Identifying high potential employees

I recently met with the Organizational Design team of a large regional bank; we were talking about future of HR technology and the challenges they were facing. One of the issues that they were keen to explore was opportunities to improve their ability to identify High Potential (“HIPO”) employees.

The team was happy to admit that their current process for identifying HIPO employees was limited to asking managers a single question during the annual performance review process:

Is he/she a candidate for the High Potential program? Yes/No

Based on this rudimentary process, employees made it through to the first round of selection for inclusion into the HIPO program.

Now, this may sound like a fairly terrible approach to identifying HIPO employees, but when you consider that only 8% of organizations believe that their performance management process drives high levels of value, maybe this approach of HIPO identification isn’t much more broken than the rest of the field of performance management.

The benefits of an effective HIPO development program are well known; we know that HIPOs are critical to an organization’s continued success. The numbers are compelling.

HIPOs contribute 21% more effort than regular employees, produce 91% more value than core employees, and are three times more likely to succeed as future leaders. But the difficulty in identifying and retaining HIPOs is also complex. Only 29% of employees in the top quartile of performance are HIPO employees. 25% of HIPOs are planning to leave their company within the next year, while the other 75% are 10% more likely to leave than other employees.

HIPOs must be effectively honed to be able to meaningfully contribute to both the organizational and their own goals, if they are to remain effectively engaged.

If you have a look at the training courses offered as part of HIPO development programs, they focus almost exclusively on leadership. Universities like Wharton, Stamford, and Harvard all offer courses developed specifically for HIPOs. But these very expensive courses have very little focus on running a business, or finance, or marketing. But by using Organizational Network Analysis (“ONA”); we can develop a quantifiable method of measuring an employee's potential that can quickly benefit the business by identifying those employees who are demonstrating high potential.

HIPO employees have a rare mix of aspiration, ability, and engagement.

The deeper view on these broad characteristics becomes a little more measurable and quantifiable:

ONA provides a structured way to visualize how communications, information, and decisions flow through an organization. ONA can provide an x-ray into the inner workings of an organization measuring how all individuals contribute to the creation of “value” by communicating, collaborating and influencing their networks.

For identifying those employees who display the traits of a HIPO employee and then crucially, measuring the HIPOs ongoing activity to see if they are actually delivering on this potential, we can measure the following characteristics:

  1. Network immersion and strength: how strong are the relationships that the employee has with colleagues? The stronger those relationships, the better value is created.
  2. Network Reach: how and where does the employee's network reach, how are their relationships with more senior employees, with different teams, departments and across different physical locations? The research shows that high performers build networks that are more more immersed, broader and stronger than their contemporaries.
  3. Ability to influence: HIPOs that are critical to the flow of information are the key connectors that hold networks together. This identifies key employees who can drive and support organizational change.
  4. Collaboration: A quantified measure of how collaborative employees are, within their team, and with other teams and departments.

The ongoing measurement of an HIPO’s development and network growth is also a critical piece of insight. A traditional weakness has been in evaluating the impact of the program, on the employee and the wider business and then creating a process to provide regular feedback to the candidate and monitor progress. By running these scorecards on an ongoing basis, we will close this gap and be able to demonstrate impact and benefit.