How to Identify, Manage and Retain High-Potential Employees 1

People often confuse high-performing employees and high-potential employees when in fact the two are quite different. Organizations need to make this distinction if they want to build strong leadership teams from within. And the first step is to ensure your people understand what “potential” really means.

What is a high-potential employee?

High-potential employees are the rising stars in your organization. According to CEB research, high-potential employees have three key characteristics in common: aspiration, ability and engagement. High-potential employees are likely to be successful in more senior, critical positions in your organization in the future.

Developing high-potential employees is a great way to ensure the future success of your organization. A few years ago, we hosted a webinar called Cracking the Code to High Potentials with Dr. Henryk Krajewski of The Anderson Leadership Group.

The webinar was so popular, we’ve invited Dr. Krajewski back for an updated look at what makes high-potential employees tick.

Henryk: It’s easy to confuse the two – and despite all that’s been written, we still recognize, reward and promote the highest performers in our organizations. Performance is how well I’m doing my job tasks. Potential is how well I might perform in a future role, in a given organization – and commonly we’re talking about leading larger and larger groups of people, and making more and more consequential decisions.

So, for me, potential is about the ability to lead larger and larger groups of people, and the ability to do more increasingly complex thinking. This is quite different from whether I wrote a good proposal, delivered a sales goal or kept server downtime to a minimum.

Why is this difference so important for leaders at all levels of the organization to understand?

Henryk: We are still so myopic about a leader’s actual duties (i.e., not just what’s in the job description). In fact, a leader’s job is to:

  1. organize work in such a way as to maximize the leverage the organization model provides, and
  2. to maximize talent within that model.

Simply put, it’s about getting the most out of the people underneath you. The trouble is, we haven’t yet had the courage to say, “Enough with the job specs and tasks; we’re assessing people for their ability to lead others. They might not be the highest performers, but we’re over it. This is their job now – to be leaders.”

At best, we’re assessing both leadership and technical job performance but even when we do assess both, we overvalue the performance piece. For example, have you ever heard of an average performer getting a promotion over a recognized star performer? Maybe, but that’s rare.

No question, I would take a slightly above-average performer with great leadership potential over a high performer with average leadership potential. We need to recognize that one (potential) is a more relevant criterion than the other (performance). Moreover, we often allow performance to cloud our judgment of potential.

Research shows us there is considerable “halo” associated with high performers such that strong performers are consistently rated as higher potential – even when this approach is not really valid. This happens because people have an unclear idea of what “potential” actually is.

Organizations need to make clear the distinctions as above, and be zealous about assessing it. That means managers spending lots of time talking to one another about these constructs and how they see others. These judgments should not be made by individuals staring at computer screens, in decision vacuums.

What is one thing managers can do to identify and retain high-potential employees?

Henryk: Ask them what they want and find a way to make it happen. Try to improve things for them. Provide some service to them that’s valuable as an individual. Make them part of a meaningful experience. This isn’t “coddling” people. Reciprocation is extremely powerful.

Even just asking the questions about what a person might be interested in doing/getting/being a part of stimulates increased commitment on the employee’s part. We’ve been led to believe engagement and retention are difficult. It’s easy if you have the right managers.