Move beyond HiPo development to unlock your organization’s full potential

Who wouldn’t want to be labeled as someone with “high potential?” Who wouldn’t feel disappointed being left off a list of people considered high-potential and slated for success? Given that a person’s performance often falls short of one’s full potential, how might labeling potentiality have an impact on subsequent performance and organizational engagement? And what impact might labeling have on organizational performance?

Reevaluating your approach to evaluating potential has never been more important, as talent shortages loom and organizations prepare for a changing future of work.

We posit that reducing the potentiality gap of an entire population, rather than focusing time, money and energy on only a small subset of employees deemed high-potential, can lift organizational cultures, better realize the full potential of your entire workforce and make talent your competitive advantage.

Potentiality: A snapshot in time

The designation of “HiPo” must be earned every day. Once a HiPo, not always a HiPo. We both have worked in organizations that use ratings of potentiality as part of the performance review methodology (e.g., nine-box ratings) and have experienced the benefits and disadvantages of rating potentiality at a given point in time. Ratings of potentiality can be interpreted by management as reflective of traits versus an assessment at a point in time that is subject to change across rating periods.

As an illustration, consider this story. There was once a promising future leader, perhaps even a candidate for the senior leadership team. For many years, their annual performance reviews and nine-box ratings were consistently stellar. And then they weren’t. Over a period of 18 months, this person’s performance and engagement dropped. Others observed the change in this employee once considered HiPo. But the employee did not recognize the change in their own behavior until feedback was provided and the HiPo rating was removed. When that happened, the employee experienced disbelief, disappointment, anger and defiance and considered different courses of action:

• Make the case that the ratings were wrong and that they were treated unfairly.
• Look for a job in another organization.
• Use the feedback as fuel to improve and to earn back previously high-performance and potentiality ratings.

After seriously contemplating all three paths, they chose the third option. Within two years, the employee significantly improved their attitude, engagement and performance, and they continue to adopt a growth mindset as they advance in their career.

This story has a good ending. It reflects how performance and potentiality ratings along with concrete development opportunities can motivate people to perform at higher levels. But not all stories have positive endings, especially for leaders early in their careers.

A perspective on potentiality

The essence of “potential” is unrealized ability. Potentiality is a measure of the gap between capability and application. Inherent to closing a potentiality gap is the belief in and enactment of a growth mindset (i.e., with effort, new knowledge and skills can be developed). It also involves a belief that over time, people have the capability to transform themselves.

Imagine if every employee in an organization were to wake up in the morning with the mindset, “I am a HiPo because with effort and focus today, I can improve.” Imagine if every employee at the end of the day evaluated how well they put their potentiality into practice. The next morning, they wake up again with the mindset, “I am a HiPo,” and the process starts anew. Even with small, often undetectable daily improvements, months and years later, compounded, incremental gains produce transformative effects.

Extending this further, imagine if an organization had a culture that reinforced and modeled the relentless pursuit of growth and improvement among all employees versus focusing special attention on the typical 5 percent or less slotted into the HiPo rating category. When this approach is implemented in public health and safety campaigns, research has shown that significant improvements in health are achieved due to small changes occurring among large numbers of people.

When people show up at work feeling underdeveloped, unappreciated and overworked, negative emotions can impact others. In contrast, when employees are consistently given opportunities to develop, they are likely to be more engaged and inspired, and the ensuing positive emotions will spread to others and nurture a workforce of healthier, happier and more productive individuals.

When equity is prioritized and fully realized, it provides all people with fair opportunities to attain their full potential.

Advantages and disadvantages of ‘potentiality labeling’

A key issue to consider when assessing the impact of “potentiality labeling” is whether organizational performance can be improved by small increases in potentiality actualization across an entire employee population versus large increases in potentiality actualization in the small proportion of employees deemed HiPo. An individual’s full potential is not really known unless they are given the opportunity to show broader capability or aptitude beyond their current role. Providing an entire employee population with opportunities to develop creates an equitable opportunity for everyone to learn, grow and hopefully advance. When everyone is given an equal opportunity for development, subsequent actions and work will be more likely to reveal where and with whom the highest potential lies.

While there are advantages to potentiality labeling (see below), leaders must carefully manage the unintended disadvantages that may hold organizations back from excelling in the new world of work.

Advantages of potentiality labeling include:

• Increasing motivation, retention and performance of employees with the HiPo designation.
• Sharing labels can signal where people fall in the organization and motivate them to work toward improving their position in the talent pipeline.

Disadvantages of potentiality labeling include:

• Viewing the HiPo designation as static versus dynamic and changeable.
• Labeling a small subset of employees as HiPos and the majority as not can have deleterious effects on those not considered HiPos.
• It can be difficult to select HiPos: Subjective characteristics such as cultural fit, technical skill and manager preference can unfairly elevate some candidates, and stereotyping, prejudice and discrimination, and systemic biases can thwart efforts to promote equitable labeling.
• Potentiality ratings are subject to cognitive biases, including, but not limited to, in-group bias, confirmation bias and similarity bias.

Supplement HiPo with high performance

An equitable investment in all employees, an inclusive approach to development and an embracement of diversity of all kinds will help organizations leverage their talent. And by democratizing leadership development rather than rewarding a small segment of employees, organizations can make significant strides not only toward improving performance, but also retention and engagement.

Imagine how valued and committed all employees would feel knowing their organization provided them with tailored, strategic developmental plans regardless of their potentiality labeling. Imagine how an inclusive culture of potentiality could connect employees who previously saw few options within the organization.

Everyone in an organization is capable of developing and contributing in increasingly effective ways. By supplementing HiPo investments at the individual level with high-performance investments at the organizational level, companies can communicate the value they place on their people and unlock previously unknown or unlabeled collective potential.