Unlocking the DNA of Potential

THE MYSTERY OF POTENTIAL

High Potential is defined as having a high likelihood of advancing one or more levels in the organization. It is a predictive measure of being able to successfully navigate transitions across leadership levels. While the definition of potential may be relatively well understood, an accurate measurement of potential is not.

Potential is not always readily apparent. It is a quality that lies within the individual, much like DNA. What are the component parts of potential? This is the mystery of potential. Once we can unlock the DNA of potential and identify the component parts, we can then decide on appropriate measurement strategies.

Organizations repeatedly see individuals identified as high potential stagnate, struggle, or fail in successfully making upward transitions. This suggests that significant problems exist with how potential is measured today and how high potential individuals are identified.Companies clearly recognize that these problems exist. In a recent global survey of 73 companies, 91% of companies said they were challenged to identify high potential individuals early in their careers (Corporate University Exchange, Leadership 2012 Survey).

COMMON APPROACHES AND PROBLEMS IN MEASURING POTENTIAL

There are three primary approaches used today to measure potential.Each approach and its associated problems will be briefly discussed.

1. Performance – The most common practice is to use performance in the current role as an indicator of future potential. The implicit assumption is that high performers also are high potentials. Fully 86% of all organizations and 95% of larger ones look at the past performance record of workers (May 2009 i4cp survey results). There are a number of problems with this approach. The most obvious is that the competencies and challenges faced in higher level positions are markedly different than competencies and challenges faced in lower-level roles. There is little overlap in the requirements for success so there is little reason to believe that current performance in lower roles would be indicative of success in higher roles. It is not surprising that a survey conducted by the Corporate Leadership Council found that only “29% of high performers turned out to be high potentials”. However, performance is a readily available measure and in the absence of a conceptual model of potential, performance serves as a convenient but flawed measure of potential. While performance does not equal potential, it should play a contributing role in the identification of high potential individuals. It is a threshold condition. It is unlikely that an individual will be seen as having high potential for advancement if they are not successful in their current role.

2. Manager Nominations Using Structured Judgment Frameworks – Another common approach is to ask the manager to make an informed judgment of potential considering a defined set of standard elements. This approach has the advantage of considering qualities other than performance and utilizes an implicit model of potential. In 2006, Fast Company polled 20 key leaders in 16 companies to identify the most frequently used elements in judging high potential. The following elements were identified:

   • Ability to Execute
     • Have they performed well in varied assignments and stretch assignments?
     • Do they excel in ambiguous situations?
   • Relationship Building/Influence/Communication Skills
     • Can they build a strong case to influence their peers to their position/view?
     • What do others think of them?
     • What kind of impression do they make when I interact with them?
   • Passion and Ambition
     • Do they have a sense of urgency around taking on challenging and important projects?
   • Passion for Learning
     • Do they have an openness to and passion for learning?
     • Are they highly motivated to continuously learn?

   While these elements are “future oriented”, there is still concern about the extent that current performance influences these judgments. There is also considerable concern about the potential for bias in using judgments from a single rater (manager).

3. Higher Level Competency Models – Some companies recognize that the competency requirements for high level leadership roles differ from the competencies required in lower-level roles and also recognize that a single rater approach invites personal bias. Therefore, they assess lower-level leaders using competency models for higher level roles. Most commonly, this assessment is conducted using a 360 or multi-rater survey. This approach is positive in that it is both future oriented and overcomes the reliability problems of measures from a single rater. However, there is a significant problem in the opportunity for observation. Multi-rater surveys assume that the raters have had sufficient opportunity to observe the core behaviors that define a given competency. This condition is not met in cases when raters are asked to rate behaviors that are not present or required in the current job. For example, it is difficult to obtain a reliable measure of “Developing Organizational Strategies” if an individual has no opportunity to perform the behaviors associated with the competency. When there is no demonstrated behavior to base a judgment, one has to rely on inference. In this case, one would have to infer future competence based on the individual’s understanding and analysis of the strategies developed by current senior leadership. However, this inference may well be flawed since understanding strategies is demonstrated by different behaviors than those required for actually developing effective organizational strategies.

A CONCEPTUAL MODEL OF POTENTIAL

The following conceptual model is proposed for both understanding the components of potential and suggesting a measurement strategy. The elements of the model will be discussed and a supporting rationale for each component will be presented.

The first component of the model focuses on the hard-wired aspects of potential, what we refer to as “raw potential”. There are two core elements of raw potential:

• Behavioral Predispositions – Not everyone is naturally predisposed to assume leadership roles. There are certain core traits or characteristics that are associated with leadership advancement and success. Personality constructs with proven validity in predicting leadership success should be used as measures of this core element. Particularly useful are proven personality instruments that provide an “overall leadership predisposition scale”.
• Cognitive Ability – There is increasing complexity in the challenges associated with higher level leadership roles. Individuals need superior mental abilities in order to understand and handle these complex problems, issues, and opportunities. Research shows that cognitive ability is the single best predictor of leadership success. However, not all cognitive abilities are necessarily valid predictors. Verbal reasoning does not emerge as a strong a predictor as numerical and abstract reasoning. Validated cognitive ability testing provides the best measure of this component of raw potential.

The second component of the model focuses on the motivations and career ambitions of the individual. It reflects the extent that an individual is motivated to apply energy and effort to develop their raw potential. Self-report measures can be used to gather key information on motivations and preferences. Some key motivations include:

• Interest in Advancement – A key consideration for identifying an individual as a high potential is their level of interest in advancement. The opportunities and challenges of senior leadership are not attractive to all individuals. They may prefer a career path that allows them to grow their technical expertise or broaden their scope of responsibilities within their current level of leadership.
• Achievement Orientation – Grooming oneself for senior leadership roles is hard work and often stressful. Individuals need to have a strong achievement drive to prepare for future roles while remaining high performers at their current level.

The third component focuses on the amount of relevant experience an individual has acquired at a given point in their career. Leveraging experience is the primary method for leaders to transform their raw potential and realize their true potential. This element is highly amenable to development and targeted assignments or experiences can improve an individual’s advancement potential. Research has shown that there are specific experiences that are associated with leadership development and success. These specific experiences can be categorized into four higher level factors:

• Managing a Business – Experience in managing core processes and activities related to the success of a business.
• Managing Relationships – Experience in managing interpersonal or business relationships.
• Overcoming Challenge/Hardship – Experience in handling adversity, challenges, and problems.
• Managing Development – Experience in broadening one’s global business perspective and developing individual and group capabilities.

Leadership experience is best measured using a research-based inventory instrument. 

The fourth and final element is demonstrated behavior. While there are significant differences in the competency requirements for different levels of leadership, there is also some overlap. There are core competencies that serve leaders at all levels and should be examined when considering potential. Examples of these areas include:

• Interpersonal influence
• Communication skills
• Adaptability
• Emotional control
• Integrity

A multi-rater survey provides an economical and reliable measure of demonstrated behavior in core competency areas.

THE MAGIC RECIPE – PUTTING THE INFORMATION TOGETHER

In order to analyze Potential, it is important to include both the red flag and normative information suggested by the model. Some examples of red flags considerations include:

• Low manager opinions of potential – The model does not suggest that human judgment should be ignored in evaluating potential. If the manager feels that potential is limited, this should be considered a red-flag and the underlying observations and rationale should be explored.
• Low expressed interest in advancement – Preferences and motivations provide the power for transforming raw potential. Low levels of interest would be a serious red flag. It should be noted however that this does not mean that an individual with good raw potential and low interest in advancement should be ignored. Their career interests may well change over time and changes in motivation should be monitored.
• Low competency performance in core areas – Competency performance in the current role should be used as both a threshold condition and suggest red flags if deficits exist in those areas that will be important for future success. These areas should be addressed through developmental planning.

Standardized tools with appropriate norms provide the basis for integrating the overall personality data, cognitive ability data, and experience data. These data can be combined into a single norm-based percentile standing. The recipe mix for integrating these data is an important consideration to mitigate possible adverse impact effects while retaining predicting power.

SUMMARY

A Potential Analysis Report can be used to help inform talent management decisions concerning the identification of potential early in an individual’s career. The Report would consolidate all relevant information suggested by the conceptual model into an easily understood and simple display. It would provide a common conceptual model for how to think about potential. Human Resource and Line Executives could use the report to complement other data and processes concerning high potential identification and development.

---

REFERENCES

Corporate Leadership Council.High Potential Management Survey, 2005.

The Corporate University Exchange.Leadership 2012 Survey, 2009. www.corpu.com/leadership.

FAST Company.“Identifying and Developing Talent”, Jim Bolt, July 8, 2008.

The Institute for Corporate Productivity.“Living Up to Your High Potential(s)”. Mark Vickers, May 29, 2009.