High Potential Status Transparency

Most leadership development programs are targeted to the organisation’s “stars”. These are people who have not only been recognised as having high potential but have also demonstrated high performance. The latter is, by its nature, transparent – the high performance is seen and is recognised not only by the management but by the organisation at large. The high potential status is something else entirely. Surveys suggest that in Europe only 40-50% of organisations openly communicate this “status”; whereas in the USA at least 80% of organisations are transparent with this labelling (ref. HBR inter alia).

So why the difference in approach and what are the pros and cons of being transparent about the “high potential” label? This led me back to one of the most definitive books on the subject “High Potentials: the competitive edge in your company” by Timmerman and Sabbe, 2007, Hudson. The book looks at the ever-increasing need for organisations to implement a “development” culture as opposed to the ready-now, performance-driven “succession planning” culture which is prevalent in a lot of organisations. In that context they give a complete overview of the pros and cons of openly communicating the “high potential” label.

Here’s a summary followed by further implications (“et alors”).

High Potential Status Transparency

The pros of openly communicating the High Potential status are as follows:

·         Shared responsibility – development becomes the responsibility of all involved: not just HR, but also management and the individual.

·         Transparency – not only a “moral” contract with the individual, but for the entire organisation, transparency can boost motivation in terms of visible opportunities.

·         Fairness – when not a secret, a formal and open policy regarding the unequivocal status requirements enhances the feeling of fairness and objectiveness.

·         Quality assurance – if transparent, the status evaluations and assessments have to be thorough enough to withstand scrutiny which thereby ensures quality.

·         Visibility – not only will the individual feel they have to prove their status, but the wider context of leadership development also becomes more visible to all.

The cons of openly communicating the High Potential status are as follows:

·         Assumed permanence – often the individual assumes that the status is permanent which can cause difficulty when the temporary status is removed.

·         No vacant growth positions – not achieving advancement due to hierarchical constraints can lead to resentment and cynicism by the individual and by the entire organisation.

·         Label abuse – externally the individual might be head hunted by other organisations; internally the individual might use the status as a “crown prince”.

·         Pressure – in one sense, the extra pressure placed on the individual by this status can be challenging; in another sense it can also be demotivating when the “spotlight” is removed.

·         Implicit negative status for others – if some are “high potentials” does that mean that the majority is “low potential”?  Beyond this one status, further clear communication is required.

Et alors?

Timmerman and Sabbe actually change the question from “should the status be communicated” to simply ask “how should the status be communicated”? In the context of moving to a “development” culture, transparency is almost a “given”. A lot of the cons referenced above only occur when transitioning from a “succession planning” culture and become redundant once a “development” culture is achieved.  The correct way to communicate the status is to formally publish the required criteria (which can have the added benefit of “awakening dormant talent”); then to have formal assessments to identify high potentials; so as to finally communicate that the achieved status is temporary, that there are certain expectations and that it is not guarantee of promotion. The end result is a jointly agreed development plan which is followed-up and in line with the organisation’s strategy.

Companies that have a “succession planning” culture might be more reluctant to communicate high potential status. According to McCall, a succession planning culture is all about “results” which can be best achieved by having the right people in “key functions”.  In order to be assigned a “key function” the candidate has to be “ready now” in terms of competences. The emphasis is therefore usually on expertise and in such an environment, open “high potential” status can cause more cons than pros. The alternative “development” culture is where “high potential” is not just a status but a whole management ethos. Being all about “learning”, the focus is on “development assignments” (to achieve results in the long- rather than short-term). Who can learn the most from a particular assignment is given that assignment in order to develop. The emphasis is usually on leadership and in such an environment, open “high potential” status can be more positive than negative.

Besides corporate culture the evaluation of employees’ potential is also quite often clouded by national cultural references. This presents a particular set of challenges for any multinational company that might have an ethnocentric culture (usually referencing the national culture of its senior managers and/or the location of the head office). Three different European evaluation philosophies and career paths that are quite different are the “Anglo-Dutch”, the “Latin” and the “Germanic” – see previous article for more information. “Outsiders” vis-à-vis any particular model therefore might not “fit in” the system – especially when a national cultural references are also combined with the common “succession planning” corporate culture! It therefore might not be a surprise that there are less European than American organisations that currently disclose “high potential” status…