REFLECTIONS ON “HOW TO ASSESS EXECUTIVE POTENTIAL?”

Dr. Prakash V. Bhide

How do we accurately assess Executive Potential is a question which is challenging many CHRO’s and CEO’s. A 2005 survey, found that world’s largest companies ‘mishired’ people 80 % of the time and mis-promoted people 75% of the time. This is really very costly and serious. A large number of organizations are heavily investing in Talent Management and Succession Management to build a strong leadership pipeline. They use 3x3 matrix of potential and performance but struggle to assess and measure POTENTIAL. However, most of them report that they are not happy with the results. According to Human Capital Institute, 70% of succession plans fail within two years. One of the challenges is ‘Identification of potential’ especially in young executives.

In my earlier blog on ‘Reflections on Executive Talent and Potential’, we have seen in detail about the concept of potential. I would strongly recommend you to read it as a backdrop paper and setting the context to this blog. From Talent Management perspective  “Potential is the latent future capability of an individual to build upon existing strengths, knowledge, experience and improving on major weaknesses, so that they do not become derailers, to perform effectively at higher levels of responsibility within an appropriate environment”. Each organization should define Talent and Potential aligned to its Business Strategy and Industry Context.

We will now explore several ways of assessing ‘Executive Potential’. Corporate Leadership Council (2005) has defined Executive Potential in three dimensions:

1. Aspiration:

Extent to which an employee desires

a.) Advancement & influence

b.) Prestige & recognition in the organization

c.) Financial rewards

d.) Overall job enjoyment

e.) Work – life balance

2. Ability:

A combination of innate characteristics & learned skills that an employee uses to carry out their work. Mental/Cognitive agility, emotional intelligence, technical and functional skills and interpersonal skills.

3. Engagement:

a.) Emotional commitment for the organization

b.) Rational commitment to stay with the organization

c.) Discretionary effort i.e. willingness to go beyond the call of duty.

d.) Intent to stay with the organization.

Corporate Leadership Council believes that all three dimensions need to be present simultaneously for a high potential employee. Infact High Potential is the area of overlap  of the 3 circles of Aspiration, Ability & Engagement. High Potential employees are those with 75% chance of being in the top quartile of performance at the next level, within the first year in the new role. They recommend measuring employee potential through a questionnaire survey (total 64 questions) given to employees & their managers to assess aspiration, engagement & ability of employee.

In ‘Leadership@Infosys’ by Matt Barney, It is reported that two best methods for assessing potential are “Cognitive Ability” & “Work Samples” at entry level. My research on a sample of 640 High Performing employees correlates with this. At more senior levels ‘Follower Perceptions’ are more than two times better at predicting Leader Effectiveness than actual objective measures of intelligence. My experience shows that 90 degree feedback from subordinates is a great predictor of Leadership Potential. At middle and senior levels ‘Learning Orientation’ and ‘Team Playing’ become important. Infosys has developed ‘Computer Adaptive Multi-Source Assessment’ to gauge the likelihood of effective performance and potential. 360 degrees surveys using Rasch Measurement Technique that removes the leniency and severity bias of raters, to make sure that all the ratings are fair, accurate and sufficiently precise. The “Leadership Journey Series”, a 360 degree assessment based on Zaccaro, Kemp and Bader (2004) model of Leadership Predictors (e.g. personality, values, motivation, interests and cognitive ability) as well as processes (e.g. performance)has an impact on Leadership Outcomes. This assessment measures Leadership Performance and Leadership Potential. The potential is measured in terms of  Distal predictors of leadership (e.g. personality, values, etc.) and Goal Orientation (e.g. motivated to learn versus looking good).

Morgan McCall in his book ‘High Fliers’ recommends “LEARNING ABILITY” as an essential and excellent predictor of future potential. Several ‘Thought Leaders’ have recently expanded added dimensions and terms like LEARNING AGILITY, LEARNING ORIENTATION etc. Centre for Creative Leadership in collaboration with Columbia University has come out with a white paper on ‘Learning and Learning Agility’ (April 2012). Their research shows five main facets of ‘Learning Agile’ behaviours of Leaders.

 The 4 ‘ENABLERS’ are:

1. INNOVATING

2. PERFORMING (Remaining calm, present and engaged in the face of difficulty and quickly adapt in order to perform)

3. Reflecting (Hungry for feedback and understand own behaviours and assumption for deep insight of self awareness)

4. Risking (Putting themselves in a challenging situation)

And 1 ‘DERAILER’:

Defending (Defensive in face of adversity and avoiding learning opportunities as they arise)

They found leaders with high learning agility to be:

a.) More Extroverted

b.) More original

c.) Less accommodating

d.) More Focused

e.) More Resilient

Several new assessment instruments are being developed to assess ‘LEARNING ABILITY’. Many of them use 360 degree multirater feedback response on specially designed questionnaires.

Spreitger (1997)has developed a tool POSPECTOR with 14 dimensions on ability to learn from experience. Several authors have also come up with Development Activities for improving Learning Ability.

Ram Charan, in his book “Talent Masters” says that companies like GE, P&G, Hindustan Unilever etc. do not only rely on batteries of mechanistic tests to assess talent & potential. Instead, they study the behavior, actions and decisions of individuals and link them to actual business performance. Their observations are rigorous, specific and nuanced. Over time , as other senior leaders discuss them openly and candidly, the observations become verified as facts. They dig to understand an individual’s unique combination of traits. The purpose is to know what the person is, describe his characteristics in complete thoughts using full sentences (not words) and learn how key items combine in a unified whole. They become “Intimate” with their talent by observing and listening to know the essence of each individual through ‘Depth of Knowledge’ about people, a database in their minds. Accumulation of these observations on job by line managers and experts, produces a complete picture of the whole person which helps in taking high quality decisions about leaders. Talent Masters besides the formal reviews, have important “Social Processes” that can’t be easily seen. Senior leaders spend at least 25% of their time in spotting & developing leaders. At GE and P&G it is close to 40% of time.

Morgan McCall, in his book ‘High Fliers’, has identified eleven dimensions of early identification of global high potential executives. My experience shows that these can be assessed through a BEI dialogue by a trained assessor.

1. Seeks opportunity to learn

2. Acts with integrity

3. Adapts to cultural differences

4. Is committed to make a difference

5. Seeks broad business knowledge

6. Brings best out of people

7. Is insightful – sees things from new angles

8. Has courage to take risks

9. Seeks and uses feedback.

10. Learns from mistakes

11. Open to criticism

Assessment of Potential only through discussions by Boss or Senior leaders many times is biased. If open discussions are based on AC/DC data and recorded observations at work with incidents, then they become powerful.

DDI has developed a “Leadership Blue Print” assessment with four dimensions of attributes of leadership. Leadership Promise, Personal Development Orientation, Mastery of complexity & Balance of values and results.

My experience shows that BEI (Behavioural Event Interview) technique by a trained assessor can adequately assess the ‘Learning Ability/Learning Agility’ of young leaders, which is an excellent indication of future potential. I also recommend that simultaneously ‘Derailers’ should also be assessed periodically. Individual Development Plan for HI POTENTIALS should include activities/action to improve & enhance “Learning Agility” and overcome “Derailers”

I  firmly believe, based on my extensive experience of assessing more than 2000 High Performing young leaders, that a well developed Leadership Competency Model, incorporating future competencies for success (5 to 10 year time frame) and robust Assessment/Development Centre methodology can excellently predict future potential. We in JK Organization have developed an internal norm (Based on data). At least 10 out of 12 Leadership Competencies to have a score of 3.0 & above, on a 1 to 5 scale, and out of which at least 4 competencies to have a score of 3.5 & above to be rated at ‘A ’potential. Yes, the AC/DC is rather a costly process and takes more time. I feel the investment is worth it as it has a high ROI. As per me it is a small investment for assessing and identifying future leaders more accurately with high probability of success.

Ultimately, the success of assessing potential, talent management and leadership development, is evaluated by CEO’s with respect to meeting the objectives e.g. Succession Management, Developing Strong Leadership Pipeline etc. Hence, identifying High Potentials, is the first step in the Leadership Development Journey. The grooming, nurturing of these High Potentials (or assessment of potential during hiring at senior levels and their induction) is equally important. The ingredients of the ‘CAKE MIX’ is important, but so is the Love, Tender Loving Care and Expertise to ‘Bake ‘it by passing (the HI POTS) through ‘Fire of Experience’ so that it is neither half baked nor gets burnt, but really comes out “Well Baked” with all the aroma of success.

We will explore the Best Methods of Talent Management and Leadership Development in our future blogs.