Organisations are risking the loss of star talent and the derailment of high potential (HiPO) programs, if they continue to overlook the impact organisational changes can have on aspirations and career development, according to recent research from CEB.
Organisational factors such as restructuring, leadership transition and market expansion can impact whether high potential employees aspire to senior leadership positions within the company by as much as 23 per cent.
“Many organisations underestimate the impact of change, particularly on their HIPOs,” said Samantha Hickey, talent practice director for CEB.
“How leaders manage and communicate organisational disruptions and challenges can have a significant impact on how an employee feels about their future with the company.”
The research, which took in 143 HR leaders, may come as a surprise for the 83 per cent of HR leaders who believe aspiration is primarily innate among HIPOs, and that their desire to succeed will only change as a result of personal factors, such as starting a family, ageing parents or spousal career change.
According to the research, 99 per cent of organisations have experienced at least one major change in the past three years.
“HIPOs often require stability and reassurance and change can impact the attractiveness of different opportunities within the company for them,” said Hickey.
“This can see them potentially seeking development and career opportunities elsewhere.”
In fact, she said HIPOs are 15 per cent more likely to leave their organisation when they are dissatisfied with their future opportunities.
“HIPOs often require stability and reassurance and change can impact the attractiveness of different opportunities within the company for them”
The fallout of this can be felt across the business as the loss of these key players is exceptionally painful; they are 50 per cent more productive than their non-HIPO peers.
“Establishing a strong, diverse leadership pipeline is on every organisations to-do list, but it takes between three and seven years of investment and work with employees to help build the capabilities needed to take on broad leadership roles,” said Hickey.
Aaron McEwan, HR advisory leader for CEB, said that only 24 per cent of HR leaders consider their HIPO strategies successful.
“And we’ve seen the percentage of organisations with a strong leadership bench decline from 17 per cent in 2013 to just 13 per cent this year,” he said.
“This is very concerning when we consider that 27 per cent of the average organisations training and development budget is spent on HIPOs – that’s $3750 per HiPO each year.”
There are several common challenges organisations face with HIPO programs, but McEwan said the most common challenge is that most organisations (67 per cent) base their HIPO programs around finding, developing and deploying “agile” people rather than building an agile HIPO program that can flex with the changing needs of the organisations.
Because there is so much change and volatility, with an average of five organisational-wide changes in past five years, McEwan said most organisations expect more than 40 per cent of their leadership roles to be significantly different in the next five years.
“Therefore, when we talk about HIPOs, we need to ask the question: ‘high potential for what?’
“There is a common belief that leaders need to be agile so that they can take on whatever challenges or opportunities lie ahead.
“This makes sense as agile leaders are almost twice as likely (87 per cent) to be among top performers.”
“Progressive organisations focus on agile processes that move at the speed of the business to align ability, aspiration and engagement with evolving needs”
However, McEwan said betting on agile people as your primary HIPO strategy has some immediate and significant problems.
Firstly, there just aren’t enough of them, and the research found that only 15 per cent of leader candidates are highly agile.
Second, agility is very hard to develop, and providing critical experiences like re-organising a function, rotating into a foreign country, or turning around an unprofitable unit have no significant impact on agility.
Third, well-rounded, agile leaders are also at a much higher risk of looking for another job or being poached by a competitor, McEwan added.
“All this simply means is that focusing on agile people leads to business readiness problems,” he said.
“Organisations with HIPO strategies focused on agile people are 17 per cent less likely to have their HIPOs be ready for leadership roles and 71 per cent less likely to be able to fill skill gaps with internal candidates.
“Progressive organisations focus on agile processes that move at the speed of the business to align ability, aspiration and engagement with evolving needs.”
It’s essential that organisations make an ongoing effort to nurture the aspirations of their HIPOs, according to Hickey, who said that in order to maintain engagement with HIPOs, organisations must develop their leadership skill through progression, not just promotion.
“HR must take ownership of HIPOs career progression by creating opportunities for skill development within roles and efficiently sourcing extra opportunities from across the enterprise to meet HIPOs’ progression needs,” said Hickey.
“Managers often don’t have an accurate perspective on the full range of potential career opportunities available to HIPOs and are prone to talent hoarding”
McEwan also said there are three ways to best maintain HiPO engagement:
1. Connect HIPOs to genuine, business driven development opportunities.
Typical lateral development experiences fail to deliver meaningful growth because they generally lack relevance and sustainability.
2. Actively manage HIPOs’ aspiration over time.
While most organisations view HIPOs’ aspirations as innate and static, he said this can actually change significantly over time.
“Starting a family, having ageing parents, experiencing a change in health or a spouse stepping back into a career can lead HIPOs to rethink their position,” he said.
“Additionally, organisational change (such as leadership transitions, restructuring, M&As) can impact HIPOs’ aspiration by as much as 23 per cent, causing them to reconsider the attractiveness of development opportunities.”
3. Take ownership of HiPOs’ career progression.
In-role progression is critical, but McEwan said organisations often cannot provide the progression HIPOs need due to clogged pipelines.
“Metro, a large Canadian food retailer, identifies mutually beneficial in-role opportunities that take pressure off managers whilst simultaneously creating growth and stretch opportunities for HIPOs,” he said.
“They also focus on adjusting responsibilities and ownership across the HiPO’s team to ensure the HIPO’s redesigned role is sustainable and beneficial for the entire team.”
McEwan also pointed to Arrium, an Australian steel manufacturer which separates performance and career responsibilities.
“At most organisations managers are responsible for both performance and career conversations,” he said.
“However, managers often don’t have an accurate perspective on the full range of potential career opportunities available to HIPOs and are prone to talent hoarding.”
Image source: iStock