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?

Paradox of 'potential assessment'

Most organizations have some sort a process for assessing the 'potential' of its employees. This is very much required as the 'fallacy of promoting an employee to a new job based on high performance in the current job' is well known. There won't be many HR professionals (or even business managers) who haven't heard about the 'tragic story' of the 'star salesman who was promoted to the sales manager position and failed miserably'. So the business case for 'potential appraisal' is quite strong.

The problem begins when one asks questions like

a. How exactly should organizations go about assessing potential?

b. Can potential assessment be done (within the organizational constraints) in a reasonably valid manner?

c. If there are serious doubts regarding the validity of potential appraisal in a particular organization context, is it worth the trouble and effort to put in place a potential appraisal process in that organization?

There are different points of view when it comes to the answers to these questions and that is what makes potential assessment paradoxical. A paradox occurs when there are multiple perspectives/opinions (doxa) that exist alongside (para)- each of which is true - but they appear to contradict/to be in conflict with one another.

The common methods used for 'potential appraisal' include managerial judgment, 360 degree appraisal, psychometric testing, assessment centres etc. Sometimes, a combination of these methods are also used. In most cases the choice of method(s) is driven mainly by the amount of time and resources that the organization is willing to invest in the process and the 'cultural readiness' of the organization. Sometimes the choice could also be driven by things like 'casual benchmarking', latest seminar attended by the HR Head, pet methodology of the consulting firm hired etc.

I feel that 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 position
2. potential to be effective in a particular job family
3. potential to be effective at a particular level
4. potential to take up leadership positions in the company
5. potential to move up the organization ladder/levels in an accelerated timeframe etc.

Logically, the first four answers should lead to the creation of a capability framework that details the requirements to be effective in the job/job family/level/leadership positions that we are taking about. Similarly, the fifth answer should lead to identification of attributes/capabilities that enable an employee to quickly climb up the organization ladder.

It is interesting to note that since these capability requirements can be different for different organizations a person who is rated as 'high potential' in one organization might not necessarily be rated so in another organization (and vice versa) - even if we rule out any errors in measurement. However, the capability frameworks (especially the 'behavioral competency frameworks') tend to be quite similar across organizations (for a variety of reasons including the generic nature of the frameworks, attempt to include all possible 'good' behaviors in the framework, casual benchmarking of competency frameworks, hiring the same consultant to develop the framework etc.). Hence, assuming reasonable consistency of measurement, the potential ratings for the same person might not vary too much across organizations - unless the underlying definitions of potential (i.e. answer to the question - 'potential for what?' mentioned above) are different across the organizations.

The potential assessment has to be done with respect to the requisite capabilities mentioned above. Depending on the nature of the particular capability, the method for assessing it can be chosen keeping in mind the organization constraints/context specific factors. In many cases the employees might not have had an opportunity to demonstrate the requisite capabilities (for the future/target job) in their current/previous jobs. This would call for some sort of simulation, similar to those used in assessment centres. For some aspects of particular capabilities that are close to work styles/ personality attributes some sort of psychometric testing could also be useful. Psychometric testing also becomes useful if the fit between ‘certain dimensions of the organization culture and the employee’s personality’ gets identified as a key factor for potential. Managerial judgment (especially if it is calibrated through an in-depth discussion by a group of managers who have had significant amount work related interaction with the employee) and 360 degree feedback are useful to supplement the data from assessment centres/from other assessment tools - particularly from a data interpretation/'reality testing' point of view.

In the choice of methods/process, it is very important to strike the right balance between accuracy of the assessment (from a validity point of view) and the time/resource investment required (from a sustainability point of view). Some capabilities are easier to develop through training/experience in a short period of time while it is not the case for some other capabilities. So if the time/resource constraints do not allow the potential assessment to cover all the capabilities, the capabilities that are difficult to develop through training/experience in a short period of time should get priority. Of course, we need to look at the relative importance of various capabilities for enabling effectiveness on the job. Thus, to achieve a reasonable amount of validity, 'potential assessment' requires a significant amount effort and if the organization is not willing to use anything other than 'judgment of the immediate manager' for assessing potential, the usefulness of the assessment becomes doubtful.

This brings us to the issue of how would the organization use the results of the potential assessment. Most common practice is to combine the potential assessment with the performance assessment in order to arrive at some sort of 'talent classification' that segments the employees into various categories and to define particular courses of action for each category (e.g. promote, invest, retain, develop, move out etc.). It has to be kept in mind that even if the performance assessment has been done in an objective manner, if the validity of the potential assessment is doubtful, the talent classification and the consequent actions become debatable.

There are also other interesting dimensions here such as whether the organization would disclose the results of the potential assessment and talent classification to the employee in question. Not disclosing this could create issues related to transparency and even those related to data privacy/data protection. Disclosing the information might lead to a situation where the employee questions the results/methods, forcing the manager/organization to explain how exactly were the results arrived at and also the steps taken to ensure the validity of the process/ results.

There is also the issue of employees who were assessed to be 'low potential' feeling discouraged/demotivated. Sometimes, these negative reactions are even worse than those to a 'low' rating on performance. In many organizations, the results of potential assessment for a particular employee tend to remain the same across years (especially for assessment of 'leadership potential'). Thus once employees get a 'low rating' on potential, they might feel that they will never get an opportunity to take up leadership positions. Many employees also feel that they have a better chance of influencing their performance rating as compared to influencing their potential rating, especially when the potential appraisal process is not very transparent.

I have also come across situations where the potential assessment has been misused. Sometimes potential assessment is positioned/communicated to the employees as 'purely for capability development' though the potential ratings get used for making key decisions that impact the employee's career advancement. Of course, there could be much worse scenarios. Many years ago, when I was doing a diagnostic study of the HR systems of a company, I was told that though the performance planning and review system of the company provides an option to the employees to disagree with the manager on the performance rating, no one exercises that option. When I tried to investigate the reason for this, I found that the process provides for a 'potential rating' in addition to the performance rating and that the 'potential rating' is not even shared with the employee. It was common practice among the managers in that company to give a 'low' rating on potential for any employee who disagrees with manager on the performance rating. Since a 'low' rating on potential would have ruined the career of an employee in that company, no one wanted to take the risk of disagreeing with the manager on the performance rating. I hope that this scenario is a rare one. However, the point is that potential assessment can be misused and this could have serious adverse effects on employee engagement and retention.

Thus, the organization needs to think through the entire gamut of issues related to potential assessment in its context (objective, methodology/process, validity, initial investment/effort required to put the process in place, time/effort required for each cycle, sustainability, use of the results, employee communication, cost benefit analysis etc.) before a potential appraisal system is put in place. While perfect solutions may not be feasible/required, it does require thinking though multiple scenarios, options and implications and making informed decisions/trade offs. This would enable the organization to maximize the implementation effectiveness and to minimize/mange the possible adverse side effects of implementation. This is the requirement for being able to give a positive answer to the question that we started off with (Is it worth the trouble and effort to put in place a potential appraisal process in the organization?)!!!