HIGHLIGHTS
Many businesses invest in developing high-potential leaders only to lose them to competitors.
Talent development holds both immediate and long-term value, but it comes at a high cost. Developing top talent can be an expensive endeavor for organizations.
Example: Take in mind a mid-sized company with 4,000 employees, and 4% are considered high-potential leaders, commonly referred to as HiPo's. Based on some insights companies typically spend an average of Euro 5,000 and 39 hours on each high-potential leader's development. This accumulates to an expenditure of about euro 800.000 and 6.240 hours for cultivating the potential of the company's most promising future leaders.
Most organizations expect that more than 40% of today's leadership roles will look dramatically different five years from now. As a result, organizations are investing heavily in high-potential employee programs, with 65% of companies moving away from other talent investments to fund their high potential employee programs. Despite these endeavors, the benchmark of gartner report reveals that only a quarter of HR leaders perceive their high-potential employee strategy as successful. Ultimately, the effectiveness of a HiPo program hinges on its ability to generate revenue and in case you don't measure effects, the setup of HiPo programs will turn into an expensive journey. HiPo programs can become efficient, profit-generating mechanisms if leaders make 6 crucial strategic shifts:
Shift 1: Shifting from Nominations to Objective Selections
According to a study by the Corporate Research Forum, 73% of top global businesses identify High-Potentials (HiPo’s) primarily through a single subjective nomination, typically from the local manager.
Nominating direct reports in a high-potential talent program exemplifies what is known as the "IKEA effect" — a cognitive bias in which people most value what they helped create. Managers may assign a disproportionately higher value to individuals they have personally groomed, which does not constitute a rigorous assessment of talent.
Relying solely on personal preferences is insufficient; companies require a scientifically validated method for predicting performance. Moreover, this approach should be more expansive in its application. If a company's HiPo list primarily comprises leaders from its headquarters or the first two or three layers of management, it overlooks a significant portion of critical operational talent and potential future leaders.
Exceptional individuals aren't always tenured employees or those prominently visible in the organizational hierarchy. Equally vital as determining who should be on the list is identifying who should not be. The Delphi method, a technique involving multiple rounds of vetting and validation led by a cross-functional group of advisers, serves as a valuable forecasting tool. This method assists leaders in establishing a final list of potential talent that is broadly agreed upon. Importantly, these discussions should rigorously scrutinize, question, and debate why certain individuals truly deserve a spot on the list.
Shift 2: Emphasizing Experiences Over Assignments
Traditionally, organizations assign participants to tasks aligned with company strategy or prominent projects as part of the HiPo program. While these assignments effectively showcase presentation skills, they may not truly reflect leadership capabilities.
The issue arises when a substantial portion of the program revolves around presenting ideas and assignments to a "Shark Tank"-style jury comprised of senior executives. In such instances, leaders may focus more on the participant's presentation and performance rather than delving into the substance of the assignment. This approach limits the exploration of the most meaningful aspect of the participant's experience and what they have learned.
A more insightful strategy for uncovering an individual's talents involves providing them with a "breakthrough experience." This carefully selected experience should be in an area where the person has limited or no prior exposure. Regardless of the outcome, whether success or failure, the crucial aspect is what the individual learns, as that is what they will carry forward from the program. While it is essential to understand the capabilities of the selected individuals, it becomes equally important to assess how HiPo’s navigate and learn from new experiences, preparing them for unforeseen challenges. In an unpredictable future, the emphasis shifts towards the ability to learn and adapt, surpassing the significance of existing knowledge.
Shift 3: From Weaknesses to Strengths
Some top-talent programs focus on improving HiPo employees by identifying and addressing weaknesses. However, Gallup research demonstrates that a strengths-based development approach can lead to up to 19% increased sales, 29% increased profit, 7% higher customer engagement, and 72% lower attrition. Rather than fixing weaknesses, concentrating on strengths uncovers vast potential and becomes a guiding compass for leadership development.
Participants, sponsors, and mentors should leverage strengths to maximize learning styles, as individuals who know and use their strengths are six times more likely to be engaged at work.
Shift 4: Shifting Emphasis from Weaknesses to Strengths
In general high-talent programs are designed with the intention of enhancing high-potential employees, pinpointing their weaknesses, "areas of opportunity," and refining areas of improvement. However, this approach has its drawbacks. At best, rectifying weaknesses leads to mediocrity, whereas directing attention to strengths unveils realms of boundless potential.
Focus on strengths-based development empowers companies to achieve significant outcomes, including a potential up to a 19% increase in sales, a 29% boost in profit, a 7% elevation in customer engagement, and a notable 72% reduction in attrition. In the context of numerous HiPo programs failing to retain top talent despite substantial investments, this statistic emerges as particularly pivotal.
The genuine benefit of honing strengths, as opposed to addressing weaknesses, lies in unlocking authentic potential. Strengths development serves as the guiding compass for the leadership journey, spanning both the duration of the talent program and extending beyond, involving all stakeholders. Emerging talent should leverage their strengths to optimize their learning styles, while sponsors and mentors should utilize their strengths to navigate this developmental journey. Individuals who are aware of and utilize their strengths, are six times more likely to be engaged at work. Managers play a significant role as well, influencing at least 70% of the variance in team engagement. Indeed, the engagement of top talent is invaluable, representing an asset with a weight comparable to gold.
Shift 5: Transitioning from Confined Classrooms to Continuous Learning
Typically, leadership development programs encompass a mix of classroom and online learning, along with experiential training. Many top-talent programs have incorporated crucial experiential components such as junkets, field excursions, or learning sessions at other companies. While these experiences are valuable, a "one and done deal" is swiftly forgotten.
Even an intensive, high-energy, and enriching five-day off-site program tends to fade in the memory of your High-Potential (HiPo) individuals when they reenter the realities of their work lives. Research underscores that individuals forget a significant 77% of what they learn within six days of leaving the classroom. Participants must establish connections between their learning and their day-to-day responsibilities, developing 30-day, 60-day, and one-year plans with clearly defined outcomes reflecting their learning journey.
Managers play a pivotal role in offering support, given their keen insight into how program participants' contributions are being maximized. They are well-positioned to provide ongoing feedback, coaching, and assistance for top talent to directly apply their learning to enhance performance.
Shift 6: Transitioning from Individual Paths to Collaborative Journeys
Arguably the most captivating aspect of a High-Potential (HiPo) program is the collective learning experience shared among a cohort of top talent. A robust sense of community and a shared purpose serve as powerful sources of inspiration and motivation, infusing vitality into the journey. Without this communal aspect, the experience might feel mechanistic and isolating. Participants and practitioners often forge their own community, providing a support system for ongoing learning and mutual understanding of their shared experiences.
Conducting a HiPo program akin to a rendition of The Hunger Games, where top talent competes for a prominent position to leave a lasting impact on executives, is a misguided approach. While top talent may possess a competitive spirit, channeling this energy outward towards breakthroughs for the organization proves more productive than fostering internal competition.
In an era characterized by remote work and the increasing virtualization of learning, peer-to-peer learning networks, exemplified by events like "hackathons" targeting specific business challenges, offer enhanced opportunities for a collaborative journey. This approach contrasts with the diminishing value of a cutthroat, dog-eat-dog training environment.
Shift 7: Transitioning from Local to Global Perspectives
In our hyperconnected world, leaders must adopt a global mindset, to include participants from diverse regions in their High-Potential (HiPo) programs. However, fostering a global mindset extends beyond mere representation, albeit crucial for diversity. A global mindset transcends boundaries, becoming indispensable in navigating a rapidly globalizing and interdependent world for an accurate organizational view in a fast-changing, dynamic future. Learning to operate without boundaries becomes a fundamental element of the HiPo learning curriculum.
An effective program should instill curiosity about the world, exploring differences in behavior across geographies, understanding how various regions interact, and delving into socio-cultural trends beyond basic multicultural training or cultural sensitivity orientation.
The ultimate goal is to promote a broader worldview and genuinely celebrate diversity, encompassing race, background, and cultural orientation. McKinsey's research underscores the significance of diversifying workplace culture and teams, revealing that companies focusing on this aspect are 35% more likely to outperform their competition. This establishes diversity and global thinking as vital strategies for high-potential talent and businesses.
Yet, in an increasingly dynamic, competitive, and vulnerable business environment, holding on to top talent becomes equally critical. It proves to be as vital a business strategy as any other, and there's a risk of designing a program that squanders resources — money, time, and talent. Conversely, creating a journey that nurtures, manages, and develops top talent the right way is not overly complex.
Leaders should dedicate as much attention to developing their High-Potentials as they do to managing their most critical growth and business imperatives. Talent development emerges as an investment that yields almost immediate returns, coupled with virtually boundless long-term growth potential. This approach stands as a superior utilization of valuable corporate resources compared to a training program that fails to retain talent where it can contribute the most — within the company, on its side.
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