We have looked before at best practices in developing top talent.

Sometimes, we need to also admit and learn from the mistakes that have cost us the most (and in many cases are still costing us).

In their HBR article, Jean Martin and Conrad Schmidt give us more to ponder about these six mistakes.

Mistake 1: Assuming That High Potentials Are Highly Engaged

Let’s begin by talking truth about your bright stars.  

Why is the picture so negative?  Rising stars are young, talented and usually know it.  Their gigantic personal expectations are matched with lots of alternatives.
I didn’t go to Harvard myself, but here in Shanghai I have a number of friends who have Harvard MBA’s and hold good positions in solid multinational corporations.   However, if the organization starts struggling or the pressure increases too much, they have a lot of other possibilities they can explore—and many do.  They are being courted and recruited fairly regularly anyway, so they are often the first to know when other external positions are available.

Here in China finding and retaining talent can be especially challenging (for a number of reasons).  I don’t see companies working hard enough on the solution even though they have varying degrees of awareness  it exists.  Most are resigned or fatalistic about a “bubble”  in the talent pool.

Mistake 2: Equating Current High Performance with Future Potential

The “high potential” label is often used as a sort of reward for an employee’s current contribution in their job.  Important question:  is that enough for them to be successful in much bigger roles?  Marshall Goldsmith maintains  ”What Got You Here Won’t Get You There.”

Here are three attributes that really matter: ability, engagement, and aspiration.

Shortcomings in even one of the three attributes can dramatically reduce candidates’ chances for ultimate success.  The cost of misidentifying talent can be high. You might, for instance, invest dollars and time in a star who jumps ship just as you are looking for them to take the lead on a project or problem.

A sobering thought:   only about 30% of today’s high performers are, in fact, high potentials. The remaining 70% may have what it takes to win now but lack some critical component for future success. Here are three common archetypes:

1. Engaged Dreamers

Engaged dreamers have high levels of engagement and aspiration, but insufficient ability to succeed in more challenging roles. Only about 7% of current high performers fall into this category. Unless the organization can significantly—and quickly—raise these employees’ talent and skill levels, the probability that they will succeed at the next level is effectively zero.

2. Disengaged Stars

Frighteningly, more than 30% of today’s high performers suffer from a lack of engagement. They have the ability and aspiration to be high potentials but are insufficiently committed to the organization to be prudent bets for long-term success. Indeed, employees who exhibit this profile have only a 13% chance of succeeding at the next level. This group represents a sizable opportunity, however: Organizations can heavily influence employees’ engagement levels—if they’re paying attention.

3. Misaligned Stars

This group accounts for 33% of current high performers. Misaligned stars have both the ability and engagement needed to successfully take on more critical responsibilities, but either don’t aspire to the roles available at more senior levels or don’t choose to make the sacrifices required to attain and perform those high-level jobs. Their lack of aspiration is less damaging to their potential than a lack of engagement or ability, as evidenced by their 44% chance of success at the next level. But organizations must triage them to separate those whose aspirations might change from those whose long-term career and personal goals would be better accommodated in another organization.

Drawing on its work with corporations over the past decade, the Corporate Leadership Council has developed several ways to measure the three core qualities of potential—ability, engagement, and aspiration. We’ve combined them in a process we call HIPO-ID. At the heart of this process is a set of questions for candidates and their managers. An abbreviated version of this tool is at www.executiveboard.com/humancapital/CLC-highpotential.html. Readers can use it to assess their own employees’ potential.
Mistake 3: Delegating Down the Management of Top Talent

It’s easy to understand why most companies do this: Line managers know their people best and have a very concrete view of their strengths and weaknesses. Most organizations also recognize the economic benefit of delegating talent management to line leaders—when corporate and HR budgets are limited, it shifts the costs of development programs from headquarters into the budgets of business units.

That said, it is a bad idea to delegate management of high potentials to line managers. 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, here’s what tends to happen: Candidates are selected solely on the basis of recent performance. They are offered narrow development opportunities that are limited by the business units’ scope of requirements 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.  I have seen it many times.  It’s understandable from a BU or functional unit perspective, but it doesn’t help the overall enterprise.

Mistake 4: Shielding Rising Stars from Early Derailment

In many talent-development programs, a central concern is derailment—or the failure or underperformance of a candidate at the next level. Human resources executives and line managers alike will go to great lengths to ensure that employees with promise are placed in training assignments that provide a bit of a stretch but little real risk of failure. That’s understandable; they want to avoid disrupting the business. So most high-potential rotation programs rely on an annual session in which open positions at that point of the calendar year are matched to candidates with the best chances of success. These rotations typically cover various functions and business units—under controllable levels of danger to all concerned.

By being too cautious, however, 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, and the firm finds itself with a sizable cadre of middle and senior managers who can’t shoulder the demands of the company’s most challenging (and promising) opportunities.

True leadership development takes place under conditions of real stress—“the experience within the experience,” as one executive told us. Indeed, the very best programs place emerging leaders in “live fire” roles where new capabilities can—or, more accurately, must—be acquired.

True leadership development takes place under conditions of real stress.  We see that in China, which has had strong growth in the first decade of the 2000′s but slowing tendencies in the second decade.  It has also gotten very challenging in other markets, especially after 2008.  This is where true talent emerges as the stress goes up.

Mistake 5: Expecting Star Employees to Share the Pain

Great leaders elect to suffer alongside the rank and file—and sometimes more, in the tradition of the captain who goes down with the ship. So it might seem that your star employees would embrace that same sense of honor and duty. Not so fast. Particularly in difficult business environments, the decision by a senior executive team to freeze or cut salaries and performance-based compensation across the board may seem fair, but it erodes the engagement of the stars. (Recall that one of the most important factors determining a rising star’s engagement is the sense that he or she is being recognized—primarily through pay.)

Under normal circumstances, high potentials put in 20% more effort than other employees in the same roles. Their contributions may be even larger in constrained organizations, where stars tend to be carrying a disproportionate share of the workload because of recent downsizing efforts or restructuring. When you consider that—alongside our discovery (through conversations with recruiting executives) that many firms are actively creating “hit lists” of talent they can target at other firms, and the data showing a significant drop in “intent to stay” scores among top employees—an alarming picture emerges.

During tight fiscal times, it actually costs less to create meaningful differentiation in compensation—even without the jet fuel of (now out-of-favor) stock options. Modest cash or restricted stock grants go further than before, and rank-and-file expectations with respect to merit pay have never been lower. One manufacturing firm recently dedicated a proportion of the dollars saved through layoffs to sweetening the bonus pool for emerging leaders, in order to stave off attrition among them.

Even employees who haven’t been dubbed high potentials work harder in a place where good things happen to those who deserve them.

Some executives worry that by giving A players special treatment, they may be creating the perception of a “favored class” at the organization. Indeed, 60% of the firms we studied say they avoid using the “high potential” label publicly. But that doesn’t mean companies shouldn’t make emerging stars feel special. Our research suggests that even employees who haven’t been dubbed high potentials work harder (and seem happier) in a system in which good things (raises, promotions, and the like) happen to the people who deserve them. 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 6: Failing to Link Your Stars to Your Corporate Strategy

High potentials are acutely aware of the health of the firm and are rightly focused on the acuity of the senior team’s strategy. In fact, our research shows that their confidence in their managers—and in their firms’ strategic capabilities—is one of the strongest factors in top employees’ engagement. An organization that goes “radio silent” with respect to its strategy—or, even worse, explicitly or implicitly signals a strategy freeze in the midst of economic uncertainty—runs the risk of disengaging its rising stars just when they are needed most.

Firms have developed a number of ways to share their future strategies on a privileged basis with their young leaders and to emphasize their role in making that future real. Some companies send them e-mail updates detailing firm performance and strategic shifts; some invite them to quarterly meetings with high-level executives; and some provide access to an online portal where the company’s strategy is outlined and critical metrics can be viewed.

A firm’s most talented staffers can have meaningful effects across the business. But when burgeoning talent is misidentified, unchallenged, or unrewarded, these individuals become a drag on overall performance. Even worse, their disengagement and eventual derailment can lead to depleted leadership ranks and damage employee commitment and retention across the firm.

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.

Martin and Schmidt are on target about these key missteps.  If you want to read the full article, you can view it here.

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