High-potential employees are the lifeblood of any leadership succession strategy. Without a plan for finding and developing these future leaders, organizations are setting themselves up for frustration and failure. Rather than turning to a pool of qualified and capable internal candidates, they find themselves conducting expensive and lengthy searches for qualified external candidates or promoting employees based on the wrong criteria and hoping for the best.
Making the wrong hire in a key leadership position can be devastating for any organization. The US Department of Labor estimates that the true cost of a bad hire is at least thirty percent of their annual earnings, and the shoe and clothing retailer Zappos put the total cost of its failed hires over the years at “well over $100 million.” Whether the candidate lacks the necessary skills to succeed or turns out to be a poor cultural fit, promoting the wrong person to a leadership role can undermine morale and productivity throughout the organization.
Given these stakes, it’s critical that companies implement effective high-potential assessment processes and succession strategies that allow them to leverage their internal talent effectively. Only about one-in-seven high performers has the ability to become a successful leader. Gradual increases in responsibility can help to narrow the pool of high-potential candidates over time, which enables organizations to maximize their investment in employee development.
Even when they do make this commitment, there are still a few common mistakes that undermine the development and retention of high-potential employees.
Mistake #1: Not Identifying High-Potential Employees Early
The first step is to identify employees who demonstrate the desire, skills, and commitment to lead long before you need them to step up into key roles. Identifying high-potential candidates early makes it more likely they will remain engaged in their work and committed to advancing in the organization because they understand what leadership roles they might step into in the future.
There are numerous ways to be proactive about this. It could be as simple as soliciting informal peer recommendations or as formal as encouraging interested employees to engage in leadership assessments to help identify potential. Any high-potential employee assessment process needs to be multi-faceted, relying upon a combination of data points rather than simply looking at past performance or manager recommendations.
In the absence of any clear assessment process focused on identifying high-potential leaders, managers often promote employees to leadership positions based on gut feelings or because they feel they’ve “earned it.” This approach is flawed, as someone who is a strong producer may not necessarily have the skills or desire to motivate, coach, and delegate well to others.
Mistake #2: Not Having a Clear Development Strategy
Having a plan to identify high-potential employees is a great first step, but it’s only the first part of a longer development process. Leadership candidates are a valuable resource for any organization. Their development is important to the company’s future and shouldn’t be left completely to chance.
Companies need to engage with their high-potential employees, learn their motivations and aspirations, and then work with them to outline clear goals for their future. In most cases, this will involve a professional development plan that identifies concrete steps the employee should take in both the short term and the long term to achieve their career goals. Whether it’s their next promotion opportunity or a series of simple career milestones to further assess their potential, it’s essential to put "low hanging fruit" and higher reach goals in front of employees to ensure they continue to be engaged and dedicated to the work they do every day.
Putting together these development plans is an important aspect of a good succession strategy. Building a succession pipeline allows companies to train high-potential employees while also continuing to vet them as potential leaders.
Mistake #3: Not Targeting Their Development Needs
Once a company has identified high-potential employees and engaged them in an ongoing dialogue about their goals, it’s time to develop customized programs to meet their needs. If those development resources aren’t made available, employees are more likely to pursue their career goals with a different organization. Ideally, the purpose of a succession strategy and employee development is to retain high-potential candidates.
Employees will have different development needs based on their existing skills and experiences. Maybe they have all of the technical skills and desire necessary to be a leader, but need help with interpersonal skills and managing conflict. Conducting a leadership assessment can help to identify their strengths and weaknesses, as well as opportunities for further development.
Once those needs are identified, it’s important to select the right development tools to address them. Ideally, training should be provided in a format that’s best suited to how they learn. Some people are visual learners, while others learn better by experience. In addition to formal training, companies can use on-the-job assignments and assign mentors to ensure employees are set up for success.
Identifying and developing high-potential employees is an involved process that requires a substantial commitment from an organization. Simply assessing performance is rarely enough. These evaluations need to be accompanied with more robust, multi-faceted strategies to gather relevant data and provide the resources employees need to develop their leadership skills effectively. Without this dedicated approach to building a true succession pipeline of capable, qualified candidates, companies will struggle to fill their leadership positions.
OnPoint Consulting provides both leadership assessment and leadership development and training solutions to help companies get started with this process. Drawing upon years of research and experience, our customizable programs allow companies to put the tools they need in place to build their next generation of leaders. To learn more about what OnPoint can do for your organization, contact us today for a consultation.