Identifying high potential employees can be very challenging, and mistaking a high performing employee for a high potential one can be even more costly. If the organisation is not able to differentiate between performance and potential, it will face the long-term challenge of retaining talent. Working frequently with Small- and Medium-sized Enterprises (SMEs), a constant gripe from management and owners is that their employees do not have the potential to bring the organisation to new heights.
For example, a client faced the challenge of increasing revenue. The client promoted his top-performing salesman to sales manager to be in charge of a sales team, and hired junior salespeople. The newly-minted sales manager struggled to move from hitting his impressive sales targets to helping his sales team hit theirs. Conversely, in another example, a client’s junior salesman who supported the sales team’s success kept being passed over for promotions. Ultimately, he decided that it was time to look for better opportunities and growth elsewhere and left. In both scenarios, revenue for the organisation declined and hurt employee morale.
Performance and potential are not mutually exclusive. Rather, employees possess a combination of both. Organisation leaders who understand the difference will be significantly more successful at engaging and retaining both high performing and high potential employees, and often achieve industry-leading performance.
So how do we differentiate between high performers and high potentials?
High performers are the easiest to identify because they simply stand out in any organisation. They constantly exceed expectations and are often the “go-to” people for difficult projects and problems as a result of their track record of getting things done. These individuals are very proud of their accomplishments, and with good reason; they are simply great at their jobs. However, they may not have the potential to succeed in a higher-level role or a job different from their current role.
High potentials are significantly harder to identify because these individuals demonstrate both nascent aptitude with their technical abilities and less obvious attributes and behaviours like people or change management skills. They often demonstrate nuanced capabilities that are not captured by organisational performance metrics. Few organisations formalise the competencies and attributes of high potential employees, further increasing the difficulty for managers to identify high potentials as the managers do not know what to look for and assess. One caveat: high potentials who are consistently low performers are rarely suitable candidates for higher-level roles.
Because most organisations do not know precisely how to identify and evaluate high potential employees, they often focus only on performance. According to Dr. Wu Pei Chuan, Senior Lecturer at NUS Business School, “…if performance is the only metric that an organisation’s employees are assessed by, then then your top performers will be the only ones being promoted and your high potential employees will leave”.
If your end goal is to build an agile, robust organisation, then performance should not be the only metric of evaluation. It is imperative that the organisation’s leadership identify the attributes that would allow an individual to excel in key roles, or work with management consultants to do so, and communicate these attributes to your managers so that they can effectively identify these high potentials.
Ask yourself, in your organisation, can your managers identify high performers? Can your managers identify high potentials? Can your managers differentiate between the two? Few organisations can answer all three questions, but if your organisation cannot answer with an emphatic “yes” to at least being able to differentiate between high performers and high potentials, then perhaps it’s high time that you may want to consider your organisation’s future prospects.