are you grooming leaders for your competition?

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Are you one of the more than two-thirds of organizations investing in the wrong employees?

New research from the Corporate Executive Board (CEB), revealed that more than two-thirds of companies are misidentifying their high-potential employees, jeopardizing their long-term corporate performance. This failure drives true high-potentials—those who demonstrate the attributes to be successful future leaders—to pursue positions with potentially competitive organizations willing to invest in their development. 

In order to keep top talent in house and maximize bottom-line results, CEB concludes that companies must re-evaluate and reinvigorate their high-potential programs.

Major corporations spend an average of $3 million every year on leadership and development programs for high-potential employees, but 55 percent of these employees will turn over in a five-year period, resulting in wasted dollars and an insufficient leadership bench. The inability to establish a strong, diverse leadership pipeline impairs bottom-line performance, since organizations with weak leadership generate roughly half the revenue and profit growth as those with strong leadership.

“There is mounting pressure on companies to realize the value of any talent investment made, especially high-potential programs which deliver future leaders for the business. Too often resources, training and career opportunities are directed at employees who lack the aspiration, engagement or ability to be effective at the next level. This misidentification is preventing those with the strongest potential from reaching senior roles and could restrict an organization’s future productivity, innovation and performance,” said Eugene Burke, chief science and analytics officer, CEB.

Companies can expect to improve the success of their programs more than 10-fold by correctly identifying high-potentials and engaging them with the right training and development, according to the CEB. Not only will they be well positioned to groom employees for senior leadership positions, but they will also strengthen their talent pipelines and reduce the flight risk for the business longer term.

Insights from a decade of CEB research sampling 6.6 million people and more than 100 Fortune 500 Human Resource leaders suggest that companies can improve the caliber of leaders and create incentives for high-potentials to stay by applying a four-pronged approach:

  • Redefine “potential” – Adopt a clearer definition that accounts for the key attributes employees need to have in order to rise to more senior roles: the desire to assume senior positions (aspiration); manage and lead others effectively (ability); as well as having the commitment to realize their career goals with their current employer (engagement). 
  • Measure potential objectively – Rather than relying solely on subjective manager nominations or evaluations, organizations should adopt a systematic process for identifying high-potential talent through objective talent assessment and evaluation. 
  • Ask for commitment in return for career opportunities – Proactively evaluate engagement and act to mitigate flight risk among high-potential employees by evaluating their engagement today and their longer-term commitment to the organization in the future. 
  • Create differentiated development experiences – Typical high-potential programs provide opportunities for incremental skill building, but fail to prepare high-potential employees for realistic future roles. The best organizations help high-potentials learn new skills, but also apply existing skills in different roles by exposing them to high-impact development experiences.
By michelle m. smith, CPIM, CRP
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