In the ever-evolving business world, where the dynamics of work environments and economic challenges are in constant flux, the ability to identify and inspire high-potential employees has never been more critical. The significant number of open jobs and the notable portion of the workforce looking to move on highlight the urgency for company leaders to refine their approach to talent management. Roughly 85% of 1,000 workers polled in January 2024 said they were contemplating changing jobs this year.
The renewed emphasis on nurturing high-potential (Hi-Po) employees is also partly due to the challenges in filling roles that require scarce skills, a situation exacerbated by the worker shortage. Moreover, the impending influence of generative AI on work and jobs—particularly those requiring specialized skills—compels leaders to adopt a forward-looking approach to talent development. Recognizing and nurturing Hi-Po employees is not just about filling immediate gaps but about preparing for the future needs of the business.
Navigating these complexities requires a rigorous reexamination of high-potential talent management. What’s worked in the past is no longer sufficient. Ensuring your Hi-Po employees not only succeed, but also thrive in alignment with your organizational goals and values requires a more finely tuned approach.
What’s Preventing a Solution to the Hi-Po Problem?
We often hear from executive teams about the pressing need for more robust and diverse pipelines for Hi-Po and key leadership roles. Yet, these same leaders are relying on their traditional approaches, which are falling short in a few key ways:
- Relying on a narrow definition of the capabilities needed in Hi-Po employees, focusing on past performance and leadership capabilities, while failing to include more strategic elements of business acumen and ability to meet future business expectations.
- Nominating Hi-Pos who are mirror images of those doing the nominating—introducing bias at the start—which excludes many viable candidates who, by definition, would bring different, new, or innovative perspectives.
- Failing to provide opportunities for Hi-Pos to stretch and try the new skills needed to lead in the future, which not only limits diversity of thought and innovation in the way of work, but also leads to disengagement among talented employees.
Levers to Dramatically Improve Hi-Po Development and Retention
Applying rigor to the Hi-Po pipeline and development process has become a more strategic priority in the context of the challenges outlined above. The key to leveling up the process is introducing new elements targeted at the failure points. Here are two factors to consider:
1. Think beyond the challenges of now. No organization is going to be the same two, three, or five years from now. What it will take to lead, innovate, motivate, and deliver sustainable growth and a competitive advantage is going to be dramatically different. So, why do executives persist in focusing on what the organization needs now to be successful and how candidates have historically performed against those needs? It comes from being swamped with the operational challenges of filling roles, rather than equipping the organization for the future.
Therefore, when it comes to building a Hi-Po pipeline and developing this talent for future roles, it’s important to build in a process to systematically ask these questions:
- What does the business need to drive the strategy forward, and what are the capabilities that future talent must possess?
- What types of expertise will be needed in the next few years?
Include unlikely stakeholders in the process of answering these questions. Ask them to share their expertise on departmental strategies, organizational culture, and the specifics of essential roles, such as lessons learned, knowledge gained, current and future demands, and decision-making principles. Bring in customer perspectives, board insights, community and consumer feedback, and competitor intel. Leverage this information to build out a forward-looking, context-specific plan to identify and develop Hi-Po leaders.
2. Embed the power of practice and simulations. While technology and data analytics have significantly impacted recruitment, performance management, and workforce planning, their effectiveness in enhancing the experience and retention of Hi-Po talent remains poor. This is partly because the technology doesn’t demonstrate an unbiased process, provide relevant insight, or help team members grow as humans or leaders.
The canniest organizations are moving beyond traditional HR data capture technologies, which are really just a step up from spreadsheets, to unlocking the power of simulations. Simulations that model future business scenarios and real-world situations can provide Hi-Po employees with a realistic experience of current and future roles, allowing them to practice and prepare for strategic decision-making and leadership positions. From a talent management perspective, the insights are exceptional, “catching the person in the act” of being themselves and observing a future reality for leaders that they can currently only imagine.
A simulation approach ensures that talent development aligns with the company’s strategy, customers, market disruptions, and engrained or aspired culture. By focusing on the critical moments Hi-Po employees will face and providing clarity in expectations, leaders can create a more effective and engaging development process—as well as more prepared employees. And the organization can pinpoint with more accuracy where talent needs to grow and develop based on what’s learned in the simulations. Put simply, a simulation is the only way to accurately observe a leader’s capacity to productively face adaptive challenges, rather than hypothesize like many psychometrics do.
For example, a traditional manufacturing company we worked with had a well-identified pipeline of what it considered to be early-stage Hi-Po candidates for future C-suite roles. The front runners were very much in the mold of the organization’s current leaders. The company undertook an extensive leadership development initiative with the cohort, including simulation exercises testing out future scenarios for the state of the business. The results surfaced several unexpected top performers, who outshone the front runners across most key dimensions, and clarified what type of development was needed to retain and grow the whole cohort, as well as get the right people into the right roles.
The Future of Internal Talent Management
Looking forward, the role of internal talent management is set to evolve significantly in response to changes in the job market and workforce expectations. The focus will increasingly be on inclusivity in executive and other critical roles, necessitating objective approaches to talent identification and development. Leaders will need to be in tune with business needs and open to rethinking traditional roles and development paths.
This shift will require executives to be disruptors and innovators in their approach to identifying and nurturing Hi-Po employees. By insisting on a future-focused ideal and getting a real preview of capacity through simulations, they can ensure that their talent management strategies are not only effective, but also aligned with the future direction of the business and the dynamic nature of the job market.
Stephanie Peskett is a Senior Vice President and Partner at BTS, an organization that works with leaders at all levels to execute their strategies, help them make better decisions, convert those decisions to actions, and deliver results.
Lance Wilke is a Senior VP and Partner and Head of Talent, Learning & Leadership, Americas at BTS. His responsibilities include managing client relationships and spearheading BTS’s quickly growing business, as well as integrating BTS’s extensive capabilities into solutions that drive amazing results for clients.