Potential is likelihood, something that exists only as a possibility. What we try to do in the world of work is to estimate that likelihood. In essence, potential is an estimation of the likelihood of an individual being able to do or become something in the future within a specific context.
Estimation: we don’t measure possibility in people, we make an estimation about their future
Likelihood: we are talking about possibility, something that may or may not happen
Something: we need to ask ourselves, “potential for what?”
Future: a future that we don’t know what it’s going to look like
Context: what great will look like in an organization may be different in another organization.
This definition is intentionally vague for two reasons:
The first reason is that it seeks to define potential for what it really is, i.e., not a psychological construct but a referential concept, not something that can be identified, measured or predicted, but an estimation, an attempt at predicting.
The second reason is that anything more precise needs to be defined in context. Potential for what? To be a specialist? To be a leader? A leader in general or a specific kind of leader? How far in the future? The further in time the more variables interplay and we can no longer call this anything but guessing. And then we need to understand where. Is talent context-dependent? How transferable is it? What does great look like now? What will it look like at this or that organization in the future?
How is potential measured?
The process of identifying high potential talent is not always definitive. What can be measured are characteristics that are likely to enable people to do or become something in the future. For example, if you believe that in order for someone to be a successful leader in your organization in the future they need to be able to process complex data quickly and accurately, demonstrate confidence and ability to influence others, and be able to effectively deal with their and other’s emotions, then it would make sense for you to assess cognitive ability, personality and emotional intelligence. This, of course, leads to some challenges and questions, such as “how do I know what characteristics will be required from my leaders in the future?”, “How far in the future?”, “How can I ensure I’m embracing diversity and not ‘cloning’ people?” In any case, a lot of careful thought is required before even deciding what tools and methods will be used to assess individuals.
The pros and cons of working with potential?
Potential-related practices are supposed to:
Increase commitment, engagement, motivation and loyalty in employees labelled as ‘high potential’
Generate sense of obligation and reciprocity in individuals labelled as ‘high potential’, driving them to improve their performance
Help organizations reduce costs by not investing in the whole workforce and guarantee higher return on investment
Motivate those not labelled as ‘high potentials’ to work harder to be considered as such
However, these can also:
Decrease commitment, engagement, motivation, and loyalty in employees not labelled as ‘high potential’ (usually 80-90% of the workforce)
Increase perceptions of injustice and favoritism while decreasing diversity in the workforce, as labelling processes are usually based on subjective, biased judgements
Hide elitist and discriminatory behaviors. Because of this, transparency levels tend to be low and strategic ambiguity high.
Increase the expectations of people labelled as ‘high potential’, driving them to change jobs if these are not quickly met. This, of course, causes organizations to lose their investment.
Discourage personal development organization-wide, undermine teamwork, increase jealousy, and create an atmosphere of negative internal competition, all this in part due to overreliance on individual performance.
What should be considered before implementing a potential-related initiative?
It’s recommended to consider the following points and answer these questions:
it should be clear why organizations would like to work with potential and what outcomes they expect. If potential-related initiatives are not being instrumented carefully, negative implications can easily outweigh benefits. It’s also important to consider the population that will be examined. For example, will it focus on a specific level or involve different levels? If people are going to be assessed, will the process to be open to everyone or to a few pre-selected individuals? Organizations also need to ensure that they understand their own organizational context, what great looks like at the company today and what it will look like in the future.
Potential cannot be assessed or measured, instead the characteristics to be measured will need to be defined in advance. In order to do so, organizations need to identify “potential for what?” It also needs to be considered how many tools and methods will be used for this purpose.
What we do when we work with potential is to aim for the best possible estimation, and in order to increase the level of our estimation, we need to take into account as many data points as possible. In a way, this is like forecasting weather; you can use thermometers, barometers and other tools, or you can just put your finger in the air. The more tools and methods you use, the higher the level of complexity you will have to deal with, but the higher as well the likely level of your estimations. Ask what level of complexity the organization is equipped to deal with, how the data will be collected, and who will interpret it. Using People Analytics can certainly help with this.
Intentions must be very clear about the kind of decisions that will be made and what the next steps will be. Organizations need to explore ways to ensure that they can manage the expectations of some individuals and will avoid as many of the potential-related issues mentioned above as possible.
It is important to ensure that communication is clear and transparent, not just to avoid increasing lack of trust and low perception of fairness, but also for legal reasons linked to discriminatory behaviors and use of data (GDPR).
It can also be useful to assess how successful the potential-related initiatives have been. In order to do so, organizations need to consider ways to measure their effectiveness and determine if the outcomes justify the investment. Demonstrating return on investment around potential-related initiatives is challenging mainly because of development programs and self-fulfilling prophesies, and also because people favored by potential-related assessments tend to leave their companies when their high expectations are not met. Ironically, a way to evaluate how good the estimations have been is to assess people and not do anything. After a couple years, check to see if your estimations came true without intervention, and if that happened because of the individuals’ characteristics and not due to unrelated factors.
Should organizations really work with potential?
As highlighted above, there are certainly some benefits associated to potential-related practices, but it is not as easy as to assess a group of people, label them, and expect that a few employees will unconditionally commit to driving success in the future while the rest of the organization happily follows them. There are different ways of dealing with the many issues mentioned above, but the first two things to consider when deciding to implement potential-related practices are: 1) define potential for what it really is, i.e. just an estimation, and 2) move as much as you can from exclusive to inclusive talent management.
5 steps to develop a pipeline of leadership talent