PBS offers a set of HR services based on our extensive experience. Today’s companies need to understand who their high-potential employees are and to set up appropriate performance review processes and capabilities.

Mistaking a high-performing employee for a high-potential employee can be costly. As Vincent van de Belt, a consultant at Cubiks, points out, “If an organization is not able to distinguish between performance and potential, it will have difficulty identifying talent.”

This happens all the time. A top-performing sales rep is promoted to sales manager, and struggles to transition from killing his sales goals to helping a team of junior reps kill theirs. Meanwhile, the junior rep whose hard work has facilitated the success of sales teams for years feels undervalued, and decides it’s time to start looking for growth opportunities elsewhere. Both scenarios hurt morale and drive turnover. Performance and potential are not mutually exclusive. Van de Belt suggests that “people always possess a combination of both.”

But a manager who understands the difference will be more effective in engaging and retaining employees who exemplify aptitude in one or both. To that end, this article outlines strategies any manager can apply to identify, assess, and develop high potentials and high performers.

Identifying High Performers and High Potentials

High performers stand out in any organization. They consistently exceed expectations, and are management’s go-to people for difficult projects because they have a track record of getting the job done. They’re great at their job and take pride in their accomplishments, but may not have the potential (or the desire) to succeed in a higher-level role or to tackle more advanced work.

High potentials are birds of a different feather. Malcolm Munro, President at Total Career Mastery, LLC, says that “High potentials have demonstrated initial aptitude for their technical abilities and…have future potential to make a big impact.” In short, they can do more for the organization–possibly much more–with the caveat that high potentials who are consistently low performers are rarely strong candidates for management roles.

High potentials can be difficult to identify, for two reasons. First, high performance is so blindingly easy to observe that it drowns out the less obvious attributes and behaviors that characterize high potentials–like change management or learning capabilities.

Second, few organizations codify the attributes and competencies they value in their ideal employees–which means that managers don’t know precisely what to look for to assess potential. As a result, most managers focus exclusively on performance, and that can be a problem.

“When performance is the only criteria employees are evaluated on,” warns Brian Kight, Director of Performance at Focus 3, “high performers will be the only ones moving up–and your high potentials will be moving out.”

Don’t get me wrong–you should definitely value and reward performance. If your end goal is to build a more robust talent pipeline, though, performance can’t be the only point of entry. Kight advocates working with leadership to profile what constitutes excellence in key roles, and communicating that to managers to help them identify high potentials.

Assessing Performance vs. Potential

Because employees possess varying degrees performance and potential, you should assess your employees across both dimensions. Figure 1 provides a framework for identifying where an employee falls in the spectrum.

High Performance
Regularly exceeds expectations
Lacks skills for success at higher level
Sets standard of excellence in role
Model leadership candidate
Low Performance
Little-to-no aptitude
Weak, unsatisfactory performance
Above-average aptitude
Inconsistent performance
Low Potential
High Potential

Figure 1: Typical traits of performance vs. potential.

After you’ve determined which quadrant an employee falls under, you can develop a plan for employee development. “Each of these categories requires a specific approach when it comes to discussing development opportunities,” says van de Belt.

Development Strategies

In an ideal world, every employee in your organization would be a high performer with high potential–but that’s obviously not realistic. The appropriate question is how to move employees toward the upper-right quadrant, or at least to the high-performance tier.

It’s not always possible, nor always the desired goal (you might want to keep your high performers right where they are, for instance). There’s no one-size-fits-all strategy, but Figure 2 provides a general framework.

High Performance
Keep them where they are,
or promoteConstant encouragementChallenging assignmentsSoft skill development

 

 

Keep them where they are,
or promote
Provide autonomy 

Low Performance
Performance plan
Termination
Pair with a High Performer
New role better aligned with skills

Training

Test with more responsibilities

Low Potential
High Potential

Figure 2: Development strategies to consider.

“High performers need constant encouragement and challenging assignments. Recognition is key,” says Munro.

Kight agrees, pointing out that “High performers tend to be lone wolves, working for themselves and their own success.” As such, they want something to execute on a bigger scale. Give them the independence and autonomy that allows them to thrive, and engage them with projects that they can take full ownership of.

Alternately, Munro suggests pairing high-potential employees with established high performers who can serve as mentors.

“They need to know that while they are high potential, they need seasoning. On-the-job training is a great way to accomplish this.”

As they develop a stronger understanding of the organization and their role in it, test the capabilities of high potentials with more projects to manage, new hires to train, put them in charge of an intern or two, or offer cross-training opportunities. If they do well, consider moving them into a different role–perhaps one with more responsibilities–in which they may perform better.

A Stronger Talent Pipeline for a Stronger Company

Your managers play a bigger role in building a pipeline of thriving talent than they may realize, and it’s increasingly important that you empower them to do this successfully. While employee development is no cakewalk, failure to assess performance versus potential is a very real business problem.

The good news is that it’s a solvable problem. It simply takes dedication to identifying your high-potential and high-performing employees, assessing their competencies and attributes, and putting them on the path to success. It’s time well spent.

In today’s workplace, performance improvement and the role of performance management is an increasingly popular topic. Why the intense focus on performance management now? Business pressures are ever-increasing and organizations are now required to become even more effective and efficient, execute better on business strategy, and do more with less in order to remain competitive.

While human resources professionals clearly understand the importance of optimal performance management, they often face significant internal obstacles. When someone mentions performance management or reviews at your organization, what is the typical response? Do employees and managers alike cringe? Do they avoid performance management related tasks? Do visions of tracking down incomplete appraisal forms come to mind? This can be changed.

Forward thinking companies are taking steps to successfully address this negative view of performance management. They are implementing innovative solutions that ensure processes deliver real results and improve performance. The purpose of this guide is to provide concrete guidelines and practical steps that can be used to improve the performance management processes at your organization. In addition, a new class of automated performance management solutions has emerged to specifically address small- and medium-sized businesses. We conclude this guide with a few tips for selecting an automated performance management system to implement best practices across your company.

The Performance ReviewOnly Part of an Ongoing Process

Frequently when performance management is mentioned, people think of the employee performance appraisal or review. Performance management, however, involves so much more. Properly constructed appraisals should represent a summary of an ongoing, year-round dialogue. Focusing only on an annual appraisal form leads to misunderstanding and under appreciation of the benefits of performance management.

An effective performance management process enables managers to evaluate and measure individual performance and optimize productivity by:

  • Aligning individual employee’s day-to-day actions with strategic business objectives
  • Providing visibility and clarifying accountability related to performance expectations
  • Documenting individual performance to support compensation and career planning decisions
  • Establishing focus for skill development and learning activity choices
  • Creating documentation for legal purposes, to support decisions and reduce disputes

Many of the practices that support performance also positively impact job satisfaction, employee retention and loyalty. Recommended practices include:

  • Delivering regular relevant job feedback
  • Setting and communicating clear performance expectations
  • Linking performance to compensation clearly
  • Identifying organizational career paths for employees
  • Evaluating performance and delivering incentives in a fair and consistent manner
  • Providing appropriate learning and development opportunities
  • Recognizing and rewarding top performers

Consequences of a Poorly Structured Process

What is the impact of a poorly structured performance management process? If individual goals are not aligned with business strategy, then time and resources are wasted. Low employee engagement levels may mean that individuals are not performing at their best. Inconsistent evaluation criteria and rewards can lead to mistrust, lower productivity and higher attrition. If top performers see no differentiation in performance ratings, opportunities and compensation from underperformers, morale can suffer. Lack of documentation, visibility, and accountability can negatively affect stakeholders who are demanding more and more transparency. If accurate performance information is unavailable or difficult to access, training and development decisions along with project assignment decisions may not be made in the company’s or the individual’s best interests. An annual process will not adequately alert managers to problems in a timely manner. Last, but not least, a lack of proper documentation related to performance may result in legal issues.

Management “buy-in” is equally important to the performance management process. If management does not understand the importance and value of the process, it can lead to consistently late or incomplete appraisals, mistrust, avoidance of performance discussions, and a lack of honest performance-related discussions. Often managers may feel unprepared to deliver quality feedback and oversee effective performance discussions.

A Closer Look at the Importance of Performance Management

The primary reason to make sure performance management processes are functioning properly is to tighten the link between strategic business objectives and day-to-day actions. Effective goal setting (including timelines), combined with a method to track progress and identify obstacles, contributes to success and bottom line results. Regularly tracking progress against performance goals and objectives also provides the opportunity to recognize and reward employees for performance and exceptional effort, contributing to job satisfaction and productivity. Employees want to feel successful, to do well at their job and feel they are making a valuable contribution. In order to ensure this happens, employees need a clear understanding of individual goals and how they fit into the larger organization. New technology-based solutions offered can provide goal visibility across entire organizations, offer extensive reporting options and can reduce paperwork by as much as 90%.

Clear visibility, regular individual analysis, and company-wide employee appraisals help identify corporate competencies and skill gaps. With this valuable data in hand, companies can identify training and development plans.

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