How to Identify and Assess High Potentials? Ideas For Leaders was originally published on Ivy Exec.
In a perfect world with unlimited resources, organizations would focus attention on developing each and every one of their employees to the highest performance levels, regardless of cost.
However, in a modern business environment where resource management is critical to securing advantageous profit margins and business development outcomes, it’s clear that executive management teams have a vested interest in actively working to identify and assess the potential of employees to determine how and where to offer the right development opportunities.
An employee’s potential is a metric that could be used to describe the upper limits of an individual’s development range.
Higher potential employees are much better candidates for taking on greater responsibilities and joining executive management teams, and it costs the organizations they support much less for them to realize their potential. Employees that are found to have less potential generate less than optimal outcomes for the organizations they support, and their shortcomings threaten the ability to achieve positive business development results.
The Association for Talent Development has estimated that American businesses will spend $1,252 on average for training and development of each employee on their payroll. These initiatives are a success when productive, and engaged employees receive training opportunities that help them generate even more value for the organizations they support—companies with the most highly developed training programs have a 218% higher average employee income and enjoy a 24% higher profit margin.
Clearly, there are benefits to enriching employee development, but if organizations spend vital resources supporting the wrong staff members, they stand to incur significant losses. The United States Bureau of Labor statistics have found that employee churn has increased dramatically over the last decade leading to more than $1 trillion in losses and further reinforcing why it makes sense for top-performing organizations to consider employee potential.
In this article, learn more about how and why executive management teams have a vested interest in assessing and identifying high-potential employees.
Why It’s Essential to Identify and Assess High-Potential Employee
In his day, Henry Ford seems to have considered these topics quite significantly, and he had this opinion to share on the topic of evaluating and invigorating employee potential with training initiatives: “the only thing worse than training your employees and having them leave is not training them and having them stay.”
In 1896, management consultant Joseph M. Juran developed the Pareto Principle (also known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity) while conducting research into what businesses could gain by managing quality control issues with professional development opportunities.
The Pareto Principle holds that the top 20% of employees who contribute most significantly by generating 80% of organizational output:
● the top 1% accounts for 10% of organizational output
● the top 5% accounts for 25% of organizational output
● the top 20% accounts for 80% of organizational output
Thus, it makes much more sense for organizations to focus on initiatives to identify, assess, and set processes in place to enrich their highest potential employees to achieve even more.
Though it might seem easy to scoff at a 126-year-old management theory, the Pareto Principle continues to be extremely influential all over the business landscape because it conveys some challenging truths about organizational culture and the challenges c-suite executives have faced for time immemorial.
Raw Talent, Processing Power, Emotional Intelligence, and Soft Skills
Identifying employee potential is clearly a major c-suite management topic that impacts every business division or unit in an organization. However, it’s important to emphasize that an employee’s potential can be measured, evaluated, and assessed in many different ways depending on the employee, job, and organization.
Many organizations tend to focus on potential solely within the lens of “potential to move into a higher position within the next 2-5 years,” and while this is an excellent starting point, it could be useful to look further. Potential is the type of term like the development that will mean a lot of different things depending on the specific context being discussed.
We suggest that organizations consider the multiple dimensions of employee potential:
● Raw Talent: Employees who are just extremely talented, performing their daily responsibilities and consistently delivering results that set them apart.
● Processing Power: Employees whose personalities allow them to not only execute tasks exceptionally but with a natural tenacity that defines them as proven thought leaders, organizational connectors, problem solvers, and mission-critical resources.
● Emotional Intelligence: In recent years, many businesses have focused increased attention on emotional intelligence. The ability to demonstrate high EQ reflects a strong potential for candidates to work well within their organizations and be able to manage their tremendous skills with a natural degree of humanity that makes them exceptional partners to team up with.
● Soft Skills: When organizations are enduring challenging and uncertain times, employees with the right combination of soft and hard skills are likely to offer the organizational resilience needed to push through and overcome.
● Motivation: At the end of the day, if an employee has the right skills but does not demonstrate the drive needed to reach the next level, then it might make sense to look elsewhere.
The Best Practices for Identifying Employee Potential
☑️ Assessment and Development Centers (ACDC)
Assessment and development centers use a mixed methods approach involving interviews, aptitude tests, roleplay scenarios, simulations, presentations, and group discussions to capture valuable insights into employee potential. These development opportunities offer situation-specific contexts for evaluating professionals and comparing them to their colleagues.
☑️ Virtual ACDC
Today, organizations can gain many of the benefits of traditional ACDCs in an online format that matches the expectations of a growing remote workforce. Virtual ACDCs can be very useful for generating real-time reports to offer organizations quick access to the insights they need.
☑️ Hybrid ACDC
Increasingly, more providers are offering hybrid ACDC opportunities that involve a combination of in-person and online assessment tools and modules. These programs can also involve benefits such as giving employees a chance to be evaluated while actually performing their actual responsibilities instead of solely relying on mock-up scenarios and exercises.
☑️ 360-Degree Feedback Sessions
A 360-degree feedback session involves evaluating an employee in light of conversations and reports generated by peers, superiors, and customers to create an internal record of performance and potential. These sessions could be characterized as performance review proceedings but could easily be modified to capture insight around potential as well.
☑️ Assessment Battery
An assessment battery is a comprehensive array of assessments conducted internally that are best suited for new hires and first-time managers. These assessments create a foundation for enrichment and training that ensures employees gain the support they need to best develop their potential in their new role.
