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? 

Unorthodox concepts in HR : Part 10 – Exporting your problems

In this post, we will continue our exploration of Unorthodox concepts in Human Resources/People Management. We are 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' and ‘The plus one problem’ for the previous posts in this series).

'Exporting the problems' is one of the most common ‘crimes’ in the domain of Talent Management. This refers to attempts by people managers to move the 'low-performing' and/or 'difficult to manage' members in their team to other teams in the organization. Since no people manager would want to accept a low performer into his/her team, this ‘crime’ often involves some degree of ‘deception’. This could include tactics like not giving an accurate picture of the performance of the employee (e.g. if the performance ratings are yet to be assigned) or even artificially inflating the performance rating of a poor-performing employee so that he/she comes into the ‘good performance’ category for the next one year.

An effective way to prevent this ‘crime’ (apart from calibrating performance ratings to ensure accuracy and/or having the process of the new manager thoroughly evaluating the employee before accepting the transfer) is to stipulate that unless the performance of an employee is good, he/she won’t be eligible for any role changes. This would encourage the managers to focus on helping the employee to improve his/her performance before recommending any transfer to other teams, and if the performance improvement efforts fail, to initiate the exit process for that employee. An exception to this rule can be made in the case of employees who were very good performers in their previous roles in the organization. In those cases, the current low-performance is likely to be a ‘person-role’ fit issue and they can be moved to roles similar to their previous role if possible.

An extreme form of ‘exporting the problems’ involves recommending an employee for a promotion with the condition that he/she should be moved to other teams. The rationale given by the manager could include things like the next level jobs in the current team being too complex, the concerns existing team members would have if their peer becomes their manager etc. Here also, the solution could be to specify that unless the manager is willing to move the employee into a next level role within the his/her team (if and when such an opportunity comes up) the manager can’t recommend a promotion for that employee.
   

There is another interesting (but very unfortunate) possible fallout these attempts by managers to 'export their problems'. Over a period of time, managers in the organization lose trust in the recommendations of other managers when it comes to talent moves. This makes it difficult for managers to export low-performers. Since many of the managers might not want to let go of their best performers (some sort of ‘talent hugging’ behavior) and since they can’t export the low performers any more, they tend to recommend the average performers in their team as an when new opportunities come up. This can create a situation where the best talent loses out on career opportunities and the average talent gets those opportunities. This can lead to the average talent progressing faster from career development point of view (as compared to the best talent), and this in turn can lead to the exit of the best talent from the organization. So, mediocrity triumphs!  

An effective talent management system that ensures accurate visibility of the performance of employees to the key stakeholders beyond the immediate manager is the first step in preventing the kind of problems mentioned above. Of course, clearly articulating the talent philosophy, building people manager capability and having the right performance measures for people managers would be of immense help. Ideally, the talent moves should be based on detailed talent management calibration discussions (involving the other key stakeholders also, in addition to the manager) that matches the employee aspirations, strengths, performance and potential with the emerging requirements of the organization (and also provides structured feedback to the employees)! 

It is a bit funny to hear people managers speaking about their willingness (or lack of it) to 'release' talent from their team. The term 'release' is more appropriate in situations like  releasing someone from a prison or from a lunatic asylum. Yes, managers need to get the work done and they need good quality talent to accomplish that. So the people management system should ensure timely availability of high quality talent (leveraging strategic workforce planning and outcomes of talent management calibration discussions) to replace the high-performers who are moving to other teams. However, speaking about 'releasing talent' might be an indication that people managers have 'inappropriate mental models' about talent and talent mobility! 

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?

A Perfect Set of Delusions in Talent Management!

Talent Management is a domain that is becoming increasingly maddening for HR professionals and Business Leaders. The career paths that we create for employees with so much love and effort become are seldom followed (See Career planning and the myth of Sisyphus). Skillsets and roles that we have invested so heavily in become redundant. Increasingly fewer number of employees look at their current organization as a career destination (See Crazy HR for crazy times). Frequent changes in strategy, reorganizations and rapid scaling up & downsizing in workforce are making talent management resemble the game of ‘Calvinball’ where you make the rules up as you go along!

When the reality doesn’t suit us we are tempted to use the bricks of delusions to create a world that affirms what we would like to believe (See HR professionals and Multiple Personality Disorder and Of Reasons, Rationalizations & Collective Delusions for more). In this post let's look at some of the fundamental delusions (assumptions) in talent management practice and also explore some of the possibilities to overcome those delusions.


Delusion 1: Talent can be managed

Most of our talent management practices indicate the underlying assumption that talent can be managed in the same manner as any other resource. The problem is that talent comes with problematic parts like head and heart (and probably, soul) in addition to hands and legs. Also, talent, at least good talent, manages the organization as much as the organization manages the talent. It is a curious feature of human nature that we are more keen to manage than to be managed. Thus, the traditional ‘plan – implement – review - control’ approach to management doesn’t work very well when it comes to talent management (See 'The power of carrot and stick' for a related discussion).
A more appropriate approach to management would be ‘understand-predict-engage-facilitate’ when it comes to talent management. This requires developing deeper understanding of the human nature and human behavior in the workplace context, of the evolving employee preferences and of the enabling structures and choice architectures that can ‘attract’ employee behavior to desirable patterns. This would help talent mangers designing initiatives like ‘mass career customization’ that enable talent to manage themselves facilitated by a clearly defined set of options and implications of those options.

Delusion 2: Talent management is an annual event


In many organizations, talent management is an annual ritual that focuses on creating career & development plans for the employees and succession plans for critical positions. After this we go through the rest of year believing that our work or at least most of it has been done. The trouble here is that these plans crash-land into everyday business reality with very limited survival rate.  

In a rapidly changing business and people context, the progress against these plans should be monitored periodically and changes to the plans should be made where required. The best practice is to have at least one formal review every quarter. This need not be an elaborate and time-consuming affair. All that is required is to do a quick check on two things: whether the action points (role changes, development actions etc.) that were scheduled for the intervening period are on track and whether there are any significant changes to the business or people.


Delusion 3: Talent management can be done in a standalone manner

Often, we tend to look at talent management as a standalone HR process. There are two basic problems with this. First, talent management is not an HR only process. Second, talent management can’t exist in a vacuum.
To be effective, talent management has to be integrated with the business planning and workforce planning processes, with the talent implications of the business strategy being the starting point for talent management. The best practice is to begin talent review meetings with a structured discussion on the immediate and long term talent implications of the business strategy and plan, the talent gaps and challenges based on the same and the talent action plan to remedy the gaps. All discussions about talent movements and talent development should be done keeping this as the base.  Another important aspect here is to closely integrate talent management to the Learning & Development and Performance Management processes.   

Delusion 4: Talent management is all about managing high-potentials 


In many organizations, almost the entire focus of talent management is on identifying and developing high-potential employees. It is true that high-potential employees can create a much higher business impact, as compared to average talent, especially when there in critical roles. However, we would be deluding ourselves if we think that the organization runs on only high-potentials.

High-potentials form only a small percentage of the overall employee population. Achieving adequate levels of validity and reliability for the high-potential identification process has been one of the perennial problems in talent management (See 'Paradox of potential assessment' and 'Using Assessment Centres for evaluating potential - A leap of faith?' for more details )and this makes an exclusive focus on those high-potentials a very risky approach. Yes, there would be some talent that needs to be managed out of the organization. For the all the other talent in the organization, talent management should offer a compelling value proposition. Yes, segmenting this population and customizing the value proposition for each of the segments is a best practice. One such segment, apart from high-potentials, that merit extra focus and investment is high-performers in critical roles.

Delusion 5: Talent can read the mind of the organization

It has often been observed that an employee realizes how valuable she was to the organization and what great plans the organization had prepared for her only after she submits his resignation. This brings us to our next delusion – that talent can read the mind of the organization, especially when it comes to good things(like being in the succession plan for a more senior role). Ironically, employees often have a more accurate idea on the possible risks for them in the organization than the possible opportunities for them in the organization!
The best practice here is not to communicate labels or titles, like high-potential or top talent, to the employees. It is to communicate how the organization looks at the employee at this point and the actions that the organization intends to take subject to the employee keeping his side of the bargain, like maintaining a certain performance level and consistently exhibiting a defined set of behaviors.  Of course, the organization should not make promises that it won’t be able to keep (See 'To name or not to name that is the question' for more details).

Delusion 6: On the job development would happen automatically 

This is a very convenient collective delusion for talent managers! The script is something like this: The organization adopts the best practices of the 70:20:10 approach to employee development which correctly assumes that less than 10% of the learning takes place through formal training ad that most of the learning takes place through on-the-job- experiences (70%) and through coaching and interactions (20%).  This finding can be used as an excuse for 'cutting training budgets’ and for ‘absolving HR managers of their responsibility in talent development’ without establishing any concrete mechanism for facilitating the learning through job experiences and interactions'.

Unfortunately, learning through job experiences and interactions does not happen automatically as it requires deliberate planning, practice and facilitating in-depth reflection to derive learning from the experience. Thus there is a need to put in place a mechanism to structure, facilitate and track this type of learning. For example, 'the way a job is structured' is a critical factor in deriving learning through on-the-job experience. This calls for an intervention at the job design level to ensure that the jobs have sufficient responsibility, authority and scope. 'Job rotation' and 'special projects' also offer high learning potential. This would require that the organization puts in place policies that encourage job rotation and assigning people systematically to special projects. Experience maps can be designed to highlight the most important experiences to develop towards a particular role. Manager capability building is essential to enable them to help the employees to plan & execute the developmental experiences and to derive more learning from the experiences through coaching.


Delusion 7: Talent Management is only about long -term employees

Often, we assume that the talent management should focus only on those employees who are likely to stay on for a long time in the organization. This has become a delusion in an environment where the average tenure of the employees in a particular organization are reducing and when the employees who stay on for a long time are often not the best talent.
So what makes more sense is to assume that the organization would be handling only a limited (often very limited) part of the career in the case of most of the employees and to design talent management strategies & processes that would enable the employees to contribute within that limited time. Of course, making a focused attempt to increase the time that certain segments of the employees (e.g. high-potentials and high-performers in critical roles) spend in the organization is definitely worthwhile.

So why do we say that these seven are a perfect set of delusions? Let me just say that the number 7 is considered to be a perfect number in many cultures and some even associate mystical qualities to it. While this could also qualify as an assumption (delusion!), overcoming the seven delusions discussed above do give us a good starting point in taking a fresh look at what we do in the domain of talent management. While perfect solutions don’t exist, by being more aware of our delusions and the approaches to overcome them, we can definitely be more effective in our craft and also be saner and happier!

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?)!!!