Talent management strategy: Are you building your competitors’ talent pipeline?

by Kim Dowdeswell

As organisations look to drive growth in challenging markets, they recognise the need – in their talent management strategies - for a strong bench of rising talent that evolves with the shifting needs of the business. Our research shows that organisations with stronger leadership gain double the revenue and profit growth compared to companies with weaker leadership. This means that developing effective leadership from talent programmes has to be an imperative for both public and private organisations. How do you identify your high-potential (HiPo) individuals? What is the probable ROI of HiPo programmes? Will these high flyers stay with the business?

What is the value and reality of HiPo?

Our research - 'Improving the Odds of Success for High-Potential Programmes' - shows that HiPo employees are seen as almost twice as valuable to their organisations as employees who aren't. That said:

• Five in six HR managers are dissatisfied with the results these programmes deliver,
• 50% of individuals drop out of their programme within five years, and
• Just one in six employees entering a HiPo programme succeed in a senior role.

The search for future leaders may be happening but our research clearly shows many organisations aren't going to realise ROI from doing what they always used to do.

Assumptions lead to the wrong investment

There is a simple fact driving these poor outcomes: organisations are failing to identify the right people for HiPo programmes. That error flows from a failure to define exactly what a HiPo employee is and what that HiPo is going to deliver for the organisation. One of the most common errors is assuming that the organisation's high-performing employees who're performing well today are its HiPo employees for tomorrow. Our research shows that only one in seven HiPos have what it takes to succeed at a more senior role.

Organisations are continuing to invest in those who don't have the aspiration, ability and engagement to succeed in a senior role. This misidentification is preventing those with the strongest potential from reaching the top where their talents are critical to the organisation's future, impacting productivity, innovation and performance.

Change the odds of success of HiPo programmes

With the C-suite placing increased pressure on the HR department to prove the value of investment in their talent management strategy, using a best-practice framework will allow them to have a deeper understanding of the motivations, qualities and capabilities needed for future leaders.

Despite this, only a third of organisations are using valid assessment methods to identify HiPo talent and almost half lack any systematic process for identifying and developing these candidates.

By using objective data and rethinking HiPo programmes, the success of these initiatives can be improved by a factor of 11. Organisations need to collect data which indicates if:

• An employee will rise to a senior position,
• They will be effective when they get there, and
• They will still be with the organisation when they reach this level.

Secure engagement and the potential to stay

Flight risk is a key factor that many organisations don't address. Our research shows that less than half of HiPo employees are highly engaged with their employers. They don't see their current employer as the place to realise their career ambitions and don't buy into the organisation's objectives. Yet, those who are engaged are more than twice as likely to stay so not taking employee engagement into account when you set up a HiPo programmes is another factor that undermines how successful it is.

HiPo values recognition but only one in nine organisations tell these individuals they're HiPo. While there may be cultural or other reasons to keep this confidential, not informing these candidates and celebrating their accomplishments is a lost opportunity to improve engagement.

Double up on success

The most apparent value of changing the odds of success for HiPo programmes is clear: better leaders and managers drive higher returns. The less obvious loss of value comes when the candidates with low engagement benefit from these programmes and then leave for a rival firm, developing your competitors' talent pipeline.

Surfacing talent in organisations' talent management strategies has to shift from an art to a science if organisations are going to see ROI from these programmes. The choice is simple: better leaders building stronger organisational performance versus a failure to deliver those leaders resulting in poorer organisational performance.

This article first appeared on HR Pulse.