Back in the day when I worked for a large corporation, there were employees who had been selected for some sort of quasi-secret leadership development program. It was this weird situation in which Suzanne (or Jose, or Robert) was reportedly in “the program” but they couldn’t talk in detail about it with people outside of the program. The not-so-secret program was this: Suzanne (and her cohorts) were designated as “high-potential” (“HIPO”) employees who were being groomed for senior leadership positions. According to research by the Center for Creative Leadership, over 80% of companies have either a formal or informal way to develop their most promising talent.
If your company has a high-potential leadership program, here’s what the experts suggest to make sure that it’s worth the effort—for both the organization and its employees.
What is a High-Potential Employee?
Your company will most likely create its own definition of “high potential.” In general, a HIPO is an employee with the potential to succeed in the future at higher levels of responsibility within your organization. The Center for Creative Leadership defines a high-potential employee as, “an employee who is assessed as having the ability, organizational commitment, and motivation to rise and to succeed in more senior positions in the organization.” Also worth noting: the “HIPO” designation is fluid; people sometimes rotate in and out of high-potential programs.
What are the Considerations for Establishing a Formal HIPO Program?
Executives and the talent management teams charged with developing their leadership pipeline need to keep the big picture in mind. It’s not enough to launch a high-potential program simply because it’s considered a best practice. Mary Faulkner, who heads up the talent management function for a large water utility, has run high-potential programs for several companies. Faulkner counsels executives to think through the entire program—what’s the program’s purpose, what are the company’s specific plans to develop employees, and how will people cycle through opportunities? Faulkner says she’s seen her share of well-intentioned, but poorly thought-out programs. “If [companies] have nowhere for these folks [HIPOs] to advance, the employees will become bitter and want to leave. Good programs require hard work and commitment from HIPOs – make it worth their while.”
Should You Tell Employees that they are in the Program?
“To tell or not to tell” is a sensitive subject. Let’s face it: on some level, people know. As Julie Winkle Giulioni, career development expert and co-author of Help Them Grow or Watch Them Go: Career Conversations Employee Want says, “It doesn’t matter whether you tell people or not. They know. Everyone else knows. It’s like when we were in school. The teacher called it the ‘blue group’ or the ‘dolphins’, but everyone knew what the labels meant.” That’s why, according to this article over 60% of organizations choose not to formally identify employees as “high potential.” Yet that approach can backfire. Dan McCarthy, Director of Executive Development Programs at the University of New Hampshire, has managed succession planning for Fortune 500 companies. He advocates for a balanced communication approach, offering just the right amount of information to up-and-coming leaders. When I interviewed Dan for this blog post, he pointed me an article about notifying HIPO’s on his blog, Great Leadership . McCarthy’s advice is: skip the HIPO label, but let talented employees know that you recognize their potential and are going to provide ways for them to grow their skills to advance in your company.
What’s the Ideal Number of HIPO’s for Your Company?
Believe it or not, there can be such a thing as “too many” HIPO employees. It comes down to a Goldilocks scenario: too many or too few employees in a formal high-potential program impacts employee engagement and retention. That’s according to Development Dimensions International and the Conference Board, who surveyed over 6,000 people designated as “high-potential.” The sweet spot? Strive for a HIPO candidate pool of 15 – 30% of your workforce. HIPO programs that had this percentage were able to fully fund and support a program. The research found that smaller candidate pools tended to be underfunded; larger candidate pools offered too few opportunities, which resulted in people leaving the company.
Having a high-potential program in place at your company isn’t about the label. It’s not really even about the exact process that you use to groom the future executives for your company. What matters most is that a well-conceived plan exists and that those who are tapped for extra opportunities have the ability to succeed in a way that goes beyond belonging to a “super-secret-society” that’s just for show.
photo credit: 123rf.com Phonlawat Chaicheevinlikit