Keeping Up With the Demand for Talent

Identifying, developing and retaining high-potential talent could be the single greatest challenge organizations face during the next decade, but few organizations are confident in their ability to meet this challenge.

Eighty-four percent of talent development professionals surveyed by UNC Kenan-Flagler Business School reported that the demand for high-potential talent has increased in the past five years, driven primarily by growth (74 percent) and competitive pressure (61 percent) (Figure 1). Almost half (47 percent) of those talent development professionals stated in the “UNC Leadership Survey 2013: High-Potential Leadership” report that the current pool of high-potential talent does not meet the anticipated future need (Figure 2). Another 18 percent of those surveyed didn’t know if the current pool of high potentials will meet future needs.

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In addition, organizations expressed only moderate confidence in their ability to fill mission-critical roles and develop talent. Survey respondents rated their ability to forecast the skills and competencies needed for success during the next three to five years as good. Participants gave a similar rating to their ability to forecast potential shortages in the talent pipeline during the next five years.

Challenges in Identifying High Potentials

More than half of the survey respondents (56 percent) have a formal process to identify high-potential employees. Another 21 percent plan to start or restart a process to identify it. They are motivated by the need to meet demand for future leaders (83 percent) and the desire to retain key talent (83 percent). These organizations recognize that identifying and investing in high-potential talent improves commitment and engagement, laying the foundation for future success.

A process to identify high-potential talent is a clear advantage in the escalating war for talent, but simply having a formal process is not enough. Most of those surveyed (52 percent) are only moderately satisfied with their process. So why are organizations struggling to identify talent?

In organizations where the current pool of high-potential talent meets or exceeds future leadership needs, the most significant challenge is the attempt to achieve a balanced, organization-wide representation. This is followed closely by the reliance on current performance metrics rather than future potential.

Another common challenge reported is the use of inconsistent criteria to define potential. When asked to rate how consistent their organizations are in applying high potential selection criteria, respondents reported that they are only moderately consistent within divisions and departments and even less consistent across divisions and departments. When asked what would improve their ability to identify talent, the most common response was consistency.

Competencies for Identifying High Potentials

The research found that talent development professionals generally agree on the most important competencies used to identify high-potential employees (Figure 3). Strategic thinking and insight was reported as the most important competency (69 percent), followed by drive for results (67 percent).

Other important competencies used in selecting high-potential talent include collaborative leadership (44 percent) and the ability to build effective teams. When asked which competencies will be most important in three to five years, change leadership emerges as the most important.

In addition to competencies, organizations are looking at other factors to identify high potential (Figure 4). Future performance potential was reported as the most important factor (70 percent) in selecting high-potential employees, followed closely by current and sustained performance (66 percent). Culture fit (59 percent) and commitment (47 percent) were also rated as important.

How proficient is the talent pool with regard to these competencies? High-potential employees were rated as more proficient than typical employees on every competency. Those organizations that reported that their talent pool meets or exceeds future leadership needs rated both their typical employees and high-potential talent as more proficient than those that believe their current talent pool will not meet anticipated future needs.

High-potential employees were rated the most proficient in drive for results, followed by learning agility and flexibility and adaptability. Strategic thinking and insight was ranked as the most important competency used to identify high potentials; however, proficiency in this area is rated as only average compared with proficiency in the other competencies. Proficiency in change leadership, which was identified as growing in importance, was rated among the lowest. These findings suggest that organizations should focus more energy on talent development in this area. Other talent development opportunities where overall importance is not matched by proficiency include building effective teams and inspiring and motivating others.

Next Steps

The demand for high potentials is increasing, and this study suggests that many organizations are unprepared to meet the demand. Talent development professionals need to be proactive in recruiting, developing and retaining high-potential talent if they hope to remain competitive, and talent identification is a critical part of that equation. HR and talent management professionals can develop a systematic approach to identify high-potential employees by incorporating the following steps:

Plan for the future: The first step is to understand what the organization will need in the near future. Human resources and talent management professionals should identify anticipated leadership roles and positions, including the C-suite, the top 3 percent of senior leadership positions, hard-to-fill jobs, and the organization’s near- and long-term strategic needs. Once the future needs have been identified, the organization should articulate the purpose, priorities, needs and requirements for each role.

Define high potential criteria: Now that the organization’s future talent needs have been identified and roles have been established, it’s time to consider what qualities, characteristics, skills and abilities a high-potential employee must have to perform in a given position. Starting with clear criteria for high potentials that is specific and relevant to the organization and using it consistently is imperative. Criteria should start with the business’ current and future needs.?

Make the criteria measurable: Establishing measurable criteria is critical to the integrity of the selection process, but it can be a challenge. Many of the desired qualities, traits and characteristics are difficult to quantify. One effective tool to capture measurable information from peers, direct reports and managers is 360-degree assessments. Relying on objective, measurable criteria will help reduce the emotions and ego that can influence the talent review and help overcome many common challenges.

Identify high-potential candidates: Once the high potential criteria is defined and made measurable, high-potential candidates can be identified and selected using structured talent reviews. Candidates can be nominated, screened and assessed based on the criteria and their performance. It is essential that everyone involved in the review uses common language and definitions, understanding the difference between potential, performance, readiness and fit.

Some talent management professionals remain skeptical about the value of high potential programs. A common criticism is that they may have a negative impact on the organization, alienating a large segment of the workforce not identified as high potential. This could include some top performers and even some employees who were once considered high potential but no longer meet the criteria. Another concern is that high-potential talent will leave the organization, and the time and money invested in identifying and developing them will ultimately benefit the competition.

These are valid concerns, but the alternative is to treat every employee the same, ignoring those who have demonstrated the attitudes, skills and behaviors that the organization needs to be successful. That could have the same consequence, alienating top talent and driving them to the competition. A systematic approach to identifying high-potential talent can reduce high potential dropout rates and wasted resources and expenses. Proper high potential identification can also work to improve and target developmental plans for these individuals, resulting in more satisfied high-potential employees who are more likely to stay with the organization.

Identifying high-potential talent can be very beneficial to the organization, but with these benefits comes responsibility. Identifying individuals as high potential builds expectations regarding coaching, development and access to senior leaders. Meeting and managing these expectations is an important investment in the future success of the individual and the organization.?

While every organization is unique, there are some common challenges when it comes to identifying high-potential talent. Understanding the obstacles that are preventing your organization from creating a robust and dynamic talent pipeline is the first step in meeting future demand.

Kip Michael Kelly is the director of marketing and business development for UNC Executive Development. He can be reached at editor@talentmgt.com.