Companies That Fail To Retain High-Potential Employees Groom Top Leaders For The Competition

More than Two-thirds of Organizations are Investing in the Wrong Employees; Organizations Must Reinvigorate High-Potential Programs to Build and Maintain Strong Talent Pipelines

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CEB

Mar 24, 2014, 08:05 ET

ARLINGTON, Va., March 24, 2014 /PRNewswire/ -- CEB (NYSE: CEB), the leading member-based advisory company, today revealed that more than two-thirds of companies are misidentifying their high-potential employees¹ jeopardizing long-term corporate performance. This failure drives true HiPos—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, companies must re-evaluate and reinvigorate their HiPo programs.

Major corporations spend an average of $3 million every year on leadership and development programs for HiPo employees, but 55% 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 HiPo 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 HiPos and engaging them with the right training and development. Not only are they well positioned to groom employees for senior leadership positions, but will also strengthen talent pipelines and reduce flight risk for the business longer term.

Insights from a decade of research sampling 6.6 million people and more than 100 Fortune 500 HR leaders suggest that companies can improve the caliber of leaders and create incentives for HiPos 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 evaluation, organizations should adopt a systematic process for identifying HiPo 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 HiPo employees by evaluating their engagement today and their longer-term commitment to the organization in the future.
Create differentiated development experiences. Typical HiPo programs provide opportunities for incremental skill building but fail to prepare HiPo employees for realistic future roles. The best organizations help HiPos learn new skills, but also apply existing skills in different roles by exposing them to high-impact development experiences.

To learn more about how to increase the return on HiPo programs download "Improving the Odds of Success for High-Potential Programs".

About CEB

CEB, the leading member-based advisory company, equips more than 10,000 organizations around the globe with insights, tools and actionable solutions to transform enterprise performance. By combining advanced research and analytics with best practices from member companies, CEB helps leaders realize outsized returns by more effectively managing talent, information, customers and risk. Member companies include approximately 85% of the Fortune 500, half the Dow Jones Asian Titans, and nearly 85% of the FTSE 100. More at cebglobal.com

¹ Edwards, S. (2012). Maintaining the Delicate Balance When Developing High-Potential Programmes. T+D Magazine, April 2012. Bleak, J., and Fulmer, F. (2009). Strategically Developing Strategic Leaders. In D.Giber, S. M. Lam, M. Goldsmith and J. Bourke (Eds.). Best Practices in Leadership Development Handbook (2nd. Edition). San Francisco: Pfeiffer.

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SOURCE CEB