Too High on High Potentials?

As talent continues its rise to the top of the corporate agenda, it would seem logical that organizations would want to focus on grooming their absolute best performers — the top 10 percent.

This select group, after all, is poised to develop into the next generation of C-suite executives, tasked with managing the strategic direction of a business in an increasingly dynamic environment.

As a result, companies tend to tout development programs geared exclusively for these high-potential employees — the individual contributors or midlevel managers who not only perform exceptionally but also exhibit signs of having the skills to advance to critical senior leadership positions down the road.

But what about the other 90 percent?

Ignoring the development needs of the bulk of a workforce leaves companies vulnerable to many risks, according to human resources practitioners and experts.

Namely, productivity, engagement and turnover become increasingly susceptible.

More important, as some talent leaders disproportionally focus on the development needs of a select few, the majority of the workforce is busy taking on the brunt of the effort needed to make leadership vision a reality.

“The top 10 percent don’t do all the work,” said Stacia Sherman Garr, vice president of talent management research for Bersin by Deloitte, a leadership development advisory and research firm. “To achieve the innovation necessary for success, you need to invest in the people who make day-to-day decisions.”

Top-Down vs. Middle-Out

To combat the tendency to focus the heft of development resources and investments on high potentials, some companies have put in place infrastructures that give needed attention to the top 10 percent without sacrificing focus away from the rest of the organization.

For some firms, it’s a matter of finding the right entry point for specialized development. Other experts recommend finding the right cost strategies to make sure high-price resources are targeted toward top performers but still repurposed later through low-cost delivery methods to the rest of the company.

But in most instances, an all-encompassing approach to development is a best practice among high-performing talent management companies, said Lori Holsinger, a principal at human resources consulting firm Mercer. This includes what Holsinger termed “steady Eddies,” or employees who come in every day and do great work but aren’t likely to rise in the ranks.

While these employees may not go on to lead the company, they’re still vital to the business and require training, stretch assignments and recognition. “You need those people to continue doing their jobs successfully and to feel satisfied in their role — whether they’ve been there for one year or 10,” Holsinger said.

It is to this end that the talent development team at Fluor Corp., an engineering and construction firm, uses a trickle-down approach to development to make sure every employee — from the executive team to the front line — receives opportunities to advance and grow.

“Leaders are everywhere in an organization,” said Glenn Gilkey, executive vice president of human resources and administration at the Irving, Texas-based company. “If those people are put into leadership roles without any training, that should make you very nervous.”

Though Fluor’s career development program includes a high-potential track, Gilkey said it’s just a small portion of its wider focus on development. “Our high-pos may become our global leaders,” he said, “but we have many front-line leaders who come from the other 90 percent. If they are going to lead well, they need development, too.”

To create a top-down, cascading development environment, Fluor engages all employees in its online Fluor University, and managers are expected to support the career development needs of their teams through mentoring and stretch assignments.

In an effort to promote accountability of such organization-wide development, performance reviews and promotion at Fluor are tied to how effectively managers — high potentials included — support development. “Managers know that it is a priority,” said Jennifer Large, the company’s vice president of talent development.
Another mechanism Fluor has created to cascade employee development beyond high potentials is its Leadership Development Forum. This group’s charter is to focus on acceleration of leadership throughout the company, and employees who earn membership are recognized as having a special skill set.

“Winning this assignment means you’ve proven that you know how to develop people,” Gilkey said.Others are targeting development programs to the middle; the hope is that the culture permeates up and down the organization.

Evidence suggests that targeting leadership development investments to the middle of the organization — not top-down — actually furthers productivity of the firm at large.

A study by Ethan Mollick at the University of Pennsylvania’s Wharton School of Business found that middle managers accounted for 22.3 percent of the variation in company revenue. Similar research by performance management firm Enkata shows that teams who work for high-performing managers produce 22 percent more than teams working for low-performing managers.

Focusing on the engagement and job satisfaction of the middle of the organization has become an important strategy at JetBlue Airways Corp., according to Bonny Simi, the company’s vice president of talent. Simi said JetBlue has built its culture around offering an engaging and motivating workplace where people can build long-term careers. The company fills 80 percent of its leadership positions through promotion, Simi said, partly because it offers training and career development opportunities to everyone.

To make sure employees are aware of their options, Simi’s team regularly holds internal career expos. The company also provides online career exploration tools for employees who are interested in advancing.

Employees who don’t have the skills or ambition to be considered as a future leader are encouraged to move laterally, take stretch assignments and participate in learning and development as a means to improve performance in their current roles.

All of these middle-centric talent development opportunities tie back to JetBlue’s core internal metric of employee engagement. “We know career growth and development is key to engagement,” Simi said. “If we didn’t do it, our people would leave and our customers would be less satisfied.”

Some might caution against advancing development resources evenly across the entire organization, instead focusing the high expense of leadership development to the group most likely to provide the biggest return on investment down the road.

And in many cases, it’s a valid argument. Organizations with strong leadership generate roughly twice the revenue and profit growth as those with weak leadership, according to member-based advisory firm Corporate Executive Board Co. What’s more, most great leaders inevitably come from that high-potential group, so companies might be wise to put their development dollars where they count most, said Jay Conger, senior research scientist for the Center for Effective Organizations and professor of leadership at the California-based Claremont McKenna College.

“If you only have a certain amount of resources, you want to divert them to your best and brightest talent,” he said. 

One way Conger said companies can do this is by taking an 80-20 approach — that is, investing 80 percent of development dollars into the top 20 percent of performers, leaving the remaining 20 percent of investment dollars to the rest of the organization. Still, Conger said the key to making this investment strategy work is not being too rigid about who lands in the high potentials group.

Companies might also consider widening the high potential net. According to a March 2014 CEB survey, more than two-thirds of organizations misidentify high-potential employees, making some true high potentials feel neglected and pursue opportunity elsewhere.

“The best companies take a fluid approach to identifying high potentials, and they revisit those decisions annually,” Conger said. 

Development on a Shoestring

Even if companies focus most of their resources on high potentials, they can still offer development opportunities to the rest of the company without spending a lot of money.

“There are lots of ways to provide development and recognition that don’t cost a lot of money,” said Jen Centrone, head of diversity and talent management at The Hartford Financial Services Group Inc. She said the insurance firm uses online courses and its employee resource groups — where employees can take advantage of public speaking and networking opportunities — as low-cost means to further organization-wide professional development.

Technology can also play a role. For example, Conger said organizations can gain added value from existing development investments by recording leadership training seminars given to high-potential employees and delivering them digitally en masse afterward.

They can also provide low- or no-cost online learning opportunities. At JetBlue, Simi said her team has identified dozens of free massive open online courses that employees use to learn basic business and leadership skills like how to read a financial statement and manage others. Employees are also encouraged to shadow other employees to learn more about roles they might be interested in.

Fluor’s Gilkey said one of the most successful development programs at the company is its mentoring circles, where company leaders identify a group of employees who are not high potentials who they meet with once a month for lunch. The mentoring lunches typically consist of discussions about company strategy and other internal initiatives, as well as mentee career goals.

“The purpose is to provide everyone in the company face time with a leader,” Gilkey said. “At the same time, the leaders have the opportunity to get to know staff they might not otherwise encounter.”

Since launching the program in 2003, Gilkey said Fluor leaders have run more than 700 mentoring circles with 8,000 employees.

Even in challenging times, when there is little budget for talent development, simply talking with employees about their career goals and helping them find mentors or on-the-job opportunities to develop their skills is worthwhile.

“You want to be sure you are regarded in your industry as a company that cares about the development of its people,” Mercer’s Holsinger said. “That takes diligence and thought, but it doesn’t have to cost a lot.”

For more on how to motivate low performers, click here.

Sarah Fister Gale is a freelance writer based in the Chicago area. She can be reached at editor@talentmgt.com.