Everything You Need to Know About High Potential Employees (HiPos)
High-potential employees are employees who have been identified as having the potential, ability and aspiration for successive leadership positions within the company. These employees are often provided with focused development opportunities as part of a succession plan and are referred to as ‘High Potentials’ or ‘HiPos’.
According to The Harvard Business Review, HiPos “consistently outperform their peer groups in a variety of settings and circumstances. While achieving these superior levels of performance, they exhibit behaviors that reflect their companies’ cultures and values in an exemplary manner. Moreover, they show a strong capacity to grow and succeed throughout their careers within an organization – more quickly and effectively than their peer groups do.”
It’s surprising that not all companies take the time to identify their HiPos in a purposeful and organized manner, given that these are the future leaders of the organization. How they are identified, developed and retained will have a huge impact on the enterprise’s long-term viability.
Characteristics That Define a High Potential Employee
While your company may have a different definition (or might not even officially distinguish between HiPos and other employees), most companies tend to think of the top 3% to 5% of their talent as HiPos. These individuals demonstrate the ability, motivation, and commitment to progress to roles of greater responsibility.
Here are some traits that HiPos share:
Personal Drive for Excellence
HiPos are driven and ambitious. They have high expectations for themselves, not only for their career but also for the quality of their work. They demonstrate a strong work ethic and consistent initiative. Proactive in nature, they can see or address needs and concerns without having to be given specific instructions or directions by their manager.
Able to Adapt Quickly to New Situations
Change is one of the few constants in today’s business world, and HiPos understand that regardless of how much planning is done, uncertainty and ambiguity are inevitable. HiPos thrive in conditions of uncertainty by assessing the situation, evaluating and prioritizing risks and responses, and formulating an action plan. HiPos are willing to take risks and, regardless of outcomes, be held accountable for their decisions.
Deliver Tangible and Consistent Results
HiPos earn the trust and respect of others by demonstrating high levels of consistency and professionalism. They can be counted on to keep their word and deliver results. They take their goals and responsibilities seriously.
Hungry for Knowledge
Instead of becoming specialists in one area or focusing on a specific skill, HiPos demonstrate a hunger for continuous learning that creates value across the organization. HiPos’ adaptability to change, their ability to learn quickly and their willingness to develop others often leads to new leadership roles and opportunities.
HiPos usually possess what is called a ‘catalytic learning capacity’. They have the capacity to scan for new ideas, the cognitive capability to absorb them, and the strategic thinking ability that processes the information to formulate appropriate responses.
They Understand the Value of Leadership
HiPos are effective at developing talent in the organization. They welcome advice and guidance from mentors and take the time to contribute to the development of other employees by providing feedback and encouragement.
Pareto’s Principle and How it Relates to HiPos
In 1906, Italian economist Vilfredo Pareto created a mathematical formula describing the unequal distribution of wealth in his country. Pareto observed that 20% of the people owned 80% of the wealth. In the late 1940s, manufacturing quality guru, Dr. Joseph M. Juran, attributed the ‘80/20 Rule’ to Pareto, calling it Pareto's Principle.
Over the years, Pareto's Principle has been recognized as a very effective business management metric.
Essentially, Pareto’s Principle posits that in any set of things (workers, customers, etc.) a few (20%) are ‘vital’ and many (80%) are not. In Pareto's case, he found that roughly 20% of the people in his country dominated with 80% of the wealth. In Juran's initial work, he identified 20% of product defects causing 80% of product problems. It’s well known by project managers that 20% of work (usually the first 10% and the last 10%) consumes 80% of the time and resources.
With respect to HiPos, the findings mirror the Pareto Principle 80/20 ratio. Extrapolation reveals additional valuable data.
- The top 1% accounts for 10% of organizational output
- The top 5% accounts for 25%, of organizational output
The value of the Pareto Principle in management is in reminding us to stay focused on the percentile that matters most. This percentile includes HiPos, and, considering the possible contribution they could make in terms of output, it’s critical to invest the time and effort to help them achieve their potential.
The Dark Side of High Potential Employees
It is important to acknowledge that no matter how talented and promising a HiPo seems, less desirable and potential disruptive characteristics will also be present. So don’t focus only on the HiPo’s strengths – you’ll also need to identify ‘derailing tendencies’ that, if left unchecked, will have negative consequences for the individual and the organization.
It’s not surprising that HiPos have weaknesses; it is human nature, after all. Paradoxically, in some cases the HiPo’s intelligence, charisma, confidence and other characteristics that contribute to the HiPo designation can be the reason they fail to be effective later.
Using the Pareto Principle, we apply the 80/20 Rule: 20% of employees make up for 80% of the company’s revenues and profits. Likewise, 20% of employees cause 80% of the problems within an organization.
Coincidentally or not, they are often the same employees.
That means that sometimes HiPos, who are aware of their value, may become difficult to manage. Regardless of how apparently exemplary these individuals are, dealing with maladaptive or undesirable tendencies should be addressed.
High Risk of Employee Burnout
Employee burnout has reached epidemic proportions. A study conducted by Kronos Incorporated and Future Workplace in the United States of America found that nearly 95% of HR leaders consider employee burnout to be the biggest threat to an engaged and productive workforce.
The top three factors that caused burnout among employees were unfair compensation (41%), unreasonable workload (32%) and too much overtime (32%). Other factors, factors like poor management (30%), employees seeing no clear connection of their role to corporate strategy (29%), and a negative workplace culture (26%) also made the list.
Mitigating HiPo burnout should be a top priority. Whatever the proximate cause, burnout undermines engagement and weakens productivity, and, if unchecked, can result in HiPos leaving the organization.
Not All HiPos Remain High Performers
A common flaw in HiPo developmental efforts is that they often focus exclusively on performance. This is problematic for two reasons. First, organizations are not very good at measuring performance (once you eliminate subjective ratings, there are very few reliable metrics left). Second, even with positive performance measurement data, many HiPos will fail to perform well at the next level.
That’s because when HiPos transition from individual contributors to managers, or from managers to senior management, the pivotal qualities or competencies that drive high performance change. Furthermore, many HiPos may not want to manage or lead, preferring instead to focus on independent problem-solving or being a team-player. The result is a paradoxical system that removes people from a job they are rather good at, and re-positions them in a role they don’t want.
High Potential May Also Mean Large Ego
Most HiPo programs focus on potential for leadership. This makes sense, as leaders control a disproportionate amount of resources, set key strategy decisions, and create culture and engagement in their firms. At some point, a HiPo will ‘emerge’ as a leader. The next challenge is to be ‘effective’ as a leader. Consider that the key attributes that contribute to emergence can actually be detrimental to effectiveness. For example, self-promotion, political dexterity, and networking skills play major roles in helping HiPos emerge as leaders: this is why many leaders are confident and charismatic, if not narcissistic. However, leading effectively requires good judgment, empathy, and self-awareness. Those qualities are rarely found in individuals who are self-focused and obsessed with personal advancement.
In fact, many brilliant leaders have clear problems with authority, so they are often indomitable and insubordinate, particularly when they have an entrepreneurial profile.
Clues to Help Identify High Potential Employees
Many organizations, either formally or informally, compile a list of people they believe will have high potential for advancement. From an individual’s point of view, being acknowledged and recognized as a HiPo is a personal and professional accomplishment that bodes well for their career.
From the organization’s point of view, there is a great deal at stake in identifying HiPos. If the wrong individuals are selected, valuable developmental resources will be misdirected and, ultimately, wasted.
Having strong HiPos in place will ensure a long-lasting talent pipeline and healthy succession plan for the organization. That’s a far better strategy than the alternative of replacing top employees with external candidates. That approach tends to be more expensive and have lower chances of success. Even when you hire people with the right skills, they often fail to adapt to the new culture because of incompatible values or style.
Examine the resources you already have. Here are key characteristics to look for among your current employees.
Works Well Autonomously
HiPos are extremely proactive about their careers. They are always looking for new opportunities and seeking the ways and means to be successful. They understand that acquiring new skills and competencies are a must for reaching the next level. They create opportunities, learn from them, broaden their expertise, and leverage their expanding skill set as new challenges arise.
Have an Acute Sense of Emotional Intelligence
Emotional intelligence is the sum of three unique characteristics:
- The ability to be aware of personal emotions as well as the emotions of others
- The ability to apply emotions to thinking and problem-solving
- The ability to manage emotions internally and externally
Individuals with high levels of emotional intelligence intuitively understand what makes people ‘tick’. They are able to assess the impact of their words and actions on others. Emotional intelligence enables people to be aware of themselves and how their behaviors and actions can affect other people, both positively and negatively.
Lives and Breathes Company Culture
HiPos are wholly committed to the organization. They are highly engaged, and demonstrate it by being involved in creating opportunities, identifying challenges and motivating others to achieve common goals. They nurture and harness their own and others’ individual potential, career goals and personal needs.
Asks Relevant and Engaging Questions
HiPos are by nature inquisitive. They are verbal when colleagues may not be. HiPos have an innate feel for the issues and concerns of those around them, and don’t hesitate to ask questions or raise important issues when others hesitate.
Works Above and Beyond Their Job Description
The smaller the company, the more important it is that employees can think on their feet, adapt quickly to shifting priorities, and do whatever it takes to get the job done regardless of their role or position. When necessary, HiPos will ignore their job description and assist in any way needed to resolve unexpected challenges.
Have Friends throughout the Office
HiPos are personable by nature. They develop and maintain relationships and understand that networks must be ‘nurtured’ rather than ‘used’. They seek out mentors and advocates who can provide valuable support and speak positively on their behalf. They are aware of others and take a genuine interest in getting to know people personally.
How to Keep HiPos Engaged
An enormous strategic challenge – and it is intensifying daily – relates to employee engagement, which is particularly complex with HiPos.
Today’s increasingly competitive talent marketplace makes it harder for organizations to retain high-potential talent. Low engagement and high turnover are extremely costly for organizations – especially if the people leaving are HiPos in whom much has been invested.
Because of their unique characteristics, keeping high-potential employees engaged is essential. HiPos can be easily disillusioned by poor management and a lack of opportunities for growth. And they can easily find employment elsewhere.
Train Leadership to Understand Turnover Risks
It’s no secret that managers are one of the most important components of job satisfaction and engagement. There’s an old axiom that “people don’t leave bad companies, they leave bad managers.” And, similarly, great managers can evoke high engagement levels.
Managers must understand the vast range of reasons that can affect turnover risk. Once they have that knowledge, they can identify engagement risks that are in play. Train your managers on the importance of maintaining a regular, ongoing dialogue with HiPos so they can proactively identify and address current or emerging risks.
Give HiPos Difficult Challenges
Provide high-risk opportunities in a supportive environment. HiPos need highly challenging development opportunities that allow them to advance their career. That can be accomplished by offering tough assignments, special duties and expanded responsibilities. High-visibility assignments keep employees engaged while challenging them to perform at higher levels. These opportunities need to be carefully managed and conducted in a supportive work environment that mitigates risks and drives success.
Align with Their Career Path
HiPos are strategic resources that, like other types of capital, can move around – to the competition, as an example. That’s why it is essential to focus on proper alignment. Basically, alignment is achieved when an employee – in this instance, a HiPo – clearly understands how his or her specific role fits in the organization’s vision, goals, and values, which will result in greater engagement and productivity. Expectations – both HiPo and senior management – should be established that result in a compelling HiPo career path.
There’s no doubt about HiPos’ potential long-term strategic importance to an organization. These are the employees who have the capacity to take on roles of increasing responsibility and influence. Of course, maximizing HiPo impact is no easy matter.
Management must successfully address two fundamental challenges:
- Correctly identifying HiPo candidates. Selecting the ‘right’ individual in the first place is essential. There are certain traits and characteristics exhibited by HiPos that can’t be taught.
- Engaging them with an appropriate ‘development experience’. These efforts must be custom-tailored to recognize, reflect and align with each HiPo’s unique natural abilities, existing skill set, learning needs and individual career goals.
If these challenges can be met, the organization is sure to net positive results and benefits from the effort.
This blog post is intended for informational purposes only and does not constitute legal advice. No attorney-client relationship is created between the author and reader of this blog post, and its content should not be relied upon as legal advice. Readers are urged to consult legal counsel when seeking legal advice.