8 Things to Know About High-Potential Employees

The makeup of your team will inevitably vary. From their skills and their talents to their career ambitions and being able to learn from their mistakes, no two employees are the same. While you expect all of your employees to achieve a level of excellence, it may be easier for some on your team, and these could be your high-potential employees.

This article will explore the meaning of a high-potential employee and eight things you should know about high-potential employees. With this knowledge, you’ll be better prepared to understand the needs of these employees and why they’re critical to succession planning and the long-term success of your organization.

High-Potential Employee Meaning

Harvard Business Review defines high-potential (HIPO) employees as “[individuals who] consistently and significantly outperform their peer groups in a variety of settings and circumstances. While achieving these superior levels of performance, they exhibit behaviors that reflect their companies’ culture and values in an exemplary manner. Moreover, they show a strong capacity to grow and succeed throughout their careers within an organization - more quickly and effectively than their peer groups do.”

8 Things To Know About High-Potential Employees

1. Identifying them may be a challenge

2. They may not be your top performers
3. They're a benefit to your team and company
4. They need a clear development plan and career path
5. They may not always be a high-potential
6. They're rare
7. They should be told they're a high-potential
8. They can boost team performance
   
   

Identifying them may be a challenge

There are varying opinions on the criteria for and how to identify high-potential individuals. However, despite the different views, the commonality between them is the individual is likely to become a key driver of organizational performance in the future.

However, with that criteria, there is a trap to identifying high-potential employees that HBR highlights: “Unfortunately, most HiPo interventions focus on individual career success - ‘potential to move up two roles in five years’ is a common definition - but the ability to advance one’s own career does not guarantee that one will make a crucial contribution to the organization.”

They may not necessarily be your top performers

There is a misconception that high-potentials are always the high-performers. SHL’s guide, Reduce Flight Risk of High Potential Employees, explains that believing this is a mistake for two reasons:

1. It confuses performance to date with effectiveness in future roles where the talents and performance expectations will be more challenging
2. Research uncovered that only 15% of high performers are also considered high potentials

They’re a benefit to your team and company

Given their talents, high-potential employees are almost twice as valuable to an organization. In addition, they exert 21% more effort than their peers. With the value they add, it is easy to see why leaders and organizations alike are keen to retain them.

They need a clear development plan and career path

Every company is looking for high-potentials, making them sought-after talent in the market. Creating a development and career plan is critical to show them they have a future with your organization and decrease their flight risk. It’s been found that providing these employees with clear career paths and structured development increases engagement and, in turn, the likelihood they stay with the organization by 23%.

They may not always be a high-potential Individual

A company’s list of high-potential employees is active, meaning the list will change over time, with individuals being added and others being removed. This may happen by choice of the individual or the company determining they no longer fit their criteria. In fact, HBR noted, “Virtually all companies we surveyed indicated that retaining a high potential is not guaranteed, and we found that anywhere from 5% to 20% drop off the rolls each year, whether by choice or not.”

They’re rare

High-potential employees typically account for 5% of an organization’s workforce. Given the small amount of the workforce they make up, you may not have one on your team. However, being aware of what to watch for and the fluid nature of a high-potential list, it’s best to learn about them today because if you don’t have one on your team now, you very well may have one in the future.

They should be told they’re a high-potential Individual

With only 5% of an organization's employees being high-potentials, employers tend to avoid identifying them publicly, not to demotivate the other 95% of the workforce. However, this might be a mistake. SHL explains that this is because “High potential employees value recognition, and given their importance of reinforcing their engagement, organizations should consider telling candidates that their potential has been spotted.”

They can boost an entire team’s performance

When part of a team, high-potential individuals act as a multiplier, boosting the entire team’s performance as their colleagues begin to model the high-potential's behaviors and, in turn, the high-potential’s coach and pass on their talents to their peers.

An HBR article claims, “Simply adding a star performer to a team boosts the effectiveness of other team members by 5-15%. No wonder, then, that study after study shows stronger financial performance in companies that make proportionally greater investments in identifying and developing top talent.”

Conclusion: Invest in These Employees with a High-Potential Leadership Program

Given the importance of these employees, investing in a comprehensive high-potential program can be the key to developing, engaging, and retaining these talented employees. Luckily, with a partner like Niagara Institute, we make it easy with a turnkey solution for your organization. Our high-potential leadership program combines targeted training, assessments, and individualized coaching, capping it off with a presentation to senior management.