CEOs at the world’s most successful companies know that they can only safeguard their organization’s competitive future if they have the right leaders to develop and implement their strategy.
1. Potential
– for what?
What every CEO should
know – new insights
into selecting the right
leaders to secure your
competitive future
CEOs at the world’s most successful companies know that they can
only safeguard their organization’s competitive future if they have
the right leaders to develop and implement their strategy >>
2.
3. Contents
Potential – for what? 2
Breakthrough approaches to selecting future leaders 3
Is your employee or candidate ready, willing and able 5
to take on the next role?
The ‘growth’ factors that enable people to develop over time 8
Derailers: is it them? Is it you? (It is probably both) 11
Potential – for what? A roadmap 13
Understanding the job and its context 15
Best practices in assessing potential 16
Summary – five key steps to identifying and managing potential 17
Leadership competencies 18
5. Our work shows that those organizations affirms similar findings by the Corporate
considered best practice at talent Leadership Council, where a strategic
management by their peers clearly focus on employee potential was seen
articulate what talent management as the single most effective strategy in
means to them: building a reserve of high quality leaders.
Eighty percent of employers saw high
talent management is the process potential employees as half as productive
by which an organization puts the again over the average.
right mechanisms in place to deliver
competitive advantage through the
Best practice organizations are not only
more productive; by constantly getting
effective management of its people.
the management of high potential
In other words, ensuring the right people talent right, they also survive and win
are in the right roles at the right time to on into the future. This is a sobering
deliver on strategy now and in the future thought when you consider that since
the inauguration of the stock market
This definition of talent management indices, few of the companies originally
was used as the background to research listed survive today and even fewer exist
Hay Group conducted in 2006 with in anything like their original form. In
Chief Executive Magazine. A key short, a strategic and wise investment in
finding was that the 20 companies best talent management pays dividends. At the
at managing their talent consistently heart of that lies the ability to recognise
outperform their peers in terms of – and nurture – the long-term potential
return on share price. This research of your employees.
Breakthrough approaches
to selecting future leaders
Predicting potential, particularly long term potential, is a
high-stakes game. You are not just dealing in specifics such
as previous performance record, you are deciding where to
place the organization’s bets in investing time and resources
to develop future leaders.
Because of this Hay Group has developed two new, break-through approaches
to help organizations select the right leaders for both the short and long term:
1 A guide to what organizations 2 A selection roadmap to identify the
should place their bets on in most suitable process and approach
terms of investing in their talent to identifying talent at different levels
by assessing the growth factors in an organization.
underpinning long term potential.
7. Is your employee or candidate ready, It is deeper, more
willing and able to take on the next role? personal factors
(also known as
competencies) that
Some organizations think of potential in terms of immediate provide the foundation
performance in the next role, what we call ‘suitability’; while for performance at
others see it as a latent, longer term quality that needs to be a superior level.
identified and nurtured to provide leadership in the future.
Whether organizations are assessing short-term suitability or long term potential,
there are three questions that must be asked:
1 Are they ready?
Does the person have the hard skills, knowledge and experience required
for the role into which they will be moved? Developed through education,
training and career experience, readiness is necessary for achieving
effective performance. This is sometimes referred to as being ‘résumé-
ready’ because much of this kind of readiness can be evaluated through
a good résumé or career history.
2 Are they willing?
Does the person want to rise in the organization? Can the organization
adapt to the person’s needs? Given the ever-increasing pace of corporate
life and rising standards of living, people are increasingly choosing to
balance their work and life, rather than single-mindedly pursue careers.
This issue has implications for both the individual and the organization.
3 Are they able?
Does the person possess the ‘soft’ characteristics, the underlying personal
traits required by the specific role or organization? Some of these are the
inherent qualities of the individual, while others can be developed through
career experience and coaching. It is these deeper, more personal factors
(also known as competencies) that provide the foundation for performance
at a superior level.
M
ost organizations are quite capable of assessing the first question and
of negotiating the second. The third question, the question of potential
ability, is the focus of this paper.
So, what is “Potential”? The formula on the next page captures the critical
elements for defining and identifying potential.
9. ƒƒ Difficult to develop and their own customers. This makes
Sufficient development time and them great sales people – but not great
resources are never available – so sales managers. Often, the next-best
organizations should leverage their sales person, the one who misses an
investment by selecting people who occasional opportunity because he or
already have those qualities and develop she is coaching someone else on the
the knowledge and skills that are less team or figuring out how to help the
difficult to learn. These people are whole office do better, will make a
more likely to take advantage of the much better sales manager.
experiences or training that cultivate
the specific credibility and breadth 2 Expressing great personal
needed. ambition and drive
“I want to be CEO.” Although this
ƒƒ Not strongly associated with
seems like an obvious indicator of
significant derailers
potential, it has two drawbacks. First,
Characteristics such as driving personal such strongly ambitious individuals
ambition may be desirable in some ways may seek their personal advancement
but can also become a liability if over- at the expense of the performance
developed, leading to arrogance and blind of the group. They may become so
spots. You would want to use growth focused on their own career that they
factors that do not carry these risks. become blind to other factors. They
may also be subject to over-confidence
The research was also clear on some and the lack of self-questioning that
popular choices that are, in fact, not goes with that. In contrast, many of
such good indicators of growth potential: the most successful executives talk
of occasions when they hesitated to
1 Being the very best performer accept a promotion, taking time to
in the current job reflect and assess their own capabilities.
This person may have good growth Often, they went on to do a great job If you had a limited
potential. However, the characteristics in a challenging role but occasionally leadership development
that make someone ideally suited to they declined an offer that was not a budget, what measurable
one role do not necessarily lead to good match to their capabilities and
characteristics would
success a level or two up the corporate waited for an opportunity where they
ladder. The best sales people are a could shine. They did not put driving predict the best returns
good example. They are often super- personal ambition first but had the on investment?
focused on their own performance maturity to question and consider.
11. 2 Curiosity and eagerness to learn
This natural curiosity and eagerness to these do not represent a promotion; by helps the person take on a broad and
learn and to take on new challenges extensive or diverse reading; or attending challenging range of career experiences
may be displayed by asking questions unusual courses. It supports thinking and take full advantage of development
that push the boundaries of accepted beyond the boundaries by providing the and educational opportunities. Both
norms; by a desire to take on different and information that makes such thinking this quality and thinking beyond the
challenging assignments, even when possible. This desire to learn also boundaries are not always associated
with great grades in school or college.
2 Core questions
Does this person display curiosity and eagerness to learn that goes well beyond what is normally expected in their job?
Does this person readily take on tasks or roles that are new and challenging to them, embracing the implicit risk in trying something new?
3 Social understanding and empathy
This is the genuine desire and ability to – with the needs, background and people is an essential executive skill and
understand others, to catch not only personality that affect how they respond is difficult to acquire. After all leadership,
their explicit argument but also the – underpins sophisticated influence at its heart, is all about influencing others.
subtext and context, the reasons for their skills, as well as many of the leadership Don’t be fooled by charm or polished
responses, the other person’s perspective. competencies such as collaboration and presentation skills. These can carry a
This ability to see a person as a whole teamwork; developing, motivating and smart person quite a long way in their
inspiring others; negotiation skills, etc. career but at some point they are simply
This innate understanding of other not enough.
3 Core questions
Does this person listen carefully, ask clarifying questions and not jump to conclusions about other people and their motives?
Is this person motivated to understand others?
Does this person treat others with respect and see the positive in others more often than they see faults or shortcomings?
(Someone who constantly finds the faults in others – however accurately – is NOT showing empathy)
Does this person consistently bring out the best in others?
“ The ‘growth’ factors are associated
with outstanding performance at
senior levels by people who fulfilled
”
their earlier potential
13. Derailers: is it them?
Is it you? (It is probably both)
As we have seen, growth factors have few downsides and act
as a multiplier to a person’s leadership potential. Derailers, on
the other hand, are aspects of the person – or the organization
– that interfere with growth and performance and detract
from potential. Most cases of career derailment involve both
individual factors and organizational complicity.
Individual factors For example:
A few derailers may exist within a person. ƒƒ being too affiliative can lead to a
Some of these are the opposite to the tendency to avoid confronting issues
growth factors, as suggested below. ƒƒ being too focused on achieving results
ƒƒ A narrow and short-sighted emphasis can lead to a narrow view and a lack of
on immediate results and/or technical strategic insight
expertise – this is the opposite of lateral ƒƒ being so focused on personal
thinking and taking a broader view achievement that one cannot work
ƒƒ An assumption of being smarter than collaboratively
everyone else – this is the opposite of ƒƒ being so intellectual and cerebral that
the desire to learn and such arrogance the person doesn’t or can’t win hearts
can work against acquiring any learning and minds
ƒƒ An inability to listen and properly hear ƒƒ having such high standards that
what others are saying – this is the ‘perfecting perfection’ gets in the way
opposite of empathy. This can appear as of on-time, cost-effective delivery
a shallow or manipulative charm, or as
ƒƒ being so good at everything that
sheer lack of interest in other people
others are overshadowed and
ƒƒ A lack of self-control, depression, unintentionally disempowered
sulking and self-centerdness – these or left little latitude to contribute.
are the opposites of emotional maturity
and resilience. The reason these strengths derail
careers is because of the unintended Career derailment can
While some people who become derailed consequences of over-applying them.
be subtle and associated
have obvious personal weaknesses, with It is difficult to abandon what has
others, the derailing factor can be more worked, even when circumstances with strengths, where too
subtle and can be associated with their change, and it may be nearly impossible much of a good thing can
strengths, where too much of a good to give up old patterns if no new skills start to work against you.
thing can start to work against them. have been developed to replace them.
15. Potential – for what? A roadmap
The best organizations excel by being aware enough to
avoid organizational complicity in derailing careers and by
encouraging employees to develop a flexible range of strengths.
But they also go one step further. In their mind, the question of
potential is only partly answered by the identification of growth
factors and derailers.
When it comes to making a placement ƒƒ suitability for low or entry level roles.
decision, they also look more deeply into ƒƒ long term potential when selecting The question of
specific factors such as the critical success graduates or entry into management potential is only
requirements for different types of role. training. partly answered by the
By knowing this information in detail ƒƒ long term potential for senior
and in having a roadmap of critical roles, leadership.
identification of growth
it is then possible to start asking a wiser ƒƒ immediate performance for crucial factors and derailers.
question, one that is focused around senior leadership jobs.
asking: potential – for what?
For example, when short term suitability
for the next job is the main issue, the
Organizations may also maintain more
person’s fit to that job is given primary
than one ‘talent pool’: they may have one
consideration, (but even then it may be
for technical leaders, another for sales and
useful to consider the growth factors
another for corporate leadership.
for future added value). For executive
level roles, it is crucial to define the
Organizations will do well to weigh
requirements of the specific role with
different parts of the potential formula
some precision: differences in executive
more heavily than others, on how much
roles can have significant consequences.
they are selecting for suitability for
immediate performance (‘go fix this
However, when you are considering
operation’, ‘hit the ground running in
potential for future managerial or
customer service’), and how much weight
leadership roles, the specifics of the jobs
is given for future potential. The factors
to be filled in some number of years are
that are important in selection will also
necessarily less clear – and there may be
vary by the organizational level. The
a range of possible roles. In this situation
table on page 14 outlines which selection
the person’s long-term potential and
criteria are likely to be most useful in four
adaptability (the growth factors and the
typical situations:
de-railers) become more critical. Over
time, as the person develops, the specific
roles for which they are best suited will
become more clear.
17. Understanding the job and its context
Many organizations fall into the trap of seeing potential as a
panacea, assuming that someone who is ‘high potential’ will
be good at almost any leadership role, not so.
When moving someone into a new role, and leading a small team of highly
qualified professionals), to an operations
ƒƒ first consider in detail the requirements
role (leading a large organization from a
of that role and how it contributes to
distance, focusing on delivery of results)
the overall strategy and business
or to an HR role (influencing people,
results and
collaboration, depth of understanding
ƒƒ then consider the fit between the of how processes affect outcomes).
person’s current abilities and the needs
of the new position – not the needs of Hay Group has identified some core
the person’s current role predictors across three role types:
ƒƒ then be prepared to provide guidance ƒƒ planning and policy
and support to address the gaps. (If
there are no gaps, the move is probably ƒƒ shared contributor
too easy and provides no development.) ƒƒ straight delivery.
The more pressing the organization’s
need for performance from a role, the These hold true across the majority of
more clear and specific the organization senior jobs. We have written about these
must be about what it is looking for. earlier in a ‘Leader to Leader’ article
Understanding the exact demands of entitled ‘Navigating through the new
future roles and the challenges they leadership landscape.’ It is available
present to each individual is key in the through www.haygroup.com. The more
measurement of short-term suitability. pressing the organization’s need for
It is not enough to consider whether performance from a role and therefore
someone is ready for a move ‘to a bigger the shorter term the potential you are The more pressing the
role’. Managers also need to look at assessing, the more clear and specific organization’s need for
how individuals will fit into the specific the organization must be about the
performance from a
requirements of different roles. The requirements of the new role.
role, the more clear and
ingredients for success vary considerably
from one role to another, even at the same A flavor of the success criteria to look specific the organization
level of seniority. It is a huge leap from for across role types and different must be about what it is
a senior strategy role (broad, conceptual organizational levels, is shown on looking for.
thinking, sophisticated communicator pages 18 19.
19. Summary – five key steps to
identifying and managing potential
In summary, we see five key ways to get better business results
from the identification and management of potential:
1 Know what you need from people
Start with strategy, use strategy to define which behaviors and qualities you need from
people and which roles are most crucial to execute that strategy. Then focus your selection
and development efforts on those roles, behaviors and qualities.
2 dentify long-term potential through the growth factors
I
– not just job-specific abilities, or past performance
Include the following characteristics of longer term potential.
ƒƒ Thinking beyond the boundaries.
ƒƒ Curiosity and eagerness to learn.
ƒƒ Social understanding and empathy.
ƒƒ Emotional balance.
3 Potential – for what?
Don’t mistake performance for potential or potential for readiness for promotion.
Distinguish between long term leadership potential and short term job-specific potential.
Remember that being a star performer is a state (of a good fit to a job) and not a permanent
trait. Sometimes a person with great potential and with the underlying abilities to do a job
well, but without the exact experience and knowledge, will take a longer time to get up to
speed but will ultimately produce better results. On the other hand, being a star performer
today is not a guarantee of readiness for promotion. Instead, give careful thought to exactly
what is needed in the next role and ask yourself if your candidate has those characteristics.
4 Fulfilment of potential
This is crucial – simply promoting high potentials or rotating them through assignments
is not enough; they need significant care and development attention to ensure that their
promise is fulfilled. Organizations need to take risks to help people grow, promoting
development through stretching career moves, coaching and training. This implies
minimizing the organization’s complicity in career derailment. This should be part of
the responsibility of line managers, not just HR.
The key is to ensure
5 Create enabling systems to effective talent management the business strategy
Processes need to help find and promote hidden diamonds and there needs to be is translated into a
mechanisms that inject objective data into the decision making processes around best people strategy and
deployment of talent. Through good talent systems organizations can ensure their people
all HR leaders pull in
fulfil their potential and thus contribute to the future success of the organization. These
systems also need aligning with other levers such as reward. the same direction.
20. 18
00 Potential – for what? Appendix
Leadership competencies
The success criteria varies considerably. More information on the research behind this
can be found at www.haygroup.com. These summary tables are taken from Navigating
Through the New Leadership Landscape published in Leader to Leader magazine.
Leadership type Operational roles Collaborative roles Advisory roles
Global • Symbolic leadership Not applicable Not applicable
enterprise • Externally focused
leadership • High level of social responsibility
• Focused on building top team
and organizational capability
• Unique competencies related
to values or strategy
Enterprise If top CEO: Not applicable Not applicable
leadership • high level of teamwork
• wide range of sophisticated
or unique competencies
based on organization.
Otherwise:
• same as level below, plus
Strategic
• high levels of integrity,
coaching, and customer focus.
Strategy • Competencies from level • Networks and builds [Insufficient data due to small
formation below plus relationships sample size for this role and level.]
• Strategic focus with broader, • Takes a strong leadership role
longer-term view • Greater level of organization
Tactical
Levels of work
• Higher levels of developing others commitment; models loyalty
• Sophisticated influence • Encourages development and
strategies bases on in-depth provides feedback
understanding of others and • Integrity
organization’s politics
Strategic • Competencies from level • Seeks information to • Broad and strategic business
alignment below plus support decisions, negotiate, perspective (understanding the
• Focuses on providing strong and influence others organization in the market)
visionary leadership • More likely to seek • Complex influence skills based on
• Willing to apply rules flexibly input of others deep understanding of people
• Integrity organization, and business
• High integrity
Strategic • Competencies of level below plus • More initiative than • Continues to focus advice and
implementation • Demands high performance preceding level service on the larger organization
from the team • More likely than other • Continues to model loyalty to
• More likely to act consistently collaborative managers the organization
with values and beliefs to set challenging goals • Coaches and develops others
• More likely to take a leadership
role than at preceding level
Tactical • Focuses on business results • Demonstrates responsive • Focuses on service to
implementation • Focuses on own team, coaching, rather than proactive initiative the larger organization
supporting, gaining input • Demonstrates pattern • Models loyalty to the
• More likely to take on challenges than recognition more than insight organization
peers in other roles • Manages subordinates one to
one rather than as a team
• Accepts need for flexibility
21.
22. Africa Frankfurt Middle East
Cape Town Glasgow Dubai
Johannesburg Helsinki Riyadh
Pretoria Istanbul
Kiev North America
Asia Lille Atlanta
Bangkok Lisbon Boston
Beijing London Calgary
Ho Chi Minh City Madrid Chicago
Hong Kong Manchester Dallas
Jakarta Milan Edmonton
Kuala Lumpur Moscow Halifax
Mumbai Oslo Kansas City
New Delhi Paris Los Angeles
Seoul Prague Montreal
Shanghai Rome New York Metro
Shenzhen Stockholm Ottawa
Singapore Strasbourg Philadelphia
Tokyo Vienna Regina
Vilnius San Francisco
Europe Warsaw Toronto
Amsterdam Zeist Vancouver
Athens Zurich Washington DC Metro
Barcelona
Berlin Latin America Pacific
Bilbao Bogotá Auckland
Birmingham Buenos Aires Brisbane
Bratislava Caracas Melbourne
Brussels Lima Perth
Bucharest Mexico City Sydney
Budapest San José Wellington
Dublin Santiago
Enschede São Paulo
Hay Group is a global management consulting firm that works with
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best. Our focus is on making change happen and helping people and
organizations realize their potential.
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For more information please contact your local office through
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