and meet regularly to determine the highest career trajectory for high-potential employees within each function.

Meeting the Global Rewards Challenge, a 15-country study of performance and reward management practices drawn from two related Towers Perrin surveys, found that highperforming companies take a different approach to rewarding employees than do other companies. In particular, they consistently give their high-performing and high-potential employees a better return on their individual performance than they give to other employees. These rewards may include larger base pay increases, greater variable pay awards, larger stock option grants and a number of other incentives.

Mentoring programs can provide the guidance necessary for HIPOs to take advantage of available career opportunities.

MENTORING HIGH POTENTIAL EMPLOYEESCompanies may utilize either internal mentors or coaches or hire external coaches. External coaching provides executives or emerging leaders with feedback beyond the support that an individual can gain from within their own organization.

Coach-assisted mentoring combines the use of a professional coach, often external to the organization, with senior executive mentors. The professional coach supervises the mentoring of selected high-potential employees and seeks to accelerate the career development of these HIPOs while enhancing the coaching skills of senior executives. Xerox Corporation pairs all twelve of its executive committee members with HIPOs from several layers below them to accomplish an established set of developmental objectives. Outside coaches are matched with each mentor and mentee pairing to assist with coaching and to measure progress against individual development plans.

Learning groups, comprised of one learning leader and four to six high-performing employees, allow for beneficial interaction by creating a joint learning experience. High-potentials selected to be part of learning groups are generally placed on succession planning lists, have made important contributions to the firm and possessexpertise that the organization cannot afford to lose.

Learning groups led by open-minded learning leaders help high-potential employees feel empowered. Encouragement of dialogue in the learning groups helps high-potentials to address ideas and needs as they evolve, without being hindered by a set agenda.

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LEADERSHIP DEVELOPMENT

What leadership development tactics are companies using that provide exposure to real life company problems and to the CEO and the senior executive team?

Companies have increasingly recognized that on-the-job learning is the most effective method for preparing high-potential employees for more senior positions. On-the-job learning is defined as matching high-potential employees with development positions within the company that will allow them to learn, exercise and enhance the business and leadership skills necessary to advance through the organization’s leadership ranks.

While there are numerous advantages to on-the-job development, such as its cost-efficiency and high applicability across the firm, on-the-job development has some drawbacks. One serious drawback is the low insulation from consequences of errors, as developing employees in a work environment contains the risk that any mistakes will be more costly and have a direct effect on the performance of the individual, theircolleagues or the organization.

Beyond providing challenging developmental positions to HIPOs, companies use the following tactics for developing their high-potential talent:• Business school courses and classroom-based learning—Companies may offer to send their HIPOs to executive education courses at business schools, teach mini-MBA courses internally, or allow their HIPOs time to take courses at their organizations’ corporate universities or online.

An IT firm profiled in Council research partners with Harvard Business School to offer high-potential employees and executives participation in a one-week educational retreat.

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Participants receive instruction in areas such as finance, strategy, leadership and change management, in addition to working in teams on case studies and taking part in outdoor challenge exercises.

Senior executives at Ford Motor Company teach classroom-based, leadership skills training to high-potential employees as part of Ford’s New Business Leader Program

PAGE 3• Consortium activities—An education provider, such as a university or business school, organizes for a small group of non-competing organizations to share in the cost and experience of developing potential leaders. This provides high-potential employees with developmental experiences that address strategic training while allowing them to interact with business leaders from other organizations.

• Non-executive directorships—Serving as a non-executive director on the board of an external organization can be a developmental experience for high-potential employees not yet ready to take a place on their own company’s board or executive committee. External organizations exist that can match high potential leaders withcompanies requiring non-executive directorships.

• Secondments—Executives or high-potential employees may take secondments with external organizations that can be administered through reciprocal arrangements with other organizations.

• Job rotations—Whether through different departments or to different global locations, job rotation programs allow employees to gain broader exposure to the company and to gain cross-functional skills. Furthermore, despite the potential high costs, job rotation programs often contribute to career satisfaction, employeecommitment to the company and retention.

Cadbury Schweppes structured a global rotational program with formal protocols for assignment selection and reentry into home country to accelerate the development of high-potential managers in their first global assignment. The enhanced structure of the rigorous program reduced high-potential employee participants’ derailment from a high of 88 percent to approximately 13 percent.

McDonnell-Douglas uses three types of job rotations to develop high-potential employees: corporate rotations for future general managers and executives, functional rotations and intra-company rotations for HIPOs who are still low-level employees.

• Shadow cabinets—Standing group of high-potential employees convenes regularly to consider real business issues on the agenda of the companies’ executive committee. Anheuser-Busch Companies, Incorporated forms an 18-member panel mirroring the strategy committee to expose high-potential employees to the companies’ strategic issues. Meeting monthly to examine critical corporate issues and to make recommendations to the company’s senior executives, the cabinet members achieve a higher level of understanding of the business and its strategic challenges. As a result of the program, more than half of cabinet alumni have occupied or tracked to subsidiary corporate officer positions.

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• CEO-led challenge initiatives—High-potential employees participate in high-profile action learning projects with senior executive team which allow them to innovate, take risks and learn in a protected environment. ARAMARK Corporation uses seven-month action learning projects both to develop the company’s highest potential middle managers and to enhance company revenue growth. Since instituting the program in 1993, ARAMARK’s overall annual growth rate has increased from 2.1 percent to 8.3 percent.ORPORATE LEADERSHIP COUNCIL PAGE 4• Stakeholder-focused curriculum—Representatives from key stakeholder groups challenge assumptions of high-potential middle managers in structured settings, allowing for interchange and learning. Hayden Company invites corporate stakeholders, including customers, investors and employees to present their views on company performance to a class of selected high-potential, mid-level managers. Participants gain insight into the pressures that top decision-makers face in setting the strategic direction of the firm and in setting corporate policies.

• Action learning—A form of learning through experience, action learning typically involves addressing real problems in real time. Literature indicates that executive and high-potential employee development programs are increasingly relying upon action-learning techniques to present real life case study examples. Some examples of companies’ action learning programs are provided below.

• GE’s business management and executive development programs rely upon action learning strategies to involve participants in current business scenarios, often implementing the recommendations of participant teams.

• Arthur Andersen uses a modified action-learning approach to their executive development program. Prior to beginning the program, participants receive criteria for selecting a real client with a business problem and protocols for interviewing the client. Participants then work in teams to develop recommendations for the client and after the course; they must present their recommendations either to the client or to the program sponsor.

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Why the survival of the fittest assumption doesn’t work?

Current leaders often wrongly assume their in-house potential will emerge without any regard forHR-policies. This ‘survival-of-the-fittest’ assumption pictures the high potential as a lonely warrior, whofights his way through the jungle with a machete. The business environment is considered as a kind of test, with only the ‘lucky few’ finding their way to the top. This may, however, cause leaders to overlook in-house potential, while boosting derailments in the evolution of identified high potentials.

Current leaders are keen to regard the ‘survivalof- the-fittest’ assumption as true, because they frequently regard themselves as ‘survivors’ too. According to this assumption, it would appear to be perfectly feasible to select high potentials based on values, norms and personality traits similar to the current leaders. Only modest investments in HR-policies then appear to be necessary as the current leaders believe they can best identify the future leaders.

There is a significant danger that utilising informal selection systems promote employees on the basis of similarities they display and the network they build: i.e. those who attended the same educational and training institutions, apply the same leadership style, belong to the same social background and come from the same ‘old boys club’. Applying the ‘natural-selection-technique’ implies a number of risks, however, which can have an impact on the continued, long-term existence of the company. Informal and often self-designed ‘ad hoc’ systems do not constitute an effective strategy to identify and develop the company’s future leaders. It is a luxury which companies can no longer afford, since the arrival of the second ‘war for talent’.

Second war for talent has arrivedIt is often claimed that the demographic shortage of labour will make the first war for talent (announced in the late 1990s) look like a ‘minor and temporary irritation’. The future shortage of labour is presently a fact well documented by statistics. By way of illustration, here are some figures: even if the US economy were to grow over the next fifteen years by only 2% for instance, the demand for senior managers would still rise by about one third. Meanwhile, the total potential labour forcein the US is declining: in 2005, the total of 35- year to 44-year olds decreased by some 15%. A similar phenomenon is happening in Europe: the number of employees aged 55 or older is set rise to 47% of the total European working population by 2010. By 2050, the situation will look even more dramatic: by then as much as 60% of the total European working population will be older than 60 years. This demographic trend serves to underpin the rationale that investment made in attracting, selecting, developing and retaining in-house talent is a pressing need.

Some companies will consequently push aside this imminent problem of a structural shortage of labour. It is true that until the year 2010, companies will hardly notice any change, as a consequence of increasing female participation, large restructuring operations and continuous economical fluctuations. However, demographical statistics suggest the long-term trend is clearly a continuous and ever-quicker tightening of the labour market.

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High Potential Management Programs

There is, a growing awareness that companies must develop a long-term strategic HR policy in order to win the war for talent: They must devote more attention to attracting and retaining their human capital and develop potential internally, rather than ‘buying’ it externally. Increasingly, companies are translating this awareness into an in-house ‘high potential management programme’.

High potential management programme as an answer to the new war for talent

In contrast with the phenomenon of ‘cloning the current leaders’, Hudson advises companies todevelop a formal high potential management programme: an in-house ‘pool of high potentials’, which are closely monitored and developed in line with company strategy and company needs. Consequently, companies need to free up the necessarily resources that will enable high potentials to perform at their best and grow step by step towards a next job level.

Up till today, companies are tempted to play it safe: they confine resources only to the ‘established talents’ at the top and invest little in the development of latent in-house potential at entry level. A formal high potential management program implies that organisations must look ahead and tackle their leadership development proactively. Companies should opt for a wider approach towards talent management, by identifying future leaders early on in their career. It is indeed, ‘the early bird that catches the worm’. Companies mustn’t be afraid to evaluate their employees and designate their high potentials in a formal manner. The strength of successful companies is their courage to differentiate and to be consistent in the application of a high potential policy.

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10 guiding principles for installing a high potential programme

1. Align the programme with the company strategy“The problem of our times is that the future nolonger is what it once was” — Valery

The unified commitment of the company to invest in in-house potential is decisive for the success of the high potential programme. The programme should therefore be placed on the management agenda and clearly aligned with the company strategy, ensuring all personnel decisions made with the long-term future of the company in mind.

High potential management presupposes sufficient awareness of the company strategy and the strengths and weaknesses of the company leaders, both today and in the future. In that sense, the profile of the future leaders of the company comes forth — in an almost natural way — from the dialogue on the strategic imperatives and associated challenges the company will be facing. Hudson recommends organising a ‘high potential workshop’, where the CEO and the senior management sit around the table and reflect on leadership and challenges future leaders will face. The acknowledged current and future challenges can then be used as the guiding principles during the workshop. It is important also to benchmark with other companies, in order to see what initiatives the competition is taking to develop its in-house potential. The CEO and the management should be challenged to define a clear definition, programme principles, objectives and role distributions. In principle, the owner and sponsor of the high potential programme should be the CEO. The role HRM has to assume is not a minor one, however. The role of HRM is to help put in place the systems and processes and to monitor these process and safeguard their continuity and quality.

2. Hold the management responsible“I used to select jerseys, now I select people”— Wexner, CEO of The Limited.

Engaging the management in the identification and development of the high potential pool is only possible when they are held formally responsible. They are the ones who can provide high potentials with the appropriate in-house and external training, let them go through rotational assignments andmanagement by linking development goals to an annual bonus system. The basic principle underlying this bonus system is that behaviour pointing to active participation in the development should be remunerated. The objectives relating to the in-house development of potential can account for 20% or more of the manager’s bonus. The time and energy invested by management in the development of high potentials thus becomes an integral part of the managers’ objectives. In this respect, management is seen and deployed as a ‘discoverer of burgeoning talent’. Only the management can free up the talent of the organisation by treating them as an organisation-wide resource, which has to be fully developed over time.

3. Organise a high potential executive committee“The challenge a company is facing consists in

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having talented employees who change alongwith the organisation as and when technology,competition or the entire industry changes” — Allaire, CEO Xerox Co.

Putting in place a ‘high potential executive committee’ which takes over the ownership of the high potential pool, constitutes an essential element of the development programme. There is still too much evidence that nepotism, and actions taken out of self-interest, affect the correctness of high potential pre-selection and selection. The appointment of a group of selected ‘equals’ in a high potential executive committee will in any event enhance the objectivity of any ‘propaganda’ or ‘killing’ tactics. Each business unit or division can have a ‘subcommittee’ where the information about each high potential is collected and discussed. Ideally, one day per quarter should be spent on discussing the individual cases and on preparing and monitoring the individual tracks. Regular follow-up and reporting by the subcommittee to the executive committee ensures management is, each quarter or half year, required to map the actions they have taken and the actions they will be taking to further develop high potentials. This is also an opportune time to provide information on the high potentials’ reaction to certain experiences, to assess retention risks and implement or suggest possible changes in the development track based on the executive committee members’ discussions.

4. Identification criteria linked to transition phases“Failure to learn new things results almost inevitablyin failure to perform in a management role in thelong-term” — Kovach

It seems as if there is a widespread need to believe that there is a magical ‘set’ of generic qualities for identifying high potentials. The list of qualities high potentials are endowed with seems endless, and — in some cases — even contradictory. But what if there is no such magical success formula? Furthermore, there is a common believe that this set of competencies remains constant over time. What if high potentials, like white knights, have to learn how to ride their horse and handle their sword? Even intuitively, it seems absurd to assume that a 25-year old has the same knowledge, skills, and attitudes as a 45-year old. To benchmark a young high potential against successful acknowledged talent, is a bad way to identify potential. In line with this reasoning, identification criteria should shift according to different career stages. If the idea that a basic set of unequivocal competencies is decisive for the identification of high potentials were to be abandoned, it would open the way for seeing high potentials for what they are: high performing employees with the potential — in time — to grow. Hudson advises companies to start spotting the high potentials based on three basic criteria: learning ability (LQ ), emotional (EQ) and intellectual intelligence (IQ) and attitude (A). In-depth interviews with high potentials in various age categories show that on their way to the top, they go through a numberof ‘phases of transition’. Each step on the career ladder requires the high potential to acquire a new set of competencies. Each phase of transition assumes a leap in responsibility and autonomy.

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Once high potentials have mastered a certain job or competency level, they will go in search of ways to raise the bar once more and look for a new challenge. If there is one element that is decisive in making a distinction between high potentials and other employees, it has to be the exceptional speed at which they are able to develop the knowledge, skills and attitudes needed to assume a new position. One should not benchmark a 25-year old to 45 year old, but to a ‘norm’ of what is expected of someone given his age or work experience.

5. Keep high potentials and high performers separate “What’s in a name?” — Shakespeare

Companies might be tempted to look at performance in the current job, rather than potential when identifying high potential. Excellent performance is often an identification criterion of high performers quite simply because it is the most easily observable criterion. In addition, politically it is simpler and less sensitive to put employees on a list of high potentials based on their exceptional performances rather than their latent potential. When only having eyes for the performance of employees, companies could be in for some unpleasant surprises when the high performer is promoted at a higher level with different duties and responsibilities. A study shows that nearly all high potentials (93% to be exact) are also high performers: performances seem to be a must for high potentials to be perceived and identified as such. The same study shows that only 29% of the high performers effectively were high potentials as well. This suggests there is a real danger of terminology confusion regarding high potentials, causing strong performers without growth potential to contaminate the pool of high potentials. The inconsistent use of the

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term ‘high potential’ has resulted in contamination of the term both in the literature and in business.

6. Communicate openly on the status of the high potential “The question is not whether or not we will tell highperformers that they are high potentials, but howwe are going to tell them” — Young

As a rule, high potentials are not formally told nowadays about their special ’status’. More often than not, the individuals whose names are on the secret list receive a few hints about their status: they know that they have been defined as high potential by the people they have lunch with, the mentor who supports them and the exposure they receive. Formally allocating a high potential label is considered to be tricky: in regard to communication on the label, as many advantages as disadvantages have been defined. In a tightening labour market, however, communicating on the label can form part of the strategy aimed at retaining this target group. It could potentially encourage high potentials to remain with the company for longer, even if a head-hunter contacts them and they are offered a job in which they can earn more immediately. A Hudson study (2006) revealed that allocating a high potential label — whether formally or informally — has a positive implication on the work satisfaction of the employees. The label is regarded as a proof of the faith and engagement of the company in their development. When organisations are in doubt about whether to award a hipo label or not, the question is not: Shall we inform employees about their potential? But rather: How shall we inform them about their potential? The risks related to allocating labels are often linked with perceived promotion pledge: the label is often considered as a guarantee of future success and it is this assumption that brings employers into problems. No responsible manager or HR professional -responsible can gaze into a crystal ball to predict the future, therefore allocating a label makes it more difficult to manage the expectations of high potentials. For this reason Hudson advises companies to set a time constrain on the label.

High potentials need to become aware that their label is not a ‘wild card’, but an acknowledgement of their potential at a certain moment in time. By adding a time constrain to the label, the status is ‘up for discussion’, creating the possibility of stimulating a frank debate between HR, the management and the high potential: ‘What do you want and where do you want to go?’ As against: ‘What do we want, and where do we want you to go?’ Testing one another’s needs can be regarded as a first step in the development and retention of high potentials.

7. Use development centre techniques to identify high potentials “You can only keep track of what has beenmeasured” — Old Dutch proverb

An evaluation of high potentials early on in their career enables a follow-up trail, covering the development of the high potentials over the years. Ideally, as from the start of the high potentials career, organisations use the data available from the selection phase (such as personal data orinterview data) as a ‘zero measurement’. In the very first career phase, organisations can opt first to invest in the build-up of expertise of the young potential or to let him rotate through a number of business activities. A more in-depth follow-up measurement can best be made after a period of approximately three years, from which a proposed career and development plan is drawn up resulting in active development of the high potential. A second and crucial measurement is the development centre that takes place between the ages of thirty-five and forty

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years. It is this measurement that has a truly fundamental impact on the final and detailed arrangement of the hipo track from a long-term perspective, in order to avoid the syndrome of the ‘inchdeep- mile-wide’ manager. Also, information that can prevent the ‘Peter Principle’ from manifesting itself often comes to the fore. Hudson recommends one more formal measurement (‘end assessment centre’), to evaluate and validate whether the high potential will ultimately be admitted to the highest decision-making body of the ompany or not, and in what capacity. At the end of the day, spread over the total career of a highpotential, there should be at least four important measurements, which will impact decisively on the high potentials track. Companies can — at regular intervals — adjust the high potential track, based on the development centre results.

8. Manage the tailor made high potential track “Don’t judge each day by the harvest you reap, butby the seeds you plant” — Wilbur

The high potential track is a flexible path, its direction being continuously adjusted, either based on changing external circumstances or on the high potentials’ personal development needs. It must be ensured that management are responsible for developing high potentials in the right direction, aligned with the strategic objectives of the business. For years, stretch assignments have been an important technique to develop potential. Stretch assignments are issued based on the inherent belief that offering high potentials a new experience allows them to acquire new skills, knowledge and attitudes. An essential condition is, however, that the hipo receives sufficient support and is adequately monitored while learning. In addition,

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Hudson advises open communication channels between management and the high potential about the type of development practices that both parties regard as efficient.

9. Embrace derailment of high potentials “It is not a question of whether the high potentialswill derail, but rather of when they will derail andhow they will react to this failure”- Kovach

Monitoring high potentials over time, brings up a painful contradiction: the competencies high potentials often rely upon to be identified in an early stage, are often the same as those that hamper their growth to a subsequent phase in their career. The behaviour that is endorsed and rewarded by the management in a certain career phase is admonished in a subsequent one. This makes the ongoing monitoring of high potentials and continuous feedback loops throughout the different transition periods key elements to keep high potentials on track. Many young potentials clearly feel confused and frustrated when they find out that competencies, such as ‘assertiveness’ and ‘self-confidence’ are suddenly described as ‘aggressiveness’ and ‘self-glorification’. The success of a high potential often brings about a kind of blinding arrogance as a result of which colleagues no longer want to work with them.

Based on the belief that they are special and stand apart from the mass, the high potential’s ego inflates to bursting point. This self-image exposes them to the risk of not wanting to listen to others anymore. They no longer ask for input of others, and no longer check their ideas with others because they rely too much on their own. They start extrapolating their capacities to different activities and topics about which they have less expertise, and are perceived as pedantic as a result. They merely continue to build on their ‘strengths’ and lose sight of their ‘weaknesses’. This causes them to make mistakes, which they then painstakingly try to cover up in the hope that nobody will ever find out that they are not quite as ‘special’ as they thought they were.

Generally, with each transition of a high potential to a new role or job level, the chance of derailmentis real. Derailment doesn’t have to be a bad thing, however. On the contrary, the loss of thehigh potential status forces them to practice introspection, learn from their mistakes and so to reinvent themselves. Failing is a worthwhile lesson and can be instructive for high potentials, because handling it gives them the chance to discover their own limitations. This event can therefore bring the high potential back to the high potential track. Just like the hipo status, derailment is not a permanent but a temporary state.

10.Remunerate high potentials by investing in their development “If you want one year of prosperity, grow grain; ifyou want ten years of prosperity, grow trees; if youwant a hundred years of prosperity, grow people.”— Old Chinese proverb

In an ever tightening labour market, retention of talent is becoming increasingly important. Many companies and their leaders offer astronomical salaries to secure themselves to maintain high potentials in the company. Hudson advises companies to consider the remuneration package as the combination of compensation, benefits, environment and development.

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Compensation by way of salary should be based on an employee’s performance: in line with this assumption, a high performer will receive similar pay to a high potential. Both turn in performances that are exceptional compared with the average employee and for these performances they should be remunerated. The remuneration policy of most organisations provide for the possibility of paying high performers and high potentials a slightly higher than average salary, within a certain ‘job level’ broadband. Neither benefits, nor general job environment conditions should be used to differentiate in investments in development. Remunerating high potentials by investing more in their proper development has a dual effect: on the one hand companies offer high potentials challenges and opportunities to learn new skills and on the other high potentials grow to a subsequent job level more rapidly, and — as a consequence — their fixed salary will rise without having to depart from formal company salary policies. Some high potentials are blinded by the trappings of success rather than by the process that leads to it. The high potential executive team has to support high potentials in this. While rapid promotion and high salaries can be dazzling, opting for this route means that high potentials are not always able to do enough ‘swotting up’ for a subsequent challenge. It does not allow for sufficient time to assimilate the competencies they need in a subsequent job or role. A more successful approach is to go for a well thought-out and sufficiently detailed development plan which gives the high potential time to acquire new competencies, allows them to grow and prepare for a subsequent, more complex roles with more autonomy and a wider scope.

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Case Study:

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INTRODUCTION

Up until 5 years back few Indian companies had a formalized process in place for High Potential Management. Though some companies identified high potential employees, the exercise was mainly conducted for Succession Planning rather than developing and managing the careers of high potential employees. However, in recent times High Potential Management has started gaining momentum. TCS BPO has started identifying high potential employees but does not have a formal structure in place to manage them. The purpose of this project was to develop a High Potential Management framework for Tata Consultancy Services Limited. The project was divided into the following three phases.

Literature Review

The literature review focused on understanding the best practices adopted for managing high potential by companies across various industries. This included reading books, periodicals, browsing through various websites and referring to the online books.

TCS Internal Process Study

Understanding the Internal Processes at TCS included the organization structure, various domains TCS – BPO operated in, the Performance Appraisal System and the Competency Framework.

Benchmark Best Practices

A benchmarking exercise was conducted with ten companies to understand how they companies identify and manage High Potential Employees. At the end of this exercise the various interventions implemented by the companies were reviewed and those interventions which were feasible to implement in TCS were taken into consideration for the final framework.

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METHODOLOGY

Research Design:

The concept of having a formalized structure in place for high potential management has only started catching up with Indian companies in the last 5-7 years. As most of the companies are in the nascent stages of developing and running a High Potential Management Programme, not much information on the same is easily available. Hence the research conducted for this project is exploratory in nature.

Sampling Design:

The companies for the benchmark study were selected on the basis of convenience sampling. Ten companies participated in the benchmarking exercise. The only condition that these companies had to fulfill was having a structure in place for High Potential Management.

Four honeycombs were covered for the Internal Honeycomb Study. Two employees from each honeycomb were interviewed. These employees were either Honeycomb Leaders or Project Managers.

Data Collection Technique:

Type of Data:

The High Potential Management framework was developed mainly on the basis of the primary data collected from the benchmark study. Apart from that secondary data available in the form of articles, books and white papers was also used.

Method of Data Collection:

The questionnaire for the benchmark study comprised of open-ended questions as most of the information desired was descriptive in nature. This questionnaire served as a general guide while collecting information. The aim was to collect as much information as possible from these companies even if it was not part of the original questionnaire.

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BENCHMARKING BEST PRACTICES

Ten companies across various industries were included in the benchmark study. To maintain the integrity of the information collected during the study, the names of the companies have not been disclosed in the report. Instead the names have been by alphabets as given below. To provide a better understanding, the respective sectors have been mentioned alongside the various coded company names.

Company A – Manufacturing Company B – Banking Company C – Pharmaceutical Company D – BPO Company E – Consulting Company F – Petroleum Company G– Telecommunication

The information obtained from the companies has been summarized in a table. Details with respect to the identification of high potential employees and interventions implemented have been elaborated upon in the section after the table.

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Particulars Company A Company B Company C Company D Company E

Identifying high potential employees

Rating in Performance Appraisal for the last two years and Assessment Centre.

Rating in Performance Appraisal and the Nine Box Grid.

Rating in Performance appraisal, criticality of position, 9 box grid, and feedback from functional directors.

Rating in Performance Appraisal during the last 3 years.

Rating in Performance Appraisal during the last 3 years.

Elimination Process

No No No No. No.

Scope All Managerial grades

All Managerial grades




Senior position staffed from within

A large number of senior positions are staffed from within.

Combination of the two.

All senior positions are staffed from within. Occasionally when new positions are introduced Company E recruits externally.

Positions up to the DGM level are generally staffed from within. GMs are mostly recruited from outside.

A large number of senior positions are staffed from within.

Formal structure for High Potential Management

Yes Yes Yes Yes Yes

Activities & Programmes

1) Training initiatives

E-learning Programmes

Management Development Programmes

Leadership Programmes

Consortium Programmes


Miscellaneous training programmes

Leadership Mentoring Programmes





Behavioural training with ISABS



2) Job related initiatives

Projects Job Rotations Foreign

assignments On the Job

training



training


assignments


assignments



training

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3) Mentoring / Coaching

Coaching No Mentoring Mentoring Coaching (only for senior employees)

4) Interaction No No No Interaction with top management

No

5) Representing the company

No No No

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Particulars Company A Company B Company C Company D Company E

Ownership HR Top

Management Individual

Supervisor Employee

HR Top


Supervisor Training

HR Top


Supervisor

HR Top


Supervisor

HR Training Individual

Supervisor

Process Driven v/s Individual Effort

Process driven Process driven Individual Effort Process driven Process driven

Internally Driven v/s External Consultants

External Consultants are used.

External Consultants are used.

External Consultants are used. Only culture building training is internally driven.

All programs are internally driven. Employees certified as trainers conduct the programs.

Some programs use external consultants. The content of all courses is designed and owned by the company.

Uniformity in application v/s individual focus

Uniformly applied across all employees in a grade.

Greater emphasis on individual employee's needs.

Greater emphasis on individual employee's needs

Greater emphasis on individual employee's needs. Certain programmes like The Seven Habits of Highly Effective People are compulsory for all high potential employees.


Tracking performance of high potential employees

Normal Performance Appraisal System.


In addition to the normal performance appraisal system, there is a special 360 degree feedback for high potential employees so that they can get varied inputs.

Normal Performance Appraisal system

Normal Performance Appraisal system

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Particulars Company F Company G

Identifying high potential employees

Rating in Performance Appraisal and Development Centre.

Rating in Performance Appraisal. Assessment centre used for identifying high potential employees till the middle management level.

Elimination Process

No No.

Scope All Managerial grades


Senior position staffed from within

All senior positions are staffed from within.

80% of the senior positions are staffed from within.

Formal structure for High Potential Management

Not a very formal structure in place. The activities and programmes for these employees are generally conducted discretely.

Yes

Activities & Programmes

1) Training initiatives



Advanced learning opportunities



2) Job related initiatives



training


assignments

3) Mentoring / No No

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Coaching

4) Interaction No No

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Particulars Company F Company G

Ownership HR Individual

Supervisor

HR Top


Supervisor Training

Process Driven v/s Individual Effort

Process driven Process driven

Internally Driven v/s External Consultants

Technical training programmes are internally driven whereas external consultants are used for behavioural training programmes.

External consultants are used.

Uniformity in application v/s individual focus



Tracking performance of high potential employees




Company A

Identifying High Potential Employees

At Company A employees are assessed separately for performance and potential. Employees are rated on a scale of 1-3 for performance (where 1 is the lowest) and a scale of A-C for potential (where A is the highest). Based on the rating combination employees are accordingly placed in one of the boxes in the 9 Box Grid. Employees who have received a rating of 2 or 3 for performance as well as a rating of A or B for potential are identified as high potential employees. This is illustrated in the figure given below. The employees falling in the shaded boxes are identified as high potential.

While identifying employees as high potential the performance-potential ratings acquired in the last two years is taken into account. Employees identified as high potential are required to attend an Assessment Centre. If there is a mismatch between the ratings acquired by an employee in the Assessment Centre and Performance Appraisal then it would investigated and the employee would be identified as high potential on the basis of a consensus.

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A

B

C

1 2 3

Po

ten

tia

l

Performance


Formal Structure for Managing High Potential Employees and its evolution

A structure for High Potential Management has been in place for a many years however, it was documented and formalized in 2002-03. The activities implemented prior to 2002-03 are still being followed the only difference being the system is more standardized and employees across all business units and grades have a more uniform understanding of assessing performance and potential.

Activities and Programmes currently implemented to manage High Potential Employees

An individual development plan is prepared for each employee. This plan is prepared keeping in mind the employee’s aspirations. The plan elaborates on:

Workplace assignment in the current job Cross-functional assignment E-learning programmes the employee can avail of Training programmes (classroom) Coach assigned to the employee At least one career move along with a timeline

High Potential Employees are put through the programmes and activities given below.

Training initiatives

E-learning ProgrammesCompany B offers over 250 E-learning programmes which includes everything from generic to technical training. The IDP elaborates on the E-learning courses the employee must go through.

Management Training ProgrammesThe Company A has set up its own university for providing Management Training programmes to its employees. They have tied up with renowned institutions and experts for designing and delivering these programmes. Their faculty includes professors from universities like Michigan, Harvard Business School, Indian School of Business. The programmes are designed to provide value to employees based on the level in the organization they belong to. Hence there are separate programmes for Associates, Managers, functional heads of business units, functional heads of a group of business units in an industry and the overall group functional heads.


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Company A offers two leadership programmes for high potential employees – the first programme is for associates who have 18 months or less work experience prior to an MBA and the second programme is for employees who have least four years of work experience prior to or after an MBA. Both the programmes focus on 3-5 rotational assignments which includes an international assignment as well. The employee’s performance is reviewed and he is identified for a role change.

Consortium ProgrammesCompany A has formed a consortium for senior leadership training programmes along with companies like Genpact, HLL, Mahindra and Mahindra, Suzlon, HDFC. The programmes are designed by the consortium along with help from institutions like ISB.

Job related initiatives

Projects and special assignmentsHigh potential employees are assigned to cross-functional projects. They may also be sent for special assignments abroad.

Rotation through departmentsHigh potential employees are rotated through various departments in the organization.

Coaching

Each high potential employee has a coach identified who will coach him in 3 skills. These coaches are generally Functional Heads who are certified as Master Coaches after they go through a 6 months course on coaching.

Most successful/least successful programmes

So far all the programmes and activities presently conducted for high potential employees have been successful. The E-learning courses in particular have been successful. So far 95% of the employees who have taken up online courses have completed it.

Company B

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On the basis of the rating in the performance appraisal and potential employees are fit into the nine-box grid. Employees in the high performance high potential box, high performance medium potential box and medium performance high potential box are identified as the key talent.


There is a formal structure in place for managing high potential employees since 2007. Employees in the high performance high potential box are promoted and put through a Transition Programme which combines training, projects and coaching. A development plan is drawn up for employees in the other two boxes and they attend a Bridge Programme which helps bridge the gap in competencies and prepare them for assuming challenging roles in the future.


An individual career development plan is prepared for each employee. This plan is prepared keeping in mind the employee’s aspirations. The plan elaborates on the employee’s goals, the timelines within which he needs to achieve them and development activities that would be conducted.



Training ProgrammesVarious training programmes are provided to employees. These programs are mostly classroom based. They even organize a ‘Speaker Series’ where in senior leaders in the organization address employees on the Business and Strategy.


Employees are sent for Management Development Programmes to various institutes like the IIMs, S.P. Jain as and when the need arises.


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Foreign Assignments

High potential employees may be sent for challenging short term assignments abroad.

On the job developmentOn the job development takes place by giving employees higher responsibilities, stretch targets, making presentations etc.

Challenging roles and rotation through departmentsHigh potential employees are given challenging roles and rotated through various departments.

ProjectsHigh potential employees can be assigned to special cross functional projects.

Changes introduced and latest developments

The High Potential Management Programme was introduced last year and hence is still evolving. Next year they plan on introducing a Mentorship Programme.


As the programme has just been introduced they have not been able to evaluate the success or failure of the activities conducted.

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Company C


In Company C employees are identified as high potential on the basis of:

Criticality of the position Performance Ratings 9 box Performance-Potential grid Feedback and inputs received from functional directors


There is a formal structure in place for managing high potential employees since 2000. Originally this programme was referred to as Succession Planning which was later defined as Talent Management. However since 2000 it has been referred to as the Key Talent Programme.


An individual development plan is prepared for each employee. This plan is prepared keeping in mind the employee’s aspirations. The plan elaborates on the employee’s career progression in terms of roles. For example if an employee’s ultimate aim is to be a Director – Human Resources, then the plan would elaborate on the different roles the employees needs to go through in order to become a Director.



Training ProgrammesCompany E has a competency framework in place. Based on the gaps in competencies identified, employees accordingly receive behavioural, leadership and technical training.

Management Training ProgrammesCompany E sends high potential employees for Management Development Programmes conducted by premier B-schools.


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Foreign AssignmentsHigh potential employees may be sent for challenging assignments outside the country. The duration of these assignments could range from a few months to a few years. The assignment could also be permanent.

Challenging roles and rotation through departmentsHigh potential employees are given higher responsibilities and assigned to challenging roles. They may also be rotated through various departments in the organization.

ProjectsHigh potential employees can be assigned to special projects within or outside their area of expertise.

Mentoring

High potential employees do have mentors assigned. However, Company C does not have a formal Mentorship Programme in place where the number of meeting between the mentor and mentee, discussions etc are systematically recorded and reviewed.


Three main changes have been introduced since the programme started. These changes are as follows:

Earlier the programme only applied to employees at the Middle Management Level and above. However recently it has been extended to employees at the Junior Management Level as well.

Earlier the employee’s aspirational role was defined in terms of work experience. However, now aspirational roles are defined in terms of the different roles that an employee would have to go through to be eligible for his aspirational role. For example an employee’s aspirational role may be Director – HR. In order to be eligible for this role. It is necessary for the employee to have experience in Performance Management, Recruitment, Compensation, Training etc. Hence he would need to move through these roles in order to qualify for the position of Director –HR.

Company E is moving towards developing an online system for managing high potential employees.

Programmes that most successful/least successful and reasons

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So far all the programmes and activities presently conducted for high potential employees are successful.

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Company D


High potential employees are identified on the basis of their rating during the last three years. Employees are rated on a 5 point rating scale – 1, 2+, 2, 3 & 4 where 1 is the highest and 4 is the lowest. Employees who have a rating of 1 for at least 2 out of the 3 years are identified as high potential employees or Top Talents. As Company D follows the Forced Ranking Method sometimes high performing employees may be forcibly rated as 2+. Hence in some cases the organization even considers employees who have been rated as 2+.

For an employee to be identified as top talent, he must achieve his KRAs and also take the initiative and involve himself in inter-departmental projects.


Company D has a formal programme in place for managing Top Talents. It was started in 2004. The top talents would comprise of the top 10% employees in the organization.


The following activities and programs are undertaken to manage Top Talent:


Leadership based Programs:These Leadership programs are conducted internally by employees who are certified as trainers. Eg. The Seven Habits of Highly Effective People. All employees identified as top talent have to compulsorily undergo a minimum of 3 Leadership Programmes in a year.

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Involvement in Special Projects:Employees identified as Top Talent are invited to a meeting with the CEO where he shares the vision, mission and goals of the organization as well as the challenges facing the organization. Employees brainstorm to come up with solutions to these challenges. Special Projects which address these challenges are identified and the high potential employees are actively involved in them. They explore the feasibility of various alternatives and present the same before the management for deliberation. Once the management narrows down on a solution, the resulting changes are driven by these employees through the organization.

Job rotation:Retention of Top Talent is given priority in Company D. The organization strives to fulfill the aspirations of its high potential employees in order to retain them. For instance, if an employee is interested in exploring opportunities in another department then the organization would definitely try to fulfill that.

Deputation:As and when the need arises, High Potential Employees are deputed for foreign assignments.

Mentoring programme

Recently Company D has introduced a mentoring programme. High Potential Employees are allowed choose their mentor. This mentor could also be an employee from another department. The mentor must review the employee’s performance week after week and monitor his performance.


Some of the changes that have taken place since the introduction of this system are:

The organization is focusing on creating more awareness about this system. The frequency of interactions with high potential employees has increased. Retention of high performing employees is given more importance. In fact supervisors

have a parameter in their performance appraisal for retaining top talent. Earlier when high potential employees wanted to move from one department to another

there was no formal structure in place for facilitating such movement. Now however a separate team has been put into place which looks specifically into movement of employees.

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A formal process has also been put into place for Internal Job Posting. High potential employees who apply for internal vacancies are given preference over other employees.

Recently more emphasis has been laid on tracking the effectiveness of training imparted to high potential employees. Their performance on the job and application of what they have learnt during the training programme is reviewed by the supervisors.


The most successful activity so far is the interaction with the CEO and top management. The special projects assigned to the high potential employees have been well received. It boosts the employees’ morale and encourages them to think beyond their area of specialization.

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Company E


The performance appraisal system rates the employees’ performance on a 5 point rating scale. This rating is based on three parameters:

Value creation for clients Helping the business grow Developing people

Based on the rating employees are slotted into 3 buckets:

Below average Consistent with peer group Above peer group

For an employee to be identified as a high potential employee the organization looks at two factors:

Consistency in performance during the last 3 years Criticality of the role to the organization


A formal structure for high potential management came into place during 2005. The structure in India is based on the High Potential Management structure in the US.


A Personal Development Plan is prepared for each high potential employee. High potential employees take psychometric tests which assess the gaps in their competencies. The Personal Development Plan would suggest various training programmes or activities that can be undertaken to cover the gaps in competencies. The following activities or programmes are conducted for high potential employees:

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Leadership Development Programmes:High potential employees attend leadership development programmes and seminars. These programmes could be conducted in house or employees could be sent outside.

Behavioural training with ISABS:Company E has a tie-up with ISABS for workshops and behavioural training programmes. High Potential employees are sent for these programmes depending upon their needs.

Management Development Programmes:High potential employees are also sent for Management Development Programmes conducted by the IIMs.

Capability Development Centre:Company E has Capability Development Centre at St. Charles in USA. High potential employees are sent to this centre for various training programmes based on their areas of development.


Projects and special assignments:High Potential employees may be given special assignments or projects to work on. These projects could be in the area of expertise or cross-functional.

Challenging roles and job rotation:High potential employees are given higher responsibilities and assigned to challenging roles. They may also be rotated through various departments in the organization.

Coaching

High potential employees are assigned to personal coaches. However this is only applicable for employees at a senior level.

Reading books:

Management and self-improvement books are recommended to high potential employees.

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Company E is currently working on developing a facility for Learning and Development in India on the same lines as the Capability Development Centre in St. Charles in USA


Two programmes which have been particularly well received are the Personal Coach Programme for senior employees and Sensitivity Training Programme from ISABS.

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Company F


Company F identifies high potential employees on the basis of the Performance Appraisal and Development Centre (DC). A DC lasts for 2-3 days and is carried out for employees at all levels in the organization. Company I has a competency framework in place. During a DC, employees are put through various activities like group discussions, personal interviews, role plays, mock presentations, in basket exercises etc to assess their competencies. At the end of a DC every employee has an Individual Development Plan prepared. The DC reveals that some employees possess higher levels of competencies than those required for their role. These employees would be recognized as high potential employees.


Though Company F identifies high potential employees, they do not have a very formal structure in place for managing them. The activities and programmes for these employees are generally conducted discretely. There are two reasons for this. Firstly Company F being a government organization cannot differentiate between employees. Equal opportunities have to be provided to all employees. When it comes to high potential employees Company F cannot differentiate on the basis of salary either. Secondly Company F believes that just as they require the high performers in the organization they also require the average performers as they form the major chunk of the organization. Hence openly differentiating between high potential employees and the rest of the organization would be de-motivating to a major chunk of the employees.




Training ProgrammesHigh potential employees are nominated for technical, leadership and behavioural training programmes.

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Management Training Programmes and MDPsCompany I sponsors high potential employees for S. P. Jain’s Executive MBA programme. They also have a tie-up with the IIMs and ISB for training programmes. High potential employees are nominated by their supervisors for these programmes. Employees are also nominated for MDPs.

Advanced Learning OpportunitiesHigh Potential Employees may be sent aboard for advanced learning opportunities. These learning opportunities revolve mainly around understanding new technologies and how best to apply them in India.


On the Job DevelopmentSupervisors are held responsible for nurturing high potential employees and facilitating their development on the job. High potential employees would generally be given more responsibilities. If the employee is weak in a particular area then the supervisor would give the employee opportunities to address his weakness.

ProjectsHigh potential employees may be assigned to special projects which may be in their area of expertise or in a different area.

Change in RoleHigh Potential employees would be assigned to challenging roles. They may be promoted vertically or horizontally. Employee’s preferences in terms of role, location and interests are taken into consideration.

Challenging roles and rotation through departmentsHigh potential employees are given higher responsibilities and assigned to challenging roles. They may also be rotated through various departments in the organization. In fact one of the preconditions for Company I employees in the case of promotions is experience in handling diverse roles across diverse business units and zones.

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Company G


At Company G employees who perform beyond expectations are identified as high potential. Thereafter using a competency framework employees are classified as short term and long term high potential. Employees identified as short term high potential receive promotions and challenging assignments. Long term high potential employees are put through a Talent Management Programme and groomed for future leadership positions.


Globally Company G has a formal structure in place for managing high potential employees. The Talent Management Programme has been designed on the lines of the Global Talent Management Programme.

Activities and Programmes currently implemented to manage High Potential Employees (long term)

High Potential Employees are put through the programmes and activities given below. At the middle management level the focus is on developing leadership skills whereas at the senior and top management levels the focus is on ensuring a thorough understanding of business and strategy. The Talent Management Programme at Company J focuses on developing a Career Development Plan for high potential employees. The plan generally spans from 1 1/2 to 3 years. It lays down the employee's transition from one role to another. Milestones are identified to track the employee’s progress.



There is a separate leadership development model for every level in the organization. Based on which level in the organization the employee belongs to he would accordingly undergo training programmes, seminars, workshops etc.

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Management Training Programmes

Company G has a tie up with institutes like the London School of Business (LSB). The course content is customized to suit Company G’s needs and is delivered by LSB’s faculty.


ProjectsHigh potential employees may be assigned to special projects which may be in their area of expertise or in a different area.

Assignments within and outside the countryOne of the key elements of the Talent Management Programme is ‘mobility’. Employees are assigned to roles within India or abroad to broaden their understanding of the business.

Challenging roles and rotation through departmentsHigh potential employees are given higher responsibilities and assigned to challenging roles. They may also be rotated through various departments in the organization.

Changes introduced in the system

The Talent Management Programme came into existence last year when Company G took over Hutch. Hence the programme is constantly evolving and changing.

Programmes that most successful/least successful and reasons

Even though the Talent Management Programme was introduced last year all the activities and programmes conducted so far have been successful and well received so far.

Summary of Findings

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The High Potential Programme in all organizations comprised of similar interventions like training, job rotations, foreign assignments, on the job development, projects and mentoring.

The high potential programme in most companies is dynamic. Employees are kept on the radar for a year after which they need to qualify again next year in order to be a part of the programme.

All companies used the normal performance appraisal system to track the employees’ performance.

Companies generally look at the most recent rating in the performance appraisal to identify high potential employees. Company A, Company E and Company D looked at performance appraisal ratings for the last 2-3 years for identifying high potential employees.

Company B, Company D, and Company C focus more on the individual employee’s needs rather than uniformly applying the programme across all employees in a particular grade in the organization.

Most organizations used external consultants for their programmes. Internal trainers are used for organization culture related training and technical training.

The Company A and Company B were among the companies who had a well structured and organised High Potential Programme. The High Potential Programme in these companies has been running for several years and hence over a period of time they have been able to improvise on the programme so that it runs smoothly.

Given below are some of the noteworthy activities conducted by companies for their high potential employees:

The Management Training Programmes at Company A are conducted at the company’s own university. They have tied up with some of the best universities in the world like Harvard, Michigan, ISB to design and deliver these programmes.

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The Company A has formed a consortium with companies like HDFC, Mahindra and Mahindra, HUL, Genpact and Suzlon to impart training to senior leadership. This is an excellent opportunity to not only learn but also interact with leaders from other industries.

Company A also has a well defined leadership programme which combines training with rotational and foreign assignments to nurture employees to become future leaders.

Company E has a tie-up with ISABS for behavioural training workshops.

Company F sends high potential employees abroad to understand new technologies and apply them in India.

Company D invites high potential employees to meet the senior leadership team. It isn’t everyday that employees would get a chance to interact with senior leaders and hence this initiative is extremely well received by the employees.

Company B has a unique programme called the Leadership Mentoring Programme which focuses on helping employees understand themselves better so that they can be better leaders. Employees take several psychometric tests and go through various sessions like Johari Window, Conflict Management, Power Inventory, etc which urges them to introspect.

The top 10-15% employees at Company A attend the Managerial Leadership Programme and Technology Leadership Programme. Once the employees complete these programmes, they are moved onto the fast track where they are assigned roles which would otherwise have not come their way for several years.

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CONCLUSION

High Potential Management has gained momentum during the last few years. Even though companies earlier did identify high potential employees, it was done mainly for Succession Planning. However, companies today focus more on developing and managing the careers of high potential employees not only because it provides a larger pool for Succession Planning but also because it helps in retaining these employees.

To be successful, the high potential programme must be aligned to the organization’s strategy. The Top Management, functional heads and all supervisors down the line must buy into the programme. The programme needs to be driven through them as they are the ones who actually interact with the employees and can ascertain their training needs, put them through rotational assignments, projects and mentor them. In fact some companies go as far as to link the performance appraisal of supervisors to nurturing and retaining high potential employees.

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QUESTIONNAIRE

1. How does your organization identify high potential employees? How do you use the data available?

2. What percentage of your senior positions is typically staffed from within?

3. Is there a formal structure in place for managing high potential employees? Since when is it in place and how did it evolve?

4. What activities or programmes are currently implemented to manage high potential employees?

5. How many changes have been introduced since it was first introduced?

6. Who has the final responsibility to ensure that high potential employees are taken care of?

HR Top Management Individual supervisors Training The individual employee

7. Which programmes are the most successful / least successful and why?

8. Which are the ones that call for more personal effort / less personal effort but are more process driven?

9. Which programmes are internally driven and for which ones do you use external consultants?

10. Are these activities or programmes applied uniformly across all high potential employees in a particular grade or is there a greater focus on individual employee needs?

11. How do you track the progress of high potential employees? For how long are they on the radar?

12. Who do you consider benchmark organizations for high potential management?

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Articles

Developing high-potential employees in the new business reality

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Business Horizons, March-April, 1997 by Lisa A. Burke

John, a graduate of an elite MBA program, takes a job in the finance division of a Fortune 500 company. Anxious to progress in the corporation, John is concerned about career development. The company assigns him to treasury for his first position. Twelve months pass and John is moved to a financial analyst assignment supporting the manufacturing area for one year. After this, management decides John should gain experience in another functional area of the company. So he moves again, this time to a sales assignment for four months. Upon return from his sales territory, John is assigned for ten months as a personnel associate in research and development at the corporate headquarters. With exemplary performance in all of these assignments, and after about three years with the firm, John is promoted to manager of strategic financial planning.

John represents what has been defined as a high-potential employee (HIPO), someone who is characterized by a fast rate of lateral movement through various roles in the firm, a carefully monitored career, and an elite but usually secretive status. As future leaders of their firms, HIPOs move quickly into new positions, receive special coaching and mentoring, and are expected to deliver superior performance. As illustrated by John's experience, firms refer to manage HIPO career development through on-the-job experiences, or job rotation, versus formal in-class training. In fact, 84 percent of firms in a study by Derr, Jones, and Toomey (1988) reported job rotation as the primary strategy used to develop HIPOs. Specifically, job rotation attempts to provide these fast-trackers with a "macro-view" of the firm, its business environment, and its strategy in preparation for top management positions. in the new business reality, the marketplace is characterized by hypercompetition and globalization, making HIPO programs more important now than ever. Upon consideration of the turbulent business climate, along with the nontrivial replacement costs of company-generated talent, a case can be made for efficiently identifying and grooming a firm's high-potential employees so that those who best know the business, technology, and operations are making the critical decisions.

Designing and managing a program for highpotential employees, however, is a complex process with few guidelines to follow. The objective here is to: (1) discuss the use of HIPO programs in today's business environment, (2) introduce key decision points in assessing the need for, design of, and management of a program to develop HIPOs, and (3) identify what we know about the consequences of these decisions.

THE USE OF HIPO PROGRAMS IN TODAY'S BUSINESS ENVIRONMENT

A straightforward case can be made that today's businesses actively need to select and prepare high-potential employees to manage in complex environments. The efficiency of sponsored mobility systems in meeting this need is apparent: Decisions about who moves up are made as early as possible and specialized career development follows to ensure the best and brightest quickly rise to the top. Just as competitive advantage can be generated by a speed-to-market product strategy, sustained competitive advantage can also be created with a firm's ability to develop leadership talent efficiently. In other words, a pressing need exists to decrease the cycle time required to identify leadership needs, assess current talent, and develop high performers. By efficiently developing HIPOs' leadership competencies in hopes of creating a savvy top management team, organizations can enhance their responsiveness to an increasingly complex business environment.

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Because of concerns about the shortage of executive-caliber talent at McDonnell-Douglas, rotational programs were a significant part of an overall plan designed to identify HIPOs and help their careers quickly progress. At PepsiCo, tolerating mediocrity in employee performance demoralized their top performers and encouraged 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 of challenging rotational assignments. Consider Edgar Woolward, Jr's ascent to the top spot as CEO at Du Pont, which took him through 20 different jobs in 32 years. Similar "muscle-building" programs, designed to ensure that the best and brightest move to the top, have occurred at firms such as Greyhound Financial Corporation, IBM, Hewlett-Packard, Marriott, and AT&T, to name just a few.

Nevertheless, such approaches are not without their share of criticism. It may be difficult to determine whether an employee actually merits HIPO status or fulfills higher expectations simply because of a self-fulfilling prophecy effect. HIPO programs can also encourage firms to produce clones of current top management members who are not necessarily well-equipped to handle future business issues. And when HIPO programs are not designed appropriately, such problems as non-participant resentment and participant dissatisfaction have been found to result.

Unfortunately, there is little guidance available in how better to meet these and a multitude of other challenges when designing and managing HIPO programs. Based on the principal issues identified in prior research, the Figure presents the key decision points in adopting a HIPO program. The points are outlined in three steps: (1) needs assessment, (2) design, and (3) management of a HIPO program. What follows is an initial attempt to identify, consolidate, and examine these key decision points when implementing an effective HIPO program in the new business reality.

ASSESSING THE NEED FOR A HIPO PROGRAM

The first step depicted in the Figure is relatively straightforward, yet often overlooked. The organization must determine the extent to which a business need exists for creating and managing a HIPO program, and it must specifically identify how the program will meet that need. Again, when considering the importance of promotion-from-within strategies and succession planning efforts in creating top management talent, the business case for a HIPO program may be fairly apparent. Nevertheless, the company needs to be very explicit in defining the program's objectives, because they may differ from the firm's specific business strategy, its experience with using sophisticated HR practices, and the goals of senior management.

Specifically, managers must respond to the following line of questioning: 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 our employees?

In short, the central concern is with the strategic benefit of implementing a HIPO program. As with other human resource interventions (such as training and development programs), if there is no clear sense of how the program will support the company's business strategy, the program design will be misguided. Consequently, involving a variety of people in this process will help ensure that the HIPO program has a unified purpose, is designed to meet the

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business needs of the firm, and is commonly supported. Moreover, in an era in which human resource practices are being more closely scrutinized for their contribution to the organization, performing some type of need assessment is essential.

DESIGNING A HIPO PROGRAM

After identifying the need for a HIPO program and enumerating the high-level objectives, the corporation enters into the 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 to disclose HIPO status, determining the timing of HIPO identification, and creating a program evaluation mechanism. Each is discussed in turn.

Identify HIPO Selection Criteria

The ultimate selection criteria to be used in determining HIPO status should be chosen with the program's goals in mind and should be clearly defined. There are numerous sources from which such assessments of HIPO talent could be gathered. Organizations have considered:

* level of education, university where advanced degree(s) were obtained, and grades;

* previous work experience (industry, managerial);

* assessment center performance;

* performance in the organization (using standard performance evaluations by supervisors, peers, or subordinates);

* supervisory assessment of leadership potential (qualitative or quantitative assessments).

Most companies rely heavily on the use of direct supervisors to identify HIPO talent based on actual job performance, rather than using a list of attributes or assessments of future potential. Such a performance-based approach, which incorporates several objective sources in the evaluation, should help generate valid assessments and enhance employee perceptions of fairness. This approach, in turn, should increase the company's confidence in the HIPO candidates who are selected and avoid the self-fulfilling prophecy explanation for HIPO status.

Determine A Communication Strategy

The next key decision point in program design deals with the communication of program goals in the organization. The company must decide whether the goals of the HIPO program are to be communicated, to whom communication is necessary, and what the content of the message will be. Several advantages arise from communicating the goals of a HIPO program to both current and prospective employees, helping to ensure that the process of allocating HIPO slots is seen as procedurally fair. Discussing the program with applicants realistically portrays career development practices in the firm and may encourage useful self-selection. And communicating program goals with employees removes the ambiguity, confusion, and frustration associated with concealed company practices.

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Harris and Feild (1992) found in one company that a lack of understanding of program objectives was the major barrier to the line managers' ownership of their HIPO program. No effort had been made to explain the rationale for an MBA selection criterion, so many executives perceived it as an indictment against their own qualifications, with resulting controversy. The organization should instead have announced the objectives of the program and explained the criteria and procedures to its line management.

In communicating the goals of a HIPO program, a firm should make it clear that all employees will be involved in the selection of high-potential candidates. A team-based atmosphere might be created in which other employees participate in identifying high-performing individuals through peer and subordinate input in the evaluation process. Employees should be told of the potential benefits of creating a highly competent top management team in terms of profit-sharing initiatives, formulation of business strategy, and, ultimately, job security. The potential down sides of the program should be discussed as well. By providing a candid exchange of information, the program will gain increased credibility.

Decide Whether To Disclose

HIPO StatusInforming HIPOs of their status has been a difficult issue for firms to handle, and no easy solutions are readily apparent. Most firms report that they prefer to maintain a secretive status for HIPOs. This allows more flexibility in taking individuals on and off "the list" according to their judged potential. It can also alleviate the "Crown Prince Syndrome," whereby HIPOs perceive they have been anointed as the chosen few. And it helps avoid the Hawthorne effect, in which the increased attention accounts for good performance.

However, most firms using a HIPO program have found that protecting a secret list is difficult. Employees often discover who is on the list by the opportunities given to certain employees. Or HIPOs may eventually be told informally by management. In a study of 225 corporations across 10 major industries, Fresina (1987) reports that 78 percent of the firms interviewed did not inform HIPOs of their status, but that 90 percent of the time HIPO status became apparent anyway. Not only is a secret list often impossible to maintain, but it may perpetuate feelings of injustice or invalid assumptions about employee development and advancement practices in the firm.

There are some documented benefits for informing HIPOs of their status. In Fresina's study, 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. For example, where discussion and feedback between supervisors and employees are commonplace, disclosing HIPO status will be consistent with everyday

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practices. On the other hand, in a firm in which career discussions only rarely occur, or in which low employee involvement exists, such an approach may fail miserably.

Even if the culture is supportive, the question remains as to what HIPOs should be told in order to clarify their expectations. No guidance has been provided in this area, but some examples include what specific job the person is targeted for, the level and type of the job (general manager, functional head), and the size of the HIPO pool. Process-oriented issues to be shared could include how HIPOs are selected and de-selected, what role the firm will play in their career management, and what role they should play in their own career planning. Again, the degree to which these types of information are shared with HIPOs should be congruent with the nature of the communication strategy the firm chooses to adopt.

Determine The Timing Of HIPO Identification

An egalitarian approach to determining when to identify HIPOs would be to allow all employees an unlimited amount of time in which to demonstrate they should advance in the firm. However, the new business reality calls for a more active and aggressive approach for HIPO identification.

Derr, Jones, and Toomey (1988) found that most companies identify HIPO talent after three to eight years. Evans (1986) claims that identification should be done as soon as possible and after no more than five to six years of actual work experience. In actuality, this time frame will depend on the company's supply and demand for executive-caliber talent, the type of business environment in which it operates, and its philosophy of career management.

If the need for top management talent in the company is readily apparent and the company values sponsored mobility career systems, HIPOs can be identified fairly early. Regardless of what time frame is agreed upon, though, it should be consistently applied throughout the organization. Furthermore, both human resources and line managers should be involved in the identification process so as to derive consistent and valid HIPO assessments.

Create A Program Evaluation Mechanism

The final key decision point is instituting an appropriate evaluation mechanism to ensure that the program is meeting corporate objectives. Without it, the firm will have no formalized way of assessing program contribution. The organization needs to specify:

* what criteria will be used to monitor and evaluate program effectiveness in terms of benefits for the firm productivity, employee retention) and for HIPOs and other employees (job/ career satisfaction, organizational commitment, productivity, turnover, absenteeism);

* how often the HIPO program will be evaluated;

* who (or what group) will oversee the ongoing implementation, evaluation, and modification of the HIPO program.

A regular feedback mechanism will help ensure that the desired outcomes of the HIPO program outlined in the needs assessment phase are achieved. It will also ensure that any necessary modifications to program design are pursued regularly. Finally, employees

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responsible for supporting and managing the HIPO program should be held accountable for program outcomes and appropriately rewarded throughout the company.

MANAGING HIPO DEVELOPMENT

The third step in the Figure addresses how firms can use job rotation strategies as the primary mechanism for managing HIPO development. In this step, a company must determine the type of lateral moves to use in HIPO development, decide upon the appropriate functional experience mix, identify the critical skills to be developed, determine the length and timing of lateral assignments, and consider the use of frame-breaking experiences. Each point is discussed below.

Determine The Types Of Lateral Moves.

Research has consistently shown that the number of different positions held by an employee is related to career attainment. Lateral moves are not only critical for HIPO development and advancement, but in an era of flatter organizational structures they are also more congruent with corporate opportunities.

Different types of lateral moves can be used when managing a HIPO's career. An intra-functional move occurs when an employee is rotated among several assignments within a given functional area. In the opening scenario, John had three intra-functional assignments: treasury, manufacturing-financial, and strategic-financial planning. He also had two interfunctional moves: sales and personnel. Interfunctional moves, or cross-functional assignments, provide experience in a functional area that does not represent the employee's primary realm of expertise.

Each type of lateral move should be used in HIPO career management to serve one of two purposes: to enhance discipline-specific knowledge, or to increase the breadth of knowledge. Intra-functional moves should be used when trying to deepen a HIPO's understanding of a certain business unit or function. John's managerial position in strategic-financial planning would help him develop supervisory skills while enhancing his knowledge of the financial area's processes and technologies. His cross-functional moves would help him develop a breadth of knowledge about the company's mission, products, and culture.

Given the need for this broad-based understanding of the firm, interfunctional moves should be used strategically because they provide a vast array of corporate experience and can better prepare HIPOs for a top management position. Line-staff rotations, for example, can offer early leadership experiences that are important in HIPO development. Most companies rated high in management talent, such as PepsiCo, Citicorp, and Hewlett-Packard, rely heavily on cross-functional assignments to develop their employees.

Select The Appropriate Mix Of Experiences

In grooming top management talent, a corporation must decide on the appropriate mix of functional experiences to provide its HIPOs. The most beneficial mix of work experiences across the various functional areas in a firm will depend on the environment and business

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strategy. For example, more complex strategy-making processes are needed in dynamic environments and when the organization is growing and maturing. In volatile or unstable environments, a diverse mix of assignments is necessary to develop a breadth of knowledge, insights, and skills for the solution to organizational issues stemming from environmental change.

Certain functional experiences appear to be especially desirable for HIPOs in the new business reality. Specifically, these assignments include exposure to the international arena as well as sales, finance, and human resources. International experience is especially critical for those aspiring to top management positions so that they can better understand foreign markets, how to motivate foreign workers, and how to form alliances abroad.

Identify The Critical Skills To Develop

An organization must keep an eye toward the future to avoid developing mere clones of its current leaders. But the ambiguity and complexity of the business environment can complicate the identification of specific skills needed by top managers. Some firms have chosen to identify a few competency criteria that are reliable indicators of management talent. Some have opted to decentralize the responsibility of managing the process.

Research dealing with organizational capabilities as sources of strategic advantage can provide some guidance for identifying the managerial competencies necessary in today's business environment. In a competency-based, learning-systems approach, for example, Arthur, Claman, and DeFillippi (1995) call attention to three critical competencies of "knowing": knowing why, knowing how, and knowing whom. In terms of specific competencies for leaders, Lado and Wilson (1994) broadly report two managerial competencies that are potentially important for sustained competitive advantage: the ability of leaders to articulate a strategic vision, and the unique ability to enact a beneficial company-environment relationship.

Regardless of the specific competencies identified, it is important that managers understand how job rotation (in addition to other human resource subsystems) facilitates the development of such critical skills. in the past, many businesses have reported interpersonal and leadership skills to be among the most important skills they have attempted to develop with lateral moves. On the other hand, Campion, Cheraskin, and Stevens (1994) found in a study of 255 financial employees in a large Midwestern firm that employees perceived job rotation as improving business skills -- knowledge of business issues, of other functions, and of how the firm operates -- more than administrative skills, such as leadership and communication. Given that the purpose of job rotation is to improve an employee's understanding of the total business, this finding has a great deal of face validity.

However, Campion and his colleagues also found that employees judged rotation as improving technical skills more than either business or administrative skills. It may be that in a specialized function such as finance, rotation is useful in developing technical expertise and skills. Nevertheless, an important implication from these empirical findings for practitioners is that they must ensure the actual skills being developed by lateral moves are those being targeted by the corporation.

Determine The Length And Timing Of Lateral Assignments

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The length of lateral assignments must be managed carefully so that HIPOs maximize their development and contribution in each assignment yet continue to progress in their fast-paced careers. If rotated too quickly, accountability becomes a problem and the HIPO's credibility may be questioned. Clearly, shorter-term assignments may benefit HIPOs but not necessarily the organization. Therefore, a balance must be struck between expediting HIPO development and achieving organizational productivity.

At McDonnell-Douglas (at least prior to the recent merger with Boeing), HIPOs change responsibilities every three years; at PepsiCo, it is about every year. However, research has yet to examine and/or recommend a specific length of time HIPOs should spend in their rotational assignments. According to Campion, Cheraskin, and Stevens, rotation rates should be managed according to the time required to achieve developmental needs. In other words, firms should ultimately focus on the quality of the HIPOs' work experiences, not just the quantity of assignments they rotate through.

Although rotation should not be implemented as a lockstep system, companies may want to establish some "window" of time -- say, two to three year -- as a guide in determining the length of lateral assignments. That way, it is hoped, they can avoid shortchanging both HIPO development and organizational effectiveness.

Use Frame-Breaking Experiences

Managers respond to and learn from challenges. Certain assignments, referred to as frame-breaking experiences, demand the attainment of numerous skills without much initial preparation and require a substantial amount of individual investment. The potential return from this is a high degree of learning as well as a high risk of failure. HIPO work assignments often represent frame-breaking experiences, especially in downsizing scenarios, where managers are already doing the work of many people.

There are several implications of using framebreaking experiences in HIPO programs. Companies must consider the frequency with which the experiences will be used throughout a HIPO's career development, the challenges the HIPO will face as a result, and ways to support the fast tracker during these periods. Some firms have found mentoring opportunities to be useful HIPO support mechanisms. Mentors provide necessary guidance and counsel to support HIPOs in their career progression, enhance their understanding of the firm's culture and politics, and provide direction for how best to maneuver within the organizational context.

Given today's new reality and the stormy future promised in the business world, companies must actively pursue the identification and development of high-potential talent. By preparing a select group of employees to ultimately fill its top-tier jobs, a company can build a strong management team with the skills needed to maneuver in a hypercompetitive market.

But a HIPO program can be controversial and tricky to implement and maintain. The key decision points identified and examined here can increase understanding of how to assess the need for, design, and manage a HIPO program in such a tough business environment. A clear business case must exist for incorporating the program into the company's succession planning efforts. Criteria for identifying and selecting HIPOs, justifying and explaining the program to employees, timing and evaluation mechanisms -- all must be weighed and considered carefully.

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Broad-based lateral moves throughout the firm, along with just the right mix of functional and international experiences, are crucial for learning the knowledge and skills essential for future leadership talent. Mentors and other support mechanisms should be established to help HIPOs cope with demanding assignments. And perhaps most important, managers must work to strike a balance between meeting the individuals' career needs and achieving long-term corporate objectives.

It all makes for a very ambitious and demanding plan. And, of course, there is no guarantee of success. But if carefully and properly designed and managed, a program for grooming the employees with the highest potential can go a long way toward creating the best possible leadership -- and future -- a firm can produce.

High potential, high risk: traits that indicate high leadership potential can also derail a career

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HR Magazine , March, 2008 by David B. Peterson

Most managers have heard from their company leaders that leadership talent is--or will shortly be--a scarce resource. They also have heard that it is the responsibility of every manager to help the organization prepare for the future and groom tomorrow's leaders.

To prepare, most companies invest in identifying and cultivating high-potential employees--talented, bright individuals who exhibit the right blend of skills and behaviors indicating their potential to move up in the organization and perform effectively as leaders. This practice is essential but not always well-executed. So, what is the best way to develop "high potentials" into leaders? What should managers do to ensure that high potentials stay on track?

High Potentials' Value

First, managers need to understand the true value of high potentials and know why it is so important to invest time and energy in developing this group.

Demand for top talent is soaring. Most companies are differentiated by the talent and leaders they have. With the retirement of the baby boomer generation and noticeable skills gaps in many areas, companies are losing leaders faster than they can replace them.

If senior leaders are unable to compete in recruiting and retaining top talent, they often are unable to execute initiatives and strategies. A company that lacks sufficient leadership may, for example, be unable to expand into valuable markets when opportunities arise.

The benefits of developing high potentials are great for both the employees and the organizations. Employees learn how much the organization is invested in their continued successes and career development, increasing loyalty and making the individuals feel valued and motivated to stay engaged and productive. The organizations benefit by having the right talent available to achieve long-term strategies and goals.

Every tactic needs talent to make it possible. Often, the pools of high potentials contain the candidates most likely to be capable of filling new roles--given the proper training, experiences and preparation.

Identifying High Potentials

Many managers struggle to identify their high potentials. Do they base their assessments on current performance? Intelligence? Drive and determination?

The most common misidentification of high potentials results from confusing high performance with high potential. Not all top performers have the potential to succeed at higher levels. A manager of a small team may produce great results, largely through being technically gifted and intimately involved in the team's tasks. If asked to manage a division with multiple teams working in diverse areas, however, that same manager may have neither the skills nor the desire to successfully manage the team leaders.

Clearly, current performance is an important consideration; it's rare that marginal performers will be classified as high potentials. But managers must also sort through external factors that

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impact success, such as market conditions and competitive challenges. Better yet, it's important to find people with track records of success in a variety of situations and business climates. In fact, the greater the number of challenging situations a person has encountered successfully, the greater the chance that he or she has learned valuable lessons that can fuel future performance.

High potentials also need the right motivations and drive, such as wanting to work with and through others, having an interest in financial data, and being comfortable with power. Being smart is important: The higher a person goes in an organization, the more likely he or she will encounter complexity and overwhelming amounts of data that must be assimilated quickly.

Ironically, some of the qualities most indicative of high potentials also can signal potential performance problems.

In a recent study conducted by Personnel Decisions International, 27 percent of individuals identified by their bosses as high potentials were also identified by the same bosses as having a high risk of career derailment--a likelihood that the person would fail in a specific role because he or she reached a plateau of performance, quit or was fired. This means managers believe that one of every four high potentials may never reach his or her potential.

Proper identification of high potentials requires a full assessment of an individual's capabilities, behaviors and fit with organizational expectations. These robust measures also make the identification of high potentials a more objective process. A well-liked individual may not make the best leader. Or, people with minimal interaction with nominating bosses may have leadership potential but little visibility to showcase talents in their current positions.

Derailers

The most common profile for high-potential leaders likely to derail is someone smart, driven and accustomed to pushing through obstacles to meet ambitious goals. This same hard-driving, risk-embracing style that gets leaders noticed for high performance also can cause them to experience problems with their colleagues. They are more likely to derail at some point if they don't learn to show respect for other people's perspectives and to incorporate other people's opinions to gain their commitment.

Other derailment patterns include leaders who have brilliant ideas and solutions but aren't consistent in being able to implement their ideas through others, and those who get the results their bosses want to see but alienate peers and others.

Managers should be mindful of how they treat high potentials in two particular areas. First, managers need to recognize that most top performers are rewarded for their results, not necessarily for the manner in which the results were achieved. If two top performers achieve the same result, they are often given the same reward, even if one achieves it through building and aligning a team and one achieves it by pushing with brute force. In fact, the more forceful individual, who apparently succeeds quickly by working on his or her own, is sometimes given greater rewards and encouragement than the team-builder who learns lessons that will have even greater value in subsequent roles.

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Second, top performers generally consider their work style to be effective. Even if their role changes, they are often averse to changing or modifying their behavior. They have received high praise and recognition for performance and understandably believe that they will be most effective if they continue to follow that approach.

Look, for example, at the individual who prefers isolation from others, even keeping different hours, to stay focused on specific tasks without distractions from co-workers. This method could be effective for some tasks, but when a role changes--or an individual is promoted--this behavior may alienate colleagues, sending a message that the team is not needed or appreciated or that the individual doesn't wish to be accessible. The individual fails to build the strong relationships and loyalty that can increase chances for long-term success.

This illustration appreciates the difference between potential and realized potential. These traits that suggest possible derailment are not necessarily problems as much as they are clear indicators of exactly what an individual needs to be coached on to be successful at the next level and beyond.

Provide Proper Training

To ensure that high potentials reach leadership ranks, managers need to work with employees to decrease the risk of derailment and create plans that foster development of needed skills and behaviors.

There are four steps managers can take to decrease risks for derailment:

* Accurately identify high potentials in your department.

* Provide clear expectations in terms of valued behaviors.

* Provide individuals with specific feedback on how well their performances and their behaviors (what they do and how they do it) meet expectations.

* Make sure rewards such as promotions and bonuses don't send mixed messages. Reward high potentials for both the results and the methods used to achieve the results.

By shaping development through clear communication and appropriate reinforcements, managers can teach individuals what the company values, and employees can begin to demonstrate the values of the organization's culture.

Employees are only high potentials within a specific company if they have the right fit--the skills and mind-set consistent with the organization's direction. But all employees need to know the company's values and direction before they can showcase their own potential.

Most managers fail to take the basic steps needed to help individuals develop--namely, sitting down to clearly explain the expectations for each role and providing periodic feedback about how the individual's performance and behavior align with those expectations.

High-potential leaders often advance quickly and may not learn some of the basic lessons that others learn simply from having more time in each position. That's why it's important to be explicit about expectations and styles with fast-rising leaders.

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Executive coaching represents one way to make sure high potentials learn the lessons necessary to deliver results in the long term. An accurate understanding of what future roles involve and an early assessment of a leader's strengths and weaknesses can help managers create specific development plans for those talented, high-potential performers who need the right development, coaching and experience to avoid derailment.

When current leaders take the time to measure and identify high potentials and work with each individual to create a custom development plan, these individuals can transform potential into realized leadership performance.

High Potential Leadership Development

Business Wire, July 17, 2007

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Surprising Results from A New Study on How Organizations Manage Critical Programs for Future Leaders

WOOD DALE, Ill. -- For CEOs and their senior management teams, programs designed for "high potential" leaders in their organization are seen as a crucial component to help alleviate the management shortage that many companies across all industries may soon face. However, a new study by RHR International and The Institute of Executive Development reveals some surprising results on how these programs are structured and managed. The study, "High Potential Leadership Selection & Development," now contains data from over 50 organizations who have participated to date. Among the key findings:

* 80% of respondents have high potential development programs

* A third of those programs have been in place less than two years

* 15% of respondents are in the process of designing programs

* 5% of respondents are not planning to implement a program

* "Ability to develop others" was the top skill desired of new leaders

* Among respondents with programs older than two years, "retention of high performers" was cited as a key factor driving their focus

* Respondents with programs for less than two years were more likely to select "revenue growth" or "expansion into new markets"

* Senior executive commitment is one of the most critical success factors

"For most organizations, developing high potential managers and leaders is a strategic imperative. Yet the data on issues such as the reason for the program's existence and the most desired skills of future leaders runs counter to some of the prevailing thoughts in the industry," commented Scott Saslow, The Institute of Executive Development's Executive Director.

Another unexpected element of the study is the fact that many organizations have not taken international issues into account in their high potential leadership development activities. 50% have not assessed if skills and competencies are different in various parts of the world and 44% have not considered how different types of development activities should be deployed for diverse populations of managers. Of those who did address the skill and competencies issue, 96% indicate that the skill sets required in different parts of the world are similar.

The survey data also reveals that the number and type of high potential development methods used depends on the maturity level of the company's program. For example, although mentoring is the method used most frequently by organizations currently designing high potential processes, several development methods (e.g., executive coaching, stretch assignments and increasing the scope of the high potential's current role) outrank mentoring for those companies with over five years of high potential process experience.

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On the issue of program budgets (over the next three years):

* 8% of respondents expect a funding decrease

* 46% expect no change

* 46% expect a funding increase

* 15% of the total respondents expect annual increases of 10% or more

"Results of this study to date indicate that many organizations, while aware of the need for cultivating the next generation of leaders, are still struggling with goals, methods and measurements," said Jeff Durocher, Vice President of Market Development for RHR International. "This uncertainty may explain why many of our clients have asked us to assist them in creating their high potential development programs."

This benchmark study involves organizations from multiple industries such as: Aetna, Deloitte Consulting, Dow Jones, Hitachi, Kraft Foods, SUN Microsystems, and Wells Fargo. While the majority of companies taking part are from North America, some are based in Europe and Asia.

The Institute of Executive Development delivers a unique service to executive development professionals by providing an unbiased source of information on the best practices and innovative ideas in executive development that improve their results. With over 5,000 individuals who use the service in more than 100 countries, the information and practices shared reflect global perspectives required by today's executive.

RHR International Company is a world leader in executive and organizational development. For over 60 years they have been assisting senior management in the areas of executive integration, high potential development, succession planning, team building, talent management, executive coaching and board effectiveness. RHR International has offices in Belgium, Canada, China, France, Germany, Hong Kong, Italy, Switzerland, United Kingdom and United States. The company is headquartered in Wood Dale, Ill.

The HiPo Glow: How to spot and nurture employees with high potential

Denver Business Journal - by Steven Shapiro

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Regardless of economic conditions, one of the most significant challenges facing organizations is retaining the best talent for their business. This is with good reason.

The cost of attrition includes time (advertising, sorting and reading job applications, scheduling and conducting interviews, hiring, orienting and training); lost productivity due to the loss of a veteran vs. the training process; and significant hidden costs, such as new employee's mistakes, lost sales/service opportunities, lowered employee morale, unemployment benefits and lost prestige.

To put this into perspective, many companies estimate that the costs of replacing an employee range from one to two times the person's yearly salary.

One of the methodologies that companies are using today is categorizing their employees and targeting programs and resources toward those individuals. As part of these programs, companies often rank employees, even differentiating between "high performance" and "high potential." While high-performance employees complete their jobs well, high-potential employees are thought to possess the skills and qualities necessary to be the organization's next generation of leaders.

As future leaders of their firms, "HiPos" move quickly into new positions, receive special coaching and mentoring, and are expected to deliver superior performance.

Identifying the HiPo glow

Since current performance does not necessarily equate with potential performance, identifying the "HiPo glow" that companies desperately seek in their people is more complex than understanding who the current top performers are.

What companies look for are the skills and attributes that will quickly propel them into roles of increasing responsibility, challenge and, ultimately, success. These characteristics can include:

Interest in Learning. Does the person learn eagerly and quickly? Has he/she shown a consistent pattern of learning over time?

Responsive to feedback. Does he/she act on feedback? How receptive is he/she to criticism?

Risk-taker. Will he/she challenge the status quo to support the organization's best interests? Does he/she have the courage to act, even when others in the same situation may hesitate?

Seeks personal and professional growth. Will he/she develop areas of weakness that are critical to success?

High emotional intelligence. Does this person motivate others, demonstrate self-awareness and build relationships across all levels in the organization?

Effective communicator. Do their colleagues respect their work? Do they approach management and make suggestions effectively?

To identify HiPo employees, organizations choose from a number of tools including:

Level of education, university where advanced degree(s) were obtained and grades; Previous work experience;

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360-degree assessment; Supervisory assessments.

Most companies rely heavily on the use of direct supervisors to identify HiPo talent based on actual job performance, rather than using a list of attributes or assessments of future potential.

HiPo Culture

What helps build a culture focused on development for HiPo leaders, strong individual contributors and developing talent?

Stimulating work. Being in a job that challenges HiPos to constantly learn is essential -- one that allows them to take risks and question the status quo and prevents them from being stagnant.

Clear impact. HiPos thrive on a clear view of how they can affect the success of the business.

Talent team. They like to be surrounded by capable, motivated team members and an inspiring manager.

Mentoring programs. By pairing top performers with internal senior executives, HiPos are exposed to new ways of thinking, knowledge and perspectives, which help in their development.

Action learning. Take HiPos out of the classroom and put them together to work on the company's key business issues and challenges.

Leaders as teachers. Get top executives to facilitate leadership development sessions and workshops, providing lessons from those who are trusted and well-respected inside their own organization.

Job rotation. By working throughout the organization, fast-trackers are provided with a "macro-view" of the firm, its business environment and its strategy in preparation for top management positions

HiPo Financials

High potential employees have always existed. The clear leaders always make themselves known and rise to the top. The difference today is the actual financials around the philosophy. How executives are budgeting and spending their training dollars -- and on who -- is the new issue.

In the past, organizations that passionately believed in training and development invested in their entire employee base, assuming that all boats would rise with the tide.

Today, there seems to be a clear shift. Budget constraints and intense focus on return on investment have led to investing in a percentage of the population where there can be measurable financial impact.

"Human capital" has emerged as having a true meaning -- what capital is being gained by investing in that asset. It's this dynamic that has given rise to the influence of the HiPo employee philosophy.

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Bibliography

Primary research:Adit Ahuja, Manager(Human Resources)- TCS

Secondary research:

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Reference books

Magazines/ periodicals/ journals: Business Horizon HR Magazine Business Wire ICFAI White Papers on the Internet

High Potentials: Facts and Fiction (Hudson)

Internet: www.findarticles.com www.bnet.com www.aon.com

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Documents

High Potential Management-Ajju Revised