Executive Development Blog

Keeping Up with the Demand for High-Potential Talent

Posted by Kip Kelly on Jan 9, 2014 3:09:19 PM

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The following article is featured in the January 2014 issue of Talent Management Magazine.talent management 

Identifying, developing, and retaining high-potential talent could be the single greatest challenge organizations face over the next decade, but few organizations are confident in their ability to meet this challenge according to a survey conducted by UNC Kenan-Flagler Business School.  Eighty-four percent of talent development professionals surveyed reported that the demand for high-potential talent has increased in the past five years, driven primarily by growth (74%) and competitive pressure (61%).  Almost half (47%) of those talent development professionals stated that the current pool of high-potential talent does not meet the anticipated future need. Another 18% of those surveyed didn’t know if the current pool of high-potentials will meet future needs.

In addition, organizations expressed only moderate confidence in their ability to fill mission-critical roles and develop high-potential talent.  Survey respondents rated their ability to forecast the skills and competencies needed for success over the next 3-5 years as “good”.  Participants in the research study gave a similar rating to their ability to forecast potential shortages in the talent pipeline over the next five years.

Challenges in Identifying High-Potentials

More than half of the survey respondents (56%) have a formal process to identify high-potential employees. Another 21% say they plan to start, or restart, a process to identify high-potential talent. They are motivated by the need to meet demand for future leaders (83%) and the desire to retain key talent (83%).  These organizations recognize that identifying and investing in high-potential talent improves commitment and engagement, laying the foundation for future success.

A process to identify high-potential talent is a clear advantage in the escalating war for talent – but simply having a formal process is obviously not enough.  Most of those surveyed (52%) are only moderately satisfied with their current process.  So, why are organizations struggling to identify high-potential talent? In organizations where the current pool of high-potential talent meets or exceeds future leadership needs, the most significant challenge is the attempt to achieve a balanced, organization-wide representation. This is followed closely by the reliance on current performance metrics rather than future potential.

Another common challenge reported in the research is the use of inconsistent criteria to define potential. When asked to rate how consistent their organizations are in applying high-potential selection criteria, respondents reported that they are only moderately consistent within divisions and departments and even less consistent across divisions and departments.  When asked what one thing would improve their ability to identify high-potential talent, the most common response was consistency.

Competencies for Identifying High-Potentials

The research found that talent development professionals generally agree on the most important competencies used to identify high-potential employees. Strategic thinking/insight was reported as the most important competency (69%), followed by drive for results (67%). Other important competencies used in selecting high-potential talent include collaborative leadership (44%) and the ability to build effective teams. When asked which competencies will be most important in 3-5 years, change leadership emerges as the most important.

In addition to competencies, organizations are looking at other factors to identify high potential. As one might expect, future performance potential was reported as the most important factor (70%) in selecting high-potential employees, followed closely by current/sustained performance (66%).  Culture fit (59%) and commitment (47%) were also rated as important factors.

Proficiency of High-Potential Leaders

So, how proficient is the current talent pool with regard to each of these competencies? As one might expect, high-potential employees were rated as more proficient than typical employees on every competency. Those organizations who reported that their current talent pool meets or exceeds future leadership needs rated both their typical employees and their high-potential talent as more proficient than those who believe their current talent pool will not meet anticipated future needs.

High-potential employees were rated the most proficient in “drive for results”, followed by “learning agility” and “flexibility/adaptability.”  “Strategic thinking/insight” was ranked as the most important competency used to identify high-potentials; however, proficiency in this area is rated as only average compared to proficiency in the others competencies.  Proficiency in “change leadership”, which was identified as a competency that is growing in importance was rated among the lowest. These findings suggest that organizations should focus more energy on talent development in this area.  Other talent development opportunities, where overall importance is not matched by proficiency, include “building effective teams” and “inspiring/motivating others”.

Next Steps

It is clear that the demand for high-potentials is increasing, and this research study suggests that many organizations are unprepared to meet the demand.  Talent development professionals need to be proactive in recruiting, developing and retaining high-potential talent if they hope to remain competitive – and the identification of high-potential talent is a critical part of that equation.  HR and talent management professionals can develop a systematic approach to identify high-potential employees by incorporating the following steps:

Step 1: Plan for the future.

The first step is to understand what the organization will need in the near future. HR and talent management professionals should identify anticipated leadership roles and positions, including the C-suite, the top 3 percent of senior leadership positions in the organization, hard-to-fill jobs, and the organization’s near- and long-term strategic needs. Once the future needs have been identified, the organization should articulate the purpose, priorities, needs, and requirements for each role.

Step 2: Define high-potential criteria.

Now that the future talent needs of the organization have been identified, and roles have been established, it’s time to consider what qualities, characteristics, skills, and abilities a high-potential employee must have to successfully perform in a given position. Starting with clear criteria for high-potentials that is specific and relevant to the organization, and using the criteria consistently is imperative.  Criteria should start with the current and future needs of the business. 

Step 3: Make the criteria measurable.

Establishing measurable criteria is critical to the integrity of the selection process, but it can be a challenge.  Many of the desired qualities, traits, and characteristics are difficult to quantify. 360 assessments can be an effective tool to capture measurable information from peers, direct reports, and managers.  Relying on objective, measurable criteria will help to reduce the emotions and ego that can influence the talent review and help overcome many of the common challenges.

Step 4: Identify high-potential candidates.

Once the high-potential criteria is defined and made measurable, high-potential candidates can be identified and selected using structured talent reviews. Candidates can be nominated, screened, and assessed based on the criteria and their performance. It is essential that everyone involved in the talent review uses common language and definitions, understanding the difference between potential, performance, readiness, and fit.

Some talent management professionals remain skeptical about the value of high potential programs.  A common criticism is that high potential programs may have a negative impact on the organization, alienating a large segment of the workforce not identified as high potential.  This could include some top performers and even some employees who were once considered high potential but no longer meet the criteria.  Another concern is that high potential talent will leave the organization, and the time and money invested in identifying and developing high potential talent will ultimately benefit the competition.  These are valid concerns, however, the alternative is to treat every employee in the organization the same, ignoring those employees who have demonstrated the attitudes, skills and behaviors that your organization needs to be successful in the future.  That could have the same unintended consequence, alienating your top talent and driving them in to the hands of the competition.  A systematic approach to identify high-potential talent can reduce high-potential drop-out rates and the associated wasted resources and expenses. Proper high-potential identification can also work to improve and target developmental plans for these individuals, resulting in more satisfied high-potential employees who are more likely to stay with the organization.

Identifying high potential talent can be very beneficial to the organization – and with these benefits comes responsibility.  Identifying individuals as high potential builds expectations regarding coaching, development and access to senior leaders.  Meeting and managing these expectations is an important investment in the future success of the individual and the organization.

While every organization is unique, there are some common challenges when it comes to identifying high-potential talent. Understanding the obstacles that are preventing your organization from creating a robust and dynamic talent pipeline is the first step in meeting the future demand.

Research findings are based on the responses of 1,361 talent development professionals to the UNC Leadership Survey 2013: High-Potential Talent. Click here to see the full results.

Topics: leadership, talent management, talent development, high-potential talent