Thursday, September 27, 2018

The sticky case of ‘the stickiness of potential ratings’!

In this post, we come back to one of the most amorphous areas in HR – potential assessment, its uses and its implications. As we have seen in Using assessment centres for evaluating potential – A leap of faith?’ and in The paradox of potential assessment’, there are multiple perspectives on even the most fundamental issue related to potential assessment – ‘potential for what?’ For the purpose of our discussion here, let’s focus on ‘the potential for taking up higher level jobs in the organization’.

Now let’s come to the issue mentioned in the title of this post – stickiness of potential ratings (i.e. the extent to which the potential rating of an employee remains the same as he/she progresses in his/her career in the organization). This is not an ‘academic issue’  as the way define and interpret potential has very significant implications for both the employees and the organization.

In a way, the core issue comes down to the following questions

  1. Can the potential of an employee change during his/her tenure in the organization?
  2. What are the implications if potential is not a modifiable factor? 
  3. Even if potential can’t change, can the potential rating change?
Let’s start with the first question (Can the potential of an employee change during his/her tenure in the organization?). The answer depends on how we view the alchemy of potential. If we consider potential as some sort of stable personality trait then the potential of an employee should remain the same during his/her tenure in the organization. If we consider potential to be a modifiable factor, then the potential of the employee can change if the employee works on it.

Since potential often gets linked to important decisions like promotions, development investment and compensation, this assumption (on the modifiability of potential) has important  implications. For example, if the potential of the employee corresponds to his/her current role/level, and if we assume that potential is not modifiable, the employee can’t get promoted. It also means that the organization can’t put this employee in the succession plan for a higher position. If the employee continues at the current level for a long time, it is possible that the of the employee becomes too costly a resource for the contribution possible at that level. So, in a way, both the employee and the organization are stuck. The only hope for the employee to move to a higher level position is to find another organization that measures potential differently! On the contrary, if we assume that potential is modifiable then both the employee and the organization can take steps to develop the potential and this makes promotions possible.

Now, this brings us to the most important question. Can potential change? While there are differing views on this, most of the current thinking tends to gravitate towards the position that potential is at least partially modifiable. So there is hope for both the employees and the organizations!

Now let us come to the third question (Even if potential can’t change can the potential rating change?). The short answer is that it depends on our definition of potential and the norms we agree on. For example, if we define ‘high potential’ as someone who can go two responsibility levels up in the organization (from the current level he/she is at) and the person gets promoted by one level, then the potential rating can come down by one step (e.g. to something like ‘advancement potential’) unless the person has (or has developed) more potential to still go two levels up (from the new level after promotion). However, this kind of an approach (of reducing potential ratings on promotion) can lead to inconsistent investment in  (and inconsistent engagement with) the people who were rated ‘high potential. Considering that this is usually a very small (and very valuable) population this can lead to significant negative consequences. 

Hence, my opinion is that unless we have a very good reason to do so (e.g. we have a lot of new data to show that we had made a mistake when we rated the person as ‘high-potential’), we shouldn’t down-grade the 'high-potential' ratings. Yes, it will make the high-potential ratings more sticky. Of course, since we are considering potential as a modifiable factor, an employee can work on developing his/her potential with help from the organization and hence move up from  the ‘advancement potential’ category to the ‘high-potential’ category. This can also help the organization to grow more talent internally to take up the senior positions in the organization!

Any comments/suggestions?

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