The Performance / Potential Matrix

In an organisation which requires future leaders, how do you identify those whom you will invest in? There are many common pitfalls in this arena not least that the assessment of future potential is usually based on past performance without any reference to the potential of the individual. Another common pitfall is that “potential” is only categorised in terms of “promotability” but leaving the assessor to rely on anecdotal or subjective references as to how the person might achieve promotion. There are many ways to objectively assess potential but before turning to that I was reminded last week of the overall performance / potential matrix from which it can be conjectured that only “stars” should be developed as leaders.

The matrix is referenced to Kavanaugh, Duffy and Lilly, however when researching talent development, there is no more apposite and comprehensive an article than the special report published by RMG consulting in September 2008, “Making it Happen: Developing Talent in the Workplace”. In that article, amongst many other things, the author details the performance / potential matrix.

Here is a summary followed by my culturally biased critique (“et alors”).

The Performance / Potential Matrix

The matrix has four categories which are formed by the axes of performance and potential being marked as either “high” or “low”:

Deadwood

·         Low potential and low performance

·         If any development is required here, it is usually remedial

Question Mark

·         High potential but low performance

·         Accordingly the development “risk” is high

Solid Citizens

·         High performance but low potential

·         Also known as “well placed” or “plateau-ed” this is usually a low development category

Stars

·         High performance and high potential

·         Usually the target of high impact, high investment leadership development

Et alors?

So what if the organisational culture is a mirror of the educational culture in which the members of the organisation have already been formed? If that educational culture is one of critical feedback, defending opinions and avoiding mistakes, then the cursor of assessment tends to move towards performance at the expense of potential. Further, if the educational system is so intense and so hierarchical (with some diplomas from some schools being “worth” so much more than diplomas from other schools) then graduation day can often be the end of the learning journey! Development “stops” at the university gate and potential is assessed according to the “quality” of the diploma. In that context the performance / potential matrix starts to lose its value. “Stars” and “solid citizens” form one category and in the other “deadwood” and “question marks” are also forced together. At once and at the same time, potential in “question marks” is overlooked and “solid citizens” might be “forced” to develop as leaders.

Forcing “solid citizens” to develop as leaders presents a strong argument to have a dual talent pool system where not only are the leaders selected into a leadership “pool” according to performance and potential but also by reference to their own wishes and motivations! In many scientific and engineering companies there are those who are very technically skilled and are of enormous value to the organisation (like all “solid citizens”) but who do not want to become leaders and could be well placed in an “expert talent pool”. In organisational cultures which value technical skills more than anything else, there is a strong risk of miscasting: consequently, not only might you get an unmotivated leader but you might actually lose some of the technical skills.

The “solid citizen” category normally represents 60-70% of the population of any average organisation (with 10-20% for each other category). Besides being “B” players, “ex” leaders and other “plateau-ed” staff, a lot of people might be in this category not only by “choice” but by “circumstance” (ref. R. White). In other words there is a lot of talent which is not being developed just because of circumstances: missed opportunities, overlooked potential or personal constraints which hinder the person’s experiences, exposure or education. Taking this a step further however, it might now therefore be logical to say that development should be targeted according to past performance in order to avoid this risk! Yes for general development; but not necessarily for leadership development.

Beyond the performance / potential matrix, in order to target leadership development, there needs to be an objective assessment of the individual’s motivations and “drive” in addition to a consideration of leadership aptitudes (i.e. potential). Likewise, there is a need for the assessment of performance but not necessarily an assessment of leadership performance. There is too much of a risk that the organisation could find itself in a Catch 22 situation where the person can’t be seen to be a leader without having been given the opportunity, but how do you get the leadership opportunity without having been already seen as a leader? In other words, a lot would be left to luck! Performance can be measured against other objectives but if the organisational culture is one that is based on a “performance” education culture and one that emphasises technical skills, without dual talent pools for the separate development of experts and leaders, the risk of forcing well-qualified experts to become leaders is a very real risk!

Different Levels of Leadership

A leadership development program I attended this week highlighted the fact that leadership development is relative. There does not appear to be a “standard” development that can be applied to any leader at any given moment. The leaders themselves and everyone else involved in the development process must know where the leaders are and where they need to go both from a personal and an organisational perspective. Different leaders are at different stages in their personal development and the organisation might have different leadership needs according to the applicable strategies and objectives at any one time.

In researching how to frame those levels of development, I came across John Maxwell’s recently published book entitled “The 5 Levels of Leadership: Proven Steps to Maximize Your Potential” (2011, Hachette). The target audience is global but a lot of the cultural references are American and it is not immediately evident that these “levels” can be applied in other cultures. Nevertheless, this book is a clear and practical guide amongst many books on leadership development.  

Here’s a summary followed by my culturally biased critique (“et alors”).

The Five Levels of Leadership

Position

·         People follow because they have to. The authority goes with the desk rather than the person.

Permission

·         People follow because they want to. This is the beginning of influence where people start to follow you voluntarily.

Production

·         People follow you because of what you have done for the organisation. It could be argued that this is performance in addition to the “permission” or influence.

People Development

·         People follow you because you have invested in them and developed them.

Pinnacle

·         People follow you because of what you are and what you represent. This mirrors the popular notion of “authenticity” in leadership theories.

Et alors?

Napoleon’s definition of leadership was “first define reality then give hope”. In large, complex corporations for leaders in a “position” level, there is a lot of emphasis on defining reality and not necessarily a lot of hope-giving! For the other levels, a common thread in Maxwell’s book is the “giving of hope”: with the emphasis on a potential future, people see that you are capable of achievement, that you can lead change, that you can develop talents and ultimately that you can have a vision and take people there. However, the common theme of hope does not apply consistently in all cultures.

Imagine a culture where the emphasis is on the past and the present as much if not more than the future; a culture where the emphasis is on sensing the details rather than imagining the concept; and a culture where the hierarchy is very important… In that culture, there is a risk that leadership stops at level one! To progress to level two however, the type of influencing might be different than having future-orientated and conceptual ideas, being willing to take a risk and motivating people to believe in the idea itself. You cannot just sell the idea; instead you would have to spend a lot of time relating the “idea” to the past, firmly rooting it in the present with facts and figures and then having the support of someone with a “position”. It could be argued that this is just a different type of influencing, but the focus on facts and details might not lend itself to leaders or followers interacting on the personal or “human” level with reference to future possibilities.

A further problem arises not only attempting to apply a leadership theory from one culture to another but when actually trying to “apply” a leader from one culture to another. One thing is to lead in the original or similar culture (and some leaders do appear to be “transferable”), but in a truly global environment, to lead across different cultures is extremely difficult especially if the style of leadership in one culture is not recognised by followers in the other culture. When this happens, there is a tendency to rely on the authority of the position than the person, or in other words, regress to level one!

Whether Maxwell’s levels are applicable universally or not, he has emphasised two very important points in terms of relative leadership development. When principally engaged as managers planning and organising complex tasks in complex environments, leaders can often overlook the levels “permission” and “people development”. Position is literally just that and performance (or “production”) can always be achieved with technical or expert skills in such an environment; but in order to genuinely progress as a leader, there has to be some ability to influence on a personal level howsoever that “influence” might manifest. In addition, for more “advanced” leaders, turning to their staff and becoming the leader of leaders-both-current-and-future is a good point of development to ensure that they and their organisation can reach their “pinnacle”.

Superstar Leaders and the Myth of Intelligence

Last week in The Economist, “Schumpeter” cited a paper by Cazier and McInnis presented at the annual conference of the American Accounting Association in August wherein the authors studied 192 CEOs who had been externally recruited to their new company between 1993 and 2005. They found that past performance was usually good and that a premium was usually paid to recruit. They then analysed the performance in the new role and found that the pay premium to recruit was negatively correlated with performance. The “better” the recruit, the “worse” the performance! Schumpeter goes on to conclude that corporate culture is the key since these “superstar” CEOs usually assume credit for their successes in their old companies when in fact, many others were involved in that success. Accordingly, the superstars tend to have an inflated opinion of their own abilities and they tend to think that in their new companies they can change corporate cultures single-handed when usually they cannot.

So where do these superstars come from and are they only to be found in the C suite? Is it just a case of superlative performance or are there other factors at play which mean that a leader can “snowball” up to a superstar status? This reminded me of the book: The Halo Effect ... and the Eight Other Business Delusions That Deceive Managers, by Phil Rosenzweig (2007, Knowledge@Wharton). Whilst the focus is on the corporate entity in a competitive landscape, the theories are equally applicable to the leadership of the company itself.

Here’s a summary followed by my culturally biased critique (“et alors”).

The Halo Effect… and the Eight Other Business Delusions That Deceive Managers

The eight “delusions” include: 1) difficulties with data: garbage in equals garbage out; 2) finding the real causal link to correlations; 3) singling out the key influencing “success” factor amongst many connected variables; 4) success is reviewed in isolation and not relatively compared to the “unsuccessful”; 5) success is seen as sustainable but is invariably short-term; 6) performance is relative, not absolute; 7) measuring success is not scientific; and 8) success might come from focused strategies but focused strategies do not always lead to success.

His key point linking all the other “delusions” is the “halo effect” which is described as: the tendency to make attributions about a company’s culture, leadership, values, etc. based simply on the overall performance of the company. This builds on the origin of the “halo effect”: in 1920, Edward Thorndike found that when army officers were asked to rate their charges in terms of intelligence, physique, leadership and character, there was a high cross-correlation. In other words, when we consider someone good (or bad) in one category, we are likely to make a similar evaluation in other categories. Rosenzweig concludes with advice:

1.       Chance plays a greater role in success than managers may want to admit; and

2.       Bad outcomes do not always mean that managers made mistakes. Likewise, favourable outcomes do not necessarily mean that the managers made brilliant decisions.

Et alors?

Superstar leader status appears to be born with the halo effect. The starting point can often be what is heard said in big corporations, namely: “she’s really intelligent – she’ll do well!” The myth of intelligence is often that firstly, it is nice at the top to think that the people who will replace you are those who are seen as being intelligent; secondly, either from the top or elsewhere, it can be an easy diagnostic of failure – evidently she was not clever enough: if she was really intelligent she would have worked it out. Finally, throughout the organisation, it there is a conceit amongst those who “know” that the business is complicated and challenging and can only therefore be “mastered” by “genius”, then the myth of intelligence can easily become self-perpetuating.

In most corporations, intelligence is required to enter the “leadership tournament”, but is neither a guarantee of success nor any guarantee of extra value-added to the company since everyone in the “tournament” is already of a certain higher-than-average intelligence. It should not matter but with intelligence as the starting point, the halo effect is that the superstar is then more likely to be described positively in other categories. If this is actually combined with good performance then you go from beyond halo effect to “can-do-no-wrong” and so the superstar snowball is set in motion.

How many leaders will actually admit that a positive outcome was in full or in part due to chance? If however the outcome is negative, then it goes without saying that it was bad luck! For the fledgling superstar, once status is confirmed, chance can work in their favour since if it does not happen to go the right way then not only will everyone understand that it was bad luck but people will start to appreciate this leader as a “risk taker”…

Once a superstar is not only born but is being carried along by chance, then despite the stretch targets and special projects, performance has to be seen to be good. This too will not be a problem since, with the benefit of the halo effect, the superstar will by now exemplify the corporate culture. Whatever the values of the company are, the superstar will be seen to have them and good performance will be assured when measured against the “values” of that corporate culture.

To be a leader, it helps to be slightly more intelligent than average. To be a superstar leader, you have to perfectly “fit in” to the corporate culture. If that corporate culture is one which perpetuates the myth of intelligence and the leader is not only intelligent, but is seen to be intelligent (and preferably has the very best diploma to certify it), then with some help from the halo effect, a superstar is born! My point is not whether superstar leadership is good or bad, but that from the perspective of developing leadership in a particular corporate culture, the “superstar” status should be treated with at least some scepticism...