Organizations are at different stages when it comes to creating mature High Potential (HiPo) programs, but what is clear is that talent differentiation is a necessary evil and getting it right is the key to deriving the benefits from leadership, growth, and innovation perspective. Getting it wrong can be disastrous for any organizations and can lead to the loss of key talent and a path of politics, confusion, and lack of transparency. Here are the key questions you must have clear answers to, black and white, with no shades of grey to crack a solid HIPO program.
1. Who is a HiPo?
Organizations need to define a HiPo in the context of their business. What are the qualities that are most relevant to the firm today and tomorrow that will hatch the next leadership cadre? Many companies use a mix of behaviors to define a HiPo, that includes three elements: firstly, past & present inputs (performance and achievements); secondly, leadership competencies (the fabric and DNA of the individual and, thirdly, their potential (ability to take on higher roles). Other organizations that are going away from the performance rating are moving into one single measurement of the individual and incorporating all three in one metric. What is critical is to understand what qualities we are looking for in a HiPo that will change from business to business and it is extremely contextual to each organization (Stage of maturity, competitive landscape and aspiration of the company).
For example, Ericson takes the vision 2020 and the business strategy as the base to define the kind of leadership they need for 2020. All HiPo programs and leadership development interventions align to achieving that goal. One of the qualities that have been identified as critical for Ericson to reach that target is “entrepreneurial leadership”, so that is what they are looking for in HiPos (among another 10 competencies). The process took over five months to look at the talent pool and identify those HiPos. In different businesses, at Genpact, their CEO, Tiger Tyagrajan has identified three behaviors that will drive the business to the next level: collaboration, digital thinking and being able to move across spectrum from concept to execution. For Genpact, HiPos need to exhibit these three behaviors and the entire selection happens around these competencies.
The starting point is always the end in mind: What are you looking for? If you don’t know what you are looking for, you will never find it.
2. How to find your HIPO?
The next step is to create a robust and transparent way to identify HiPOs. It is critical that the process is solid and perceived to be fair by all stakeholders in the organization. That is why it is essential that you don’t move to point 2 until you are clear about point 1. Many organizations start with performance (achievements) as 1st level of filtering, then move to the competencies and qualities of the individual – either using leader’s council reviews or assessments (or both). This stage assesses for two things: the leadership DNA & alignment with company’s requirements and the ability & aspiration of the individual to grow and take on higher and more challenging roles. Typically, this process happens yearly and reviewed half yearly – while companies are also moving to move regular and on-going reviews.
In the previous example of Ericson, in their five-month process that they underwent to identify HiPos, they used an internal talent council to do the 1st level of screening, followed by a talent boards to go deeper in each candidate and finally followed by an assessment center to validate the competencies with each candidate. In Credit Suisse, the process runs through the organization and adapts to the level of the individual. After they have identified top talent on the basis of performance/achievement/potential ("as is" today), then they measure this pool by taking them through the assessment center with the objective of assessing the individual with the competencies required for one level up. This exercise also shows the talent gaps and creates a foundation not only for identification but also for development.
Similarly, at Genpact the whole approach to HIPO process is anchored around development and careers across level. Genpact only uses assessment centers for VPs and above, for the other levels the philosophy is that managers need to take ownership of their judgment. The process is ongoing through the year and not a one-time exercise. The constant question managers ask themselves is “Are you seeing similar trends being demonstrated cycle after cycle by the individual.” There is a lot of focus on consistency of behaviors for talent identification.
3. Should you communicate or not who is a HIPO? Do you pay them differentially?
Here, the process starts to get tricky. Honestly if you have walked the path one step at a time and have a solid framework on who a HiPo is and how to be a HiPo, then why should you worry about communicating? Or creating differentiated pay? Organizations struggle to come to terms with the consequences of communication and differentiating both ways: scared to tell a HiPo she is a one (and fear of losing the person) and scared to tell the ‘solid citizens’ that they are not happy (and fear to demotivate and again losing them). No easy answers.
In some organizations, communication happens very formally (like an event) where the leadership team communicates one-to-one and creates an opportunity to build connect and commitment. Very standard process and very formal. Others don’t communicate at all, but does the sheer fact that as an individual you are chosen to be part of some projects and training, it is understood that you are a HIPO and hence the organizations is indirectly telling by showing commitment and investments?
Leaders fear that this can create a divide in culture. The ‘You’ vs. ‘Me’ and ‘Have’ vs. ‘Have not’. Additionally, there is also the context of talent demand and supply and it really depends from industry to industry and also what stage of maturity of the organization and other talent-related processes. Decide what works for you and stick to it. What is important is that it should align with your management philosophy and should be consistent with the culture and values of the organization.
The next step in the decision ladder is whether to differentially pay HiPos or not. Again, if there is clarity on 1, 2, 3 steps, the answers of 4 emerges automatically. Some companies give differentiated cash compensation linked to being identified as a HIPO automatically, some don’t. What seems to be common is of course access to critical roles, funding of external education in premier institutes, projects and international mobility as part of the non-monetary benefits. But many organizations do not differentiate in cash from day one, it is the emergence of career opportunities, new projects etc. that lead to promotion and hence compensation change – but not the HiPo program itself.
Finally, how will you measure the success of a HiPo program?
HiPo programs should have a clear objective that is defined and measurable and normally is linked to the mid to long term vision of the organization and creating leaders for the future. It is critical that it is articulated and defined by the leadership team and also that has measured KPIs that provides milestones on the direction of the program and its effectiveness. The most commonly used KPIs are the number of positions taken internally by HIPOs (instead of lateral hires), other is retention and engagement levels of top talent. There are other interesting KPIs like ‘risk-taking’ from HIPO pool – that is, how many HiPos have taken roles outside their natural domain. The important thing about KPIs is to really pick the ones that will be most meaningful for what you are trying to drive and achieve.
This is a fascinating theme that keeps many CEOs and CHROs up at night, more so, with the changing paradigms of performance management philosophies, evolving demographics and millennials coming in and with more and more volatility in business. As the song goes, ABC is easy, it's like counting up to three. Often the simplest things are the most complex ones.
The content of this article is a synopsis from the roundtable moderation led by Deepa Chadha, CHRO, Jabong during the Right Management and People Matters #HIPOWeek roundtable.