The Premier Premium: Decoding the Management Trainee Advantage

Employee: “Can I ask you something frankly?”

CHRO: “Of course.”

Employee: “What’s really the difference between the management trainees and me? I’m from a good business school—maybe not a top-ranked one—but our MBA curriculum is pretty similar. We studied the same frameworks, the same case studies. Yet they join at a much higher salary and with a different label. Why?”

I heard this conversation many years ago. I realized that this was a question many employees think about, but only a few ask out loud. I also realized that this question deserves a proper response, though such a response was elusive in many organizations, as the question hasn’t received sufficient attention, discussion, and crystallization of a response that is in line with the people management philosophy of the organization. Yes, it is indeed true that many organizations make such a differentiation between management trainees hired from premier institutes and other employees at the same stage in their career, and it leads to other organization following suite through the benchmarking route.

Let’s start by acknowledging an uncomfortable truth: companies don’t pay management trainees more just because they like certain campuses. There’s a method—if not always a perfect one—behind the madness. Let’s explore the rationale that underlies this method in some detail.

Predictability and signaling

Hiring is a gamble to some extent. Premier business schools have built strong reputations over decades. For employers, a degree from these institutions acts as a signal—of academic rigor, competitive selection, and exposure to high-quality peer learning. While not perfect, this signal reduces hiring risk. Premier business schools act like a familiar brand. Companies assume—sometimes correctly, sometimes not—that students who survive intense competition, tough grading, and high peer pressure are likely to perform well in demanding roles. The higher salary is, in a way, an insurance premium for reducing hiring risk. 

Recognizing the primary value add of b-schools

Another way to look at this is to separate education from selection. It can be argued that the biggest value a premier business school offers is not dramatically different course content—it is the quality of its selection process and the kind of candidates it attracts into that process. These schools draw thousands of highly driven, capable applicants and then filter them through rigorous exams, interviews, and peer competition. What companies end up hiring is not just someone who has completed an MBA, but someone who has already cleared multiple layers of screening in an intensely competitive environment. For employers, this acts as a powerful pre-hire signal: the candidate has demonstrated ambition, resilience, and consistency long before their first day at work—even if the classroom experience itself looks surprisingly similar across schools.

This also explains another anomaly. People who do executive MBA programs/part-time MBA programs from the premier institutes often don’t get the advantage that regular MBA students from the same institute get. It happens because while the course content and the faculty can be very much comparable, it is much easier to get selected to the executive MBA program as compared to the regular MBA program of the same institute.  

Betting on potential

It’s not really about the first job; it’s a bet on the future - Management trainee roles are designed as long-term leadership investments - to build a strong leadership pipeline. MTs are expected to take on bigger responsibilities faster, move across functions, and eventually occupy senior roles. The salary reflects not just what they do today, but what the company hopes they will become tomorrow. In a way, companies are also paying for potential and not just for performance. Yes, potential assessment is a much more nebulous area than performance assessment. 

The selection processes of many of the premier business schools give importance to cognitive ability. Cognitive ability, which translates into ‘higher processing power’ in the job context, is one of the very few psychometric factors that have a proven linkage to higher performance on the job. Often, it is also associated with ‘conceptual ability’ and ‘metacognitive ability’ that are highly useful in making decisions in complex and uncertain environments. Of course, there are many other factors (like person-organization and person-job fit, emotional intelligence, functional and behavioral competencies, etc.) that impact on the job performance. However, other things remaining the same, the advantage arising from higher cognitive ability can't be denied.  

Employer branding and competition for talent

Top companies compete fiercely for talent from elite campuses. Paying a premium is often necessary to attract these candidates, who may have multiple offers. Offers need to stand out. If one company pays less, another will pay more. Over time, these higher packages become the “market rate”. A differentiated salary offer also strengthens the company’s brand on campus, creating a virtuous cycle of visibility and access.

The other side of the coin

The above discussion doesn’t mean that the above approach is not without faults and side effects. What makes sense on paper doesn’t always work as neatly on the office floor.

Equal work, unequal rewards: When employees from different entry routes do similar work—but with different pay, titles, or access—it creates quiet frustration. People don’t mind starting lower; they mind staying there without a clear reason.

Pedigree ages faster than performance: A business school brand shines brightest at the point of entry. A year or two into the job, results matter far more. When high-performing non-MTs see slower growth despite strong outcomes, motivation begins to dip.

Invisible walls: MT cohorts often—unintentionally—become exclusive circles (see Batch mentality for a related discussion). Different training programs, faster exposure and attention from seniors. Over time, this creates “us and them” dynamics that hurt collaboration and culture.

Good talent quietly walks out: When capable employees feel overlooked, they don’t always complain. They update their résumés. Organizations then lose exactly the kind of steady, proven performers they should be nurturing.

The balancing act

The answer isn’t to scrap management trainee programs. It’s to balance them with fairness and flexibility.

Be honest about the “why”: Employees handle tough realities better than vague explanations. Clear communication about what MT programs are—and what they are not—goes a long way in building trust.

Let performance close the gap: Starting salaries can differ. Staying salaries shouldn’t—at least not forever. Strong performers from all entry paths should be able to converge on pay, roles, and responsibilities within a defined timeframe.

Open up development opportunities: Leadership training, mentoring, and high-visibility projects shouldn’t be reserved for a select few. Potential shows up in many places, not just in campus placements.

Measure outcomes, not just origins: If MTs consistently outperform, the premium is justified. If performance evens out over time (or if the potential doesn't translate into performance over time), compensation and career models should evolve too. Data—not tradition—should drive decisions.

Coming back to where we started 

The employee’s question to the CHRO isn’t about money alone. It’s about recognition, fairness, and future possibilities. Companies will—and should—continue to hire from top business schools. But organizations that combine this approach with fairness, transparency, and genuine meritocracy will build stronger cultures—and far more resilient leadership pipelines in the long run. The organizations that truly win are those that remember one simple thing: talent doesn’t stop at campus gates. And once people are inside the organization, what they deliver should matter more than where they came from. That’s not just good HR. It’s good business.

Any comments/ideas?

The Wall That Knows Too Late

For several years, a significant part of my role involved building and running campus programs—hiring bright young management trainees, designing their development journeys, and facilitating their long-term careers in the organization. This meant frequent trips to the country’s top business schools, where I would oscillate between pre-placement talks, interview panels, guest lectures, and informal conversations with students over coffee. Over time, these campuses became familiar territory: I knew the corridors leading to the interview rooms, the auditoriums where PPTs were held, even the quiet corners where nervous candidates rehearsed their answers.

It was during one such visit—another hiring season, another pre-placement talk—that something caught my eye. On the way to the Director’s office, I walked past a corridor I had somehow never paid attention to before, lined with framed photographs and neatly engraved nameplates: a Wall of Fame celebrating the school’s “Distinguished Alumni.” I slowed down, curious, reading the batch years and designations, noticing how many of these faces now led companies, shaped policy, or built institutions I recognized.

“Nice wall,” I said to the Director, pausing in front of the ”Wall of Fame”. “Tell me… when these men and women were on your campus, could your faculty have picked them as future stars?”  

He smiled, a little ruefully. “Honestly? No. They were good, of course. But so were many others. If we could have predicted this, we’d have invested a lot more in them while they were here.”  

That line stayed with me all the way back from the campus.  As a visiting recruiter, I realized that the Wall of Fame is, in some ways, a monument to our collective blindness.  

The irony   

Business schools honor “distinguished alumni” decades after graduation, engraving their names on walls and websites once their achievements are clear and public.

Yet those same institutions invest heavily in selection tools, grades, projects, and classroom participation, all with the implicit belief that they are identifying “high-potential” leaders in advance.

The uncomfortable truth is that the two worlds do not perfectly overlap: the students who ace courses are not always the ones who eventually land on that wall.

The why   

As someone who has sat on both sides—campus interview panels and corporate talent councils—this gap is both fascinating and unsettling.

Admissions criteria and early academic indicators are reasonably good at predicting academic performance in the short term (CGPA, passing courses), but are much weaker at predicting long‑term outcomes, such as career impact, or societal contribution.

Even sophisticated predictive models in higher education mostly forecast near-term academic success (pass/fail, retention), not who will go on to build institutions, change industries or shape policy.

In other words, business schools are quite good at predicting who will do well ‘here and now’, and quite poor at predicting who will matter ‘out there, decades later’.

The ripple effects

On the drive back, the Director’s candid admission forced me to confront a few of my own assumptions as a senior leader coming for campus hiring.

If business schools themselves cannot reliably foresee who becomes “distinguished alumni”, my confidence in using only conventional campus signals—CGPA cut-offs, case competition wins, committee titles—as predictors of long-term leadership success must be questioned. The Wall of Fame is a visual reminder that many future stars may have been “average” on campus, and that some of today’s campus superstars may plateau early once they leave the protective structure of academia. That realization creates a dissonance: my recruitment process is optimized for what is ‘easy to observe now’, not necessarily for what will matter 15–20 years later.

The Wall of Fame incident has subtly but firmly nudged me to reconsider how I approach campuses.  In hiring, it pushes me to widen the funnel beyond the usual “top 10 percent,” to intentionally meet students who may not have the perfect résumé, but show learning agility, resilience, curiosity, integrity and, the openness to feedback—traits research increasingly links to longer-term outcomes. In campus programs, it nudges me to design interventions that build longitudinal capabilities—critical thinking, ethical judgment, collaboration across boundaries and differences.

If prediction is inherently noisy, then perhaps the best response is not to chase a perfect algorithm, but to create conditions where a wider variety of students can discover and express their potential.

A quiet lesson

Looking back, the Director’s answer was more honest than most corporate or academic narratives. Institutions love to tell linear stories— “We admitted them, we trained them, look how they turned out”—but the evidence around predictive validity is far more modest and cautious.

For me, that honesty has become a quiet checkpoint: every time I walk past a Wall of Fame on a campus visit, I remind myself that I am not spotting finished products; at best, I am encountering ‘possibilities’ that will unfold in ways neither the school nor I can fully foresee.  Perhaps the real value of that wall is not celebration alone, but humility—a reminder that our carefully designed filters and rubrics are, in the end, only partial maps of a much larger, messier human journey.

Any comments/suggestions?

Talent's progress

Is there a perspective that can throw light not only on the progress of  employees, but also on the effectiveness of people management in the organization? Tracking the changes in the positioning of employees on the talent grid over a period of time can be an excellent option!

There are many ways in which the progress of an employee ('talent') in an organization can be depicted. The most concrete one is in terms of the roles the employee takes up in the organization. Then there are aspects like compensation, responsibility level etc. that can also be used to track the progress of an employee in the organization.

In this post, let's look at the progress of employees in the organization in terms of a more abstract (though very widely used) representation - in terms of the changes in the mapping of the employee to the performance-potential grid. This grid, often called the talent grid, is typically a 9-box one, with box 9 corresponding to high performance coupled with high potential. 

If we track the changes in the positioning of the employees on the talent grid over a period of time, say for 3-5 cycles of talent review process that lead to the mapping of the employees on this grid, the trends emerging from the same can give us very interesting insights on the effectiveness of Talent Management in the organization. 

Ideally, employees should shift right and/or up on the grid. This would mean that the Talent Management in the organization has managed to help the employees to improve their performance and/or potential. Similarly, if the general trend in an organization is that employees would shift left and/or down and then out of the grid (and the organization!) it can be an indicator of lack of effectiveness of people management in the organization. 

Of course, these movements are also dependent on the employees (their performance and demonstrated potential). However, the overall trends in the movements on the grid (for a group of employees) can provide valuable indications on the effectiveness of people management in the organization.  These employees went through the selection process of the organization before they started featuring in the talent grid and hence the organization can't easily disown them or their movements on the talent grid! 

Yes, there could be other factors at play. For example, if the organization has imposed some sort of normalization on performance ratings and/or on potential ratings, this would limit the percentage of the employees who can be in box 7, 8 and 9 (the boxes in the talent grid that denote the best talent positioning). Also, if 'long term' performance (and not recent performance) is what drives the positioning on the performance axis of the grid, the degree of  'fluctuation' along the performance axis of the grid is likely to be lower. 

There is also this interesting phenomenon of stickiness of the ratings, especially potential ratings.  The extreme case is when the organization takes the stated or unstated position that the 'potential' is a non-modifiable factor, in which case no movement on the potential axis would be possible. Mercifully, most organizations consider potential to be some sort of a combination of ability, aspiration and leadership and somewhat modifiable. 

All this assumes that the definition, the rating scale and the calibration norms for performance and potential (that lead to the positioning on the talent grid) remains consistent over the years/over the period used for trend analysis. Else, there is a possibility of scenarios similar to that of 'reducing poverty by redrawing the poverty-line'!  

There could also be deeper factors like the tacit definition of 'what good looks like' and  the unstated assumptions regarding people management in the organization  (e.g. 'we hire a person based not only on the fit to the current role but also on the fit to the future roles' or 'we hire people mainly to solve a particular problem at a given point in the organization's journey'). 

As we have seen in 'Type N and Type O Organizations', in  the case of 'Type N' organizations, the relatively new employees have a great advantage over the other employees, though this advantage vanishes quite quickly as they become 'old' (tenured)! This can lead to rapid changes in the grid positioning as the employees tend to get over-positioned on the grid initially and then shift left and down (and out!) very quickly. This creates a lot of action (and an illusion of progress) on the people management front, though over a period of time it might become apparent (if the organization is open to see it) that quality of talent in the organization hasn't improved and that 'the new is not really outperforming the old'!

 So, where does this leave us? Though Talent's progress (or lack of it) on the performance-potential grid is a rather abstract way of capturing the Talent trajectory', it can indeed provide very useful insights on the effectiveness of people management in the organization! While the movement of a particular employee on the grid is mainly a function of the performance and demonstrated potential of the employee, the trends in these moves at the group level points to the effectiveness (or lack of it) of people management in the organization. These organization level trends can also be very useful in unearthing the unstated assumptions that the organization has made on people and on people management!

Any comments/ideas? 

Unorthodox concepts in HR : Part 12 – Magical Transformation of Talent

In this post, let's continue our exploration of Unorthodox concepts in Human Resources/People Management. We have been exploring concepts that are unlikely to be found in ‘respectable’ text books (and also not taught in ‘premier’ business schools) but are very much real in the paradoxical world of people management (See ‘The attrition principle’,  'In the valley of attrition' , 'Sublimation of vision statements' , 'Computer-controlled Manager Empowerment', ‘Training the Victim’ ,‘Two plus Two personality profiling’, 'Herophobia', 'Type N and Type O organizations', ‘The plus one problem’ , ‘Exporting your problems’ and ‘The IR mindset’ for the previous posts in this series).

“If there are times when you feel that you are not being valued by the organization, don’t leave. Quietly do your work. You will come back into fashion!”, said the experienced business leader to the new joiner during an informal conversation. 

Comments like this are quite common. They also true to a large extent. Yes, there are some employees in any organization whose fortunes are relatively steady (remains the same, steadily improve, steadily worsen etc.) But, most of the employees with long tenures have faced some degree of waxing and waning of their fortunes in the organization.

So, let's look a bit more deeply at the question “What are the factors that make the fortunes of an employee wax and wane in an organization?”

Now, 'fortunes of an employee in an organization' can mean different things (like promotions, salary increases, bonuses, being chosen for important roles/projects etc.). To simplify our discussion, let's take the 'talent classification' of the employee (placement of the employee on the 'performance-potential matrix') as the indicator of an employee's fortune in the organization, as this talent classification acts as a key driver for the decisions on promotions/increments/bonuses/roles etc. So, a drastic change in the fortunes of the employee ('magical transformation of talent') can be indicated by more than one step change in the performance and/or potential ratings (say on a 4 point rating scale) of the employee.

Let's look at seven factors that can lead to this kind of a drastic change in employee fortunes. If you were to ask me why exactly seven factors, I can only say that this list of factors is only illustrative (and not exhaustive) and that the number 7 is considered to be a 'perfect number' in many cultures (and some even attach mystical qualities to it)!

1. Role change : If an employee is moved to a role that doesn't play to his/her strengths the performance can reduce significantly, especially in the short-term. One especially unfortunate case (that is more likely in the case of top talent) is to be given a 'stretch role' with an impossible degree of stretch. This, if not managed promptly, can lead not only to a drop in performance but also to loss of confidence in the employee (and to the employee losing self-confidence). See 'Of stretch roles and designed to fail roles' for details. There could also be a more subtle variation of 'role change'  where the role (that the employee has been handling so far) itself changes - in terms of expectations from the role and the skill-set requirements - and if the employee is unable to respond well to these changes, his/her performance can be adversely affected.   
2. Promotion : It is possible that the last promotion moved the employee to 'his level of incompetence'. This is especially true for the 'sublimated' employees who haven't invested enough in building their skills while climbing the organization ladder. See 'Career development and sublimation' for details. 
3. Manager-related changes: This is essentially because of the 'manager discretion'  involved in performance and potential assessments. A well-designed performance management system that also includes calibration involving the other stakeholders in addition to the manager, can help in reducing this subjectivity in manager judgement. As we have seen in 'Paradox of potential assessment' , potential assessments are inherently more subjective and hence more prone to the variations introduced by manager changes. Also, in spite of all the systems, processes and tools that we have implemented to make people management more 'objective' , the 'Chemistry' between two human beings  (the manager and the employee in this case) continues to be a factor in all these decisions (and it is something that will be impacted when there is a manager change). Of course, one's 'equation' with the current manager can also change  and that can add another layer of variability. Another important 'manager-driven' phenomenon is that of 'great by rotation'. This typically happens in those organizations that insist on a fixed distribution of performance and/or potential ratings and a positively differentiated rating is required for promotions. In such cases, managers might be tempted to inflate the performance/potential of different employees each year so as to make them eligible for promotions. So, employees become great by rotation! Using a well-run calibration process for talent decisions (instead of taking a purely Mathematical Approach of relying on rigid distributions and rules) can avoid these kind of situations. 
4. Leadership changes at CEO/CXO levels: Leaders hired with a transformation agenda might look at tenured employees as part of the problem that they need to solve, and, this can lead to a dramatic change in the way the tenured employees are looked at. This is more common in 'Type N Organizations'. See 'Type N and Type O Organizations' for details. 
5. Employee-specific factors : Employees are human beings and their level of effort/involvement/engagement and hence their level of contribution to the organization can vary based on the factors in their personal life. Yes, a supportive talent management system that focuses on 'managing the whole person' can definitely help. See 'Mass career customization' for a related discussion. 
6. Larger organizational factors: Employees' fortunes depends on the fortune of the organization. While the fortune of the organization affects all the employees, the impact on employees might not be uniform. Some roles and skill-sets might become more critical. If there is a restructuring, some roles might get eliminated. This also brings us to another important aspect. These days. it is very much possible that an employee might not necessarily recover/bounce back from a phase of waning fortunes! Yes, change resilience and change agility definitely helps!
7. Luck!: Being ,at the right place at the right time' has always been a key contributor to employee's fortunes. Though sometimes scenario planning and change agility can help us to be 'at the right place at the right time', it is often a matter of pure chance! Depending on one's belief system/'sense-making process', supernatural explanations are also possible. This brings to mind a famous poem in Malayalam that (while referring to the divine) says something like "It is you who makes someone rich and famous in a matter of days; and it is you who makes a king who is living in a place, a rag-picker"!  

So where do these leave us? Waxing an waning of fortunes of employees (including large fluctuations in fortunes that can qualify as 'Magical Transformation of Talent') are very much possible. It can be because of organization and/or individual related factors; and sometimes, even because of plain luck. An awareness of these factors can help the employees to increase their readiness and to manage their careers better, even if many of the career moves they make turn out to be based on emergent opportunities and risks (and not planned in advance). This is even more important these days keeping in mind the disruptive nature of the changes that many organizations are going through! 

I do wonder whether 'top talent  becomes successful in organizations' or 'we are just calling successful employees top talent'! If it is the latter, then the waxing and waning of employee fortunes can definitely impact the talent classification!

Any comments/ideas? 

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?

To name, or not to name, that is the question...

"Do you think that I should have announced my successor?", asked the Senior HR professional. This was my third 'encounter' with this gentleman (See 'Passion for work and anasakti ' & 'Appropriate metaphors for organizational commitment '  for the outcomes of my previous interactions with him). "Well, it depends on what you were trying to achieve", I replied in a 'consultant-like' manner. Similar to what had happened during my previous encounters with him, this interaction also prompted me to think a bit more deeply about the underlying issues.

In this particular case, the situation was something like this: This gentleman had created a structure in which many of his direct reports were at the same level – handling roles of similar size. This ensured that all of them could hope for moving into his role and hence contributed to their engagement & retention. However, this also ensured that when this gentleman moved on to another role, none of his direct reports were ready to takeover from him & hence his role had to be filled with an external candidate. With their illusions broken (and considering the fact that the situation could repeat a few years later), many of the direct reports started looking for jobs outside the company.

Now, there are multiple levels of issues here. The most basic one is the need for succession planning. There should not be too much controversy here, as most of us are likely to agree that succession planning (especially for critical roles) is a worthwhile endeavor (Whether the Head of HR role qualifies as a ‘critical role’ is an interesting issue – but that is another story/blog post!). The second one is the need for a structured approach to develop people who are in the succession plan so that they become ready for the role within a specified time-frame. Here also there should not be much disagreement when it comes to the validity of the need, though the implementation is easier said than done, as it involves quite a bit of investment/focus to ensure that the requisite capability building takes place within the timelines.  

Things get more complicated when we think about whether or not to tell the people who are in the succession plan that they are part of the succession plan. The problem here is that doing this can create high expectations (and even some sort of ‘entitlement mentality’) among the people in the succession plan and also create disengagement (or even attrition) among people who are not in the succession plan. The latter becomes a significant problem if they are very valuable contributors in their current roles, though they did not make it to the succession plan for the next level role. However, not informing those in the succession plan might defeat the very purpose of succession planning.

The purpose of including an employee in the succession plan for a position is to enable him to develop readiness for the position within an accelerated time-frame. It would work much better if the employee is aware of the purpose for which the development is being undertaken. It definitely helps to tell an employee that he is part of a succession plan, so long as the communication is done in the right manner. This would also avoid the risk of developing an employee towards a position that he is not interested in. Again, this would prevent the unfortunate scenario in which such an employee leaves the organization because he thought that he was not being developed for the next level role! 

However, the communication has to be done in the right manner. The communication should mention that the company sees the potential in him to develop towards the particular position and that the company will provide accelerated learning opportunities to enable him to develop readiness for the same. It has to be made clear that no promise is being made that the employee will be moved to the target position within a specified period of time. It should also be mentioned that there could be multiple people in the succession plan for the position and that the actual move to the position will depend on business requirement, vacancy and his relative readiness as compared to other possible candidates for the position. Stretch and discomfort are inherent in accelerated development. If an employee is aware of and is committed to the purpose behind the development, he will be able in a better position to derive meaning from the stretch experience, to learn faster and even to enjoy the ride!

Let us come back to our Senior HR professional. There are no easy answers to his question. However, let me hazard a guess based on our discussion so far. It  would have been better if he had done the succession planning for his role and told the people in the succession plan that they were being developed for his role. Of course, this would require that the identification of people for the succession plan was done in manner that was rigorous and fair (and also seen to fair!). For example, all his direct reports (at least those who were interested in developing towards  his role) could have been put through a well-designed Assessment Centre (see 'Assessment Centres and Leaps of faith' for details). 

Now, let’s look at the matter of deciding the ideal number of people in the succession plan for a particular position. Announcing only one successor (like the senior HR professional was mentioning) would have been a very risky option. It would have made the organization dependent on only one person and/or it could have made the person in the succession plan a bit complacent. Putting too many people in the succession plan also would have been sub-optimal. It would have made the investment required for developing all these people too high and also reduced the chance for any particular individual to succeed in moving to the target role. Hence the best option would have been to identify  a few (say, 2-3) people who were relatively more ready at that point (say, based on the Assessment Centre results) to be on the succession plan and to tell them they were being developed for his role. This would also allow the others direct reports to either make peace with this situation (as a fair process has been followed to identify the people in the succession plan) or to exit the organization gracefully - at a time of their choice (without any hurry and possibly with a very good offer). Yes, this is not a perfect solution. But, it seems to be the best solution available!.

Do you agree?

Using Assessment Centres for Evaluating Potential – A Leap of Faith?

“She is very bright”, said the first HR Manager. “She is the definition of a tube light - bright on the outside and hollow inside”, said the second HR Manager. Two senior HR professionals, and two very different inferences – about the same employee! I heard this conversation a long time ago. It came back to me recently, when I was thinking about Assessment Centres – the effectiveness of Assessment Centres as a tool to evaluate the ‘potential’ of employees, to be more precise. Usually, comments on 'brightness' of an employee have more to do with the perceived 'potential' of the employee as opposed to his/her performance!

As I had mentioned earlier (See Paradox of Potential Assessment), the basic issue in potential assessment (which sometimes does not get enough attention) is 'potential for what?’ Many answers are possible here. They include

1. Potential to be effective in a particular job/position
2. Potential to be effective in a particular job family
3. Potential to be effective at a particular level (responsibility level)
4. Potential to take up leadership positions in the company
5. Potential to move up the organization ladder/levels very quickly etc.

Logically, the first four answers should lead to the creation of a capability framework that details the requirements (functional and behavioral competencies) to be effective in the job/job family/level/leadership positions that we are talking about. Once this is done, a competency based assessment centre is often used to assess the potential of employees against that framework. This is where the trouble begins (Actually, the problems start earlier than this – with the definition of ‘potential’ and with the creation of capability framework. But that is another story).

Let us begin by looking at a couple of basic issues. An assessment centre is essentially a simulation*. Hence, there are always questions on the extent to which the simulation matches reality (requirements of the job//level). This becomes even more problematic in the case of international assessment centres (for global roles/with participants from different countries) as the cultural differences needs to be factored in when designing the assessment centres and while interpreting/evaluating the behavior/responses of the participants (e.g. what is an effective response/acceptable behavior in one culture might not be so in other cultures).  

Since we need to avoid a situation where the participant was able to give the correct answer/response in the simulation because he/she knew the correct answer/response based on prior experience/knowledge and not because he/she was able to arrive at the correct answer by himself/herself in response to the situation(and hence demonstrating the competency) the simulations often use a context that is different from the immediate job/organization context – while trying to test the same underlying competencies required. This can bring additional complications in ensuring adequate match between simulation and reality. By the way, this is one of the factors (knowledge of the correct answer without knowing how to arrive at the correct answer) that can give to the ‘bright on the outside – hollow inside’ kind of situation mentioned at the beginning of this post. Another factor could be ‘sublimated careers’ (See Career Development & Sublimation).

Each of the tools/exercises in the assessment centre is designed to test a set of competencies. This implies that each of the participants should have sufficient opportunity to fully demonstrate all the relevant behaviors corresponding to all the competencies during the exercise. Assuming that there are 4 competencies (each with 3 relevant behavioral indicators) being tested in the particular exercise, it would mean each participant should have an opportunity to demonstrate 12 behaviors. If the evaluation on the behavior is done using a frequency scale (e.g. always, most of the times, sometimes, rarely etc.) it would imply the need to demonstrate each of the behaviors multiple times during the exercise (e.g. demonstrating the behavior 3 times will get the participant the highest rating) and that would imply a total of 36 behaviors. Of course, if this is a group exercise, this number will get multiplied by the number of participants (e.g. 36*6 = 216 behaviors for a group of 6 participants). This is practically impossible to do in a 45 minutes group exercise! Of course, exercises can be of longer duration and there can be more number of exercises (requiring fewer numbers of competencies/behaviors to be tested per exercise). However, considering the cost and time pressures in most organizations, this becomes difficult. This implies that the very design of the assessment centres might prevent the participants from fully demonstrating their competencies/potential during the centre – leading to artificially lower potential evaluations.

Now, let us come back to problems specific to using assessment centres as a tool to measure potential. Even in a best case scenario, what the assessment centre is measuring is the degree to which the employee/participant demonstrates the behaviors corresponding to requisite competencies during the assessment centre. So, at best it can give a good estimate of the current level of readiness of the employee for a particular role/level. However, this does not really indicate the potential of the employee to take up that role/reach that level in the organization hierarchy in the future. This is because the employee has the opportunity to learn/develop the competencies during the intervening period. Assessment centre can’t give any indication on the extent to which (and the speed at which) the employee will further develop/enhance the competencies.

Assessments centres are based on competency models. As I had mentioned in 'Competency frameworks - An intermediate stage?',  one of the basic assumptions behind developing a competency model is that there is one particular behavioral pattern that would lead to superior results in a particular job(i.e there is 'one best way' to do the job). This might not be a valid assumption, in the case of most of the non-routine jobs. If there are other ways to be effective in the job (say, based on a deep understanding of the context/great relationships with all the stakeholders), it can lead to 'successful on the job  but failed in the assessment centre' kind of scenarios. Of course, it can be argued that such individuals won't be successful if they are moved to a different geography and hence a low rating on their potential coming from the assessment centre is valid. However, it still does not negate the fact that they can be effective in that role/level in that particular context. Yes, this (producing results without possessing the specified competencies) can sometimes resemble the ‘bright on the outside –hollow inside’ kind of situation mentioned earlier. 

Another problem is that the results of the assessment centres are rarely conclusive - in the case of most the participants. What you get as the result of the assessment centre is a score on each of the competencies (say on a 5 point scale). Converting these scores into a ‘Yes or No’ decision on whether the employee has the potential to move into the role/level often involves a many inferential leaps (similar to the ‘leaps of faith’ mentioned in the title of this post). It is easy to string these scores together into some sort of a decision rule/algorithm (e.g.  If a participant has a score of 3 and above on 3 of the 5 competencies, and an average score of 3 overall, the answer is an ‘Yes’ etc.). Of course, we can do tricks like assigning different weights to the individual competencies and specifying minimum scores on some competencies and come up with a decision rule that appears to be very objective (or even profound!) and that gives a clear ‘Yes or No’ decision (on if the participant has the potential or not) . But the design/choice of the algorithm is more of an art than a science and it can be quite subjective and even arbitrary (unless the organization is willing to invest a lot of time and money in full-fledged validation study)!

So what does this mean? To me, assessment centre is a tool; a tool that has certain capabilities and certain limitations. The tool can be improved (if there is sufficient resource investment) to enhance the capabilities and reduce the limitations to some extent. But, some basic limitations will remain. Hence, if one is aware of the limitations and the capabilities, one can make an informed decision on whether it makes business sense to use this tool in particular context – depending on what one is trying to achieve and the organization constraints/boundary conditions. If you push me for being more specific, the best answer that I am capable of at this point is as follows - ‘It is valuable to use assessment centres as one of the inputs if the objective is just to assess the current level of readiness of the employee for a particular role/level. If the objective is to assess the potential of the employee to take up that role/reach that level in the organization hierarchy in the future, assessment centres are of limited value when the intervening time period is long – say anything above 2 years’!!!

*Note: Assessment Centres need not always be pure simulations. Tools like Behavioral Event Interview (BEI) are often used as part of assessment centres. However, it becomes difficult to use BEI in an assessment centre designed to test the employee’s potential for a higher level role. This is because employee might not have had enough opportunities (till that time in his/her career) to handle situations that require the higher order competencies (required for the higher level/role and hence being tested in the assessment centre). Hence she/he will be at a disadvantage when asked (during the BEI) to provide evidence of having handled situations/tasks that require the higher level competencies.

Any comments/suggestions?