Potential Versus Performance

What’s more impressive: a person’s performance or potential? Researchers from Harvard and Stanford University say in most cases it’s the latter — potential wins out nearly every time. Further, firms are willing to hire and pay more for high-potential candidates than those with proven performance, according to “The Preference for Potential,” a study released this year.

“There’s something in us where, yes, we like people that have achieved things,” said Michael Norton, an associate professor at Harvard Business School and one of the co-authors of the study. “… But there’s part of us that is really attached to the idea that we don’t know how well this person is going to do. They might be a superstar, and we’re almost willing to gamble and take a chance because it’s exciting to think about people having high potential.”

The researchers used eight experiments to test this theory. One involved two hypothetical applicants for a management job. Both candidates presented the study’s 77 participants with two test scores — one for leadership achievement and the other for leadership potential.

The first candidate rated highly on the test measuring leadership potential but more moderately on the test measuring achievement. The other candidate’s scores reflected the opposite.

The researchers found the participants were more excited about the candidate with the thinner achievement score and greater potential score.

Norton said potential’s dominance over performance is context specific, however.

If the cost of leaning toward potential is low — say, in choosing a movie to watch on a Friday night based on potential, versus hiring a new CEO in a time of peril — it’s likely to win out.

High Potential Identification Made Simple