Why do companies so often end up with a shortfall in their talent pipeline? And what distinguishes organisations that have been able to prepare their rising stars for post-promotion success? These questions are asked in Harvard Business Review by Jean Martin and Conrad Schmidt of the Corporate Executive Board’s Corporate Leadership Council.
As they point out, a vast number of companies now have some kind of programme whose purpose is to nurture nascent talent – understandably so, when you consider the significant impact high-achievers can have on business results.
However, the results of these programmes have been disappointing. Martin and Schmidt reveal: "Our recent research on leadership transitions demonstrates that nearly 40% of internal job moves made by people identified by their companies as 'high potentials' end in failure."
Over a six-year period, Martin and Schmidt and the Corporate Leadership Council have studied over 20,000 employees labelled "emerging stars" from more than 100 organisations across the globe, analysing how their employers view them, how they are treated by management and how they react to economic changes.
They explain: "Senior managers tend to make misguided assumptions about these employees and take actions on their behalf that actually hinder their development.
“In isolation or in combination, these mistakes can doom a company’s talent investments to irrelevance – or worse."
So, Martin and Schmidt highlight the six most common errors and offer advice on how they can be corrected, drawing on examples from organisations who are getting it right.
MISTAKE NO. 1
The first common mistake is: assuming that high potentials are highly engaged.
Martin and Schmidt explain: "Many of these employees set an incredibly high bar for their organisations. Precisely because they work harder (and often better) than their peers, they expect their organisations to treat them well.
"So when the organisation is struggling… your star players are the first to be disappointed. Meanwhile, they are much more confident than their rank-and-file peers about their ability to find new jobs."
Senior management must, therefore, make doubly – or triply – sure their young talent remains engaged. That involves "recognising them early and often, explicitly linking their individual goals to corporate ones, and letting them help solve the company’s biggest problems".
MISTAKE NO. 2
The second common error is: equating current high performance with future potential.
While it's true that high potential doesn't often exist in low performers, it's incorrect to assume that it exists in most high performers. Martin and Schmidt's research shows that over 70% of top performers do not possess critical attributes crucial to their success in future positions. So much of the investment in talent is being wasted on people who don't have high potential.
Therefore, the senior management needs to measure the potential of the top performers by looking for three key attributes:
• Ability Employees need the intellectual, technical, and emotional skills (both innate and learned) to deal with increasingly complex challenges.
• Engagement The authors suggest asking: “What would cause you to take a job with another company tomorrow?”
• Aspiration How strong is their desire for recognition, advancement, and future rewards, and how does this align with the company's objectives?
MISTAKE NO. 3
The third common mistake is: delegating down the management of top talent.
Martin and Schmidt say delegating the management of high potentials to line managers is a bad idea. They explain:
"These employees are a long-term corporate asset and must be managed accordingly. When you leave the task of identifying and cultivating tomorrow’s leaders exclusively to the business units… candidates are selected solely on the basis of recent performance. They are offered narrow development opportunities… and focus mostly on skills required now rather than tomorrow. Talented employees can also be hoarded by line managers – collected and protected and certainly not shared."
Therefore, general managers must share the responsibility for the development of high potential employees. When the top talent is treated as an asset to be developed by the firm's senior leaders, their ability and willingness to contribute rises accordingly.
MISTAKE NO. 4
The fourth common error is: shielding rising stars from early derailment.
It is often the case that high potentials are protected from failure by being placed in training assignments that "provide a bit of a stretch but little real risk of failure".
"By being too cautious," warn Martin and Schmidt, "HR executives and managers can thwart employees’ development and put the business at greater risk in the long term: Emerging talent is never truly developed and tested."
True leaders develop and realise their potential in environments of stress. Martin and Schmidt believe the most effective programmes place emerging leaders in "live fire" roles where they have to acquire new capabilities to survive.
MISTAKE NO. 5
Error number five is: expecting star employees to share the pain.
Martin and Schmidt's research shows that high potential employees exert 20% more effort than other employees performing the same roles. While some executives worry about creating a "favoured class" by giving special treatment to their top talent, the authors spell out the bottom line:
"An employee’s rewards should be in line with his or her contributions. And if you’re treating everyone equally, you’re not doing enough to support and keep the people who matter most."
MISTAKE NO. 6
The sixth and final mistake is: failing to link your stars to your corporate strategy.
According to Martin and Schmidt, confidence in a company's strategic capabilities is one of the strongest factors in the top talent's engagement. So a firm that is silent or inactive on strategy runs the risk of losing the confidence and engagement of rising stars.
So take a tip from the firms that provide high potential employees with email updates or invite them to quarterly meetings with top management.
In conclusion, Martin and Schmidt say: "Senior executives need to reinforce the message that the 'high potential' designation is not primarily an acknowledgment of past accomplishment but mainly an assessment of future contribution.
“Their talent-management initiatives must challenge and cultivate rising stars, not just celebrate today's high achievements."
How to Keep Your Top Talent
Jean Martin and Conrad Schmidt
Harvard Business Review