A narrow point of view on what constitutes high potential (HIPO) and an over-reliance on identification of HIPO talent by executives are two key areas in which organisations struggle when it comes to successfully selecting and developing HIPOs, according to a global consulting firm.
An over reliance on past performance as an indicator of potential is an example of how companies can potentially have a narrow definition of HIPO talent, said Nick Grage-Perry, principal consultant at Right Management.
“Performance is heavily influenced by context, therefore organisations need to have seen high performance over at least two years and with at least two different managers. Typically, just 15-20 per cent of high performers are also high potential,” he said.
Grage-Perry also observed that some companies place too much emphasis on identification of HIPO talent by executives. While organisational confidence is a valid and important element of potential, he said this should be supported by sound data.
“This will limit the occurrence of executives identifying HIPOs simply because they look and act just like themselves,” he said.
However, Grage-Perry said that Australian organisations have become more sophisticated in their approaches to selecting and developing HIPO employees in recent years.
“We are seeing leading organisations add rigour to their talent and HiPo assessment approaches, as they look to make structured talent identification processes a reality,” he said.
“This includes confirming what capabilities an organisation needs to perform at a high level going forward, and identify individuals that demonstrate the qualities to take it there.”
Education vs experience and exposure
In the past, he noted that Australian organisations have too often turned to business schools and executive development programs to help develop HIPOs.
While such programs address the ‘education’ element of a ‘3E’ development approach (the others being experience and exposure), Grage-Perry said they do not address the specific development needs of the individual or the organisational context.
“Organisations must use assessment to identify HIPO participants and their priority individual development areas,” he said.
“Don’t just outsource the development – plan and structure internal experiences (project roles, short or long-term assignments) to ensure that the individual’s potential is tested and developed in the real world of your organisation.”
HIPO pitfalls and challenges
The Australian culture often presents challenges for organisations in selecting and developing HIPOs, and Grage-Perry observed that Australians in general are still not comfortable identifying and recognising talented individuals and telling everyone else what that looks like.
“As a result, we fail to communicate expectations around ‘what it means to be a HIPO and what does it take to stay there’,” he said.
“If the organisation won’t talk about it, people will form their own perceptions (‘the chosen few’, ‘the old boys’ network’). However, if you have a clear, impartial process, you won’t have to hide it and employees will understand what characteristics make a HIPO.”
Career motivation is a critical and often overlooked element of potential (the others in Right Management’s HIPO model being agility and organisational confidence), and Grage-Perry said an associated risk is investing in the development of people whose career aspirations are unclear, or who say they want to move to a high level in the organisation because they’ve always been told to strive higher.
“However, some individuals may not want to do so, and have never had a framework for understanding their career drivers and aspirations and developing a strategy to achieve this,” he said.
“Others may self-select out of the HIPO path when they shouldn’t – robbing themselves and the organisation of opportunity.”
For individuals, being part of a HIPO program raises their expectations, but as a participant they need to be clear about what’s expected of them, said Grage-Perry.
“You do need to take the opportunities that come your way, you do need to build your own networks and you are still responsible for doing your day job and working collaboratively with others.”
3 key steps for HR
HR leaders can take a number of steps to ensure that the right HIPOs are selected, hired, developed and retained, Grage-Perry said:
1. Define what capabilities will be required to be successful in a role, one (or two) levels higher, in the next two to five years. Don’t take them from the role description of an executive team member, or copy them from a performance management system.
2. Your HIPO talent pool is already small enough – don’t make it smaller. You must champion diversity in all its forms in the HIPO discussion. It’s not just about gender; it’s about age, part-time work, cultural background and all the other diversity factors we constantly struggle to address.
3. Rigour in the assessment and measurement process. Be clear about the success metrics up front so you can demonstrate the value of your investment in the program. Leading organisations typically spend in the range of $15,000 to $30,000 per individual in a HIPO program, therefore you need to know the return on investment.
HIPO programs are long term, we are typically looking at ‘potential’ as being realised over the next five years: therefore measures have to have that time frame in mind. They also have to acknowledge the external factors that will influence development and capability over that timeframe – the individual’s success (or otherwise) will never be able to be attributed solely to the influence of the HIPO program