By Eugene Burke

As organisations look to drive profitable growth in challenging markets, they increasingly recognise the need for a strong bench of rising talent that evolves with the shifting needs of the business. Our research shows that organisations with stronger leadership gain double the revenue and profit growth compared to companies with weaker leadership. The development of effective leadership from talent programmes therefore has to be an imperative for both public and private organisations.

But how do organisations identify their high-potential (HiPo) individuals? What is the probable ROI of HiPo programmes? And more importantly, will these high flyers stay with the business for years to come?

HiPo: the value and reality

Our research, ‘Improving the Odds of Success for High-Potential Programmes’, shows that HiPo employees are seen as almost twice as valuable to their organisations as employees who are not. That said, 5 in 6 HR managers are dissatisfied with the results these programmes deliver; 50% of individuals drop out of their programme within five years and just 1 in 6 employees entering a HiPo programme succeed in a senior role. The search for future leaders may be happening, but our research clearly shows that many organisations are not going to realise ROI from pursuing historical practice.

Assumptions lead to the wrong investment

There is a simple fact driving these poor outcomes: organisations are failing to identify the right people for HiPo programmes. That error flows from a failure to define exactly what a HiPo employee is and what that HiPo is going to deliver for the organisation. One of the most common errors is assuming that the organisation’s high-performing employees who are performing well today are its HiPo employees for tomorrow. Our research shows that only 1 in 7 high-performers have what it takes to succeed at a more senior role.

Secondly, organisations are continuing to invest in those who do not have the aspiration, ability and engagement to succeed in a senior role. This misidentification is preventing those with the strongest potential from reaching the top, where their talents are critical to the organisation’s future, impacting productivity, innovation and performance.

Changing the odds of success of HiPo programmes

With the C-suite placing increased pressure on the HR department to prove the value of talent investment, using a best-practice framework will allow them to have a deeper understanding of the motivations, qualities and capabilities needed for future leaders.

Despite this, only a third of organisations are using valid assessment methods to identify HiPo talent and almost half lack any systematic process for identifying and developing these candidates.

By using objective data and re-thinking HiPo programmes, the success of these initiatives can be improved by a factor of 11. Organisations need to collect data which indicates whether an employee will rise to a senior position, whether they will be effective when they get there and if they will still be with the organisation when they reach this level.

Doubling up on success

The most apparent value of changing the odds of success for HiPo programmes is clear:  better leaders and managers drive higher returns.  The less obvious loss of value comes when the candidates with low engagement benefit from these programmes and then leave for a rival firm, developing your competitors’ talent pipeline.

Surfacing talent in organisations has to shift from an art to a science if organisations are going to see ROI from these programmes. The choice is simple:  better leaders building stronger organisational performance versus a failure to deliver those leaders resulting in poorer organisational performance.

To know more, download your new eBook: The HR Guide to Identifying High-Potential. This eBook is based on extensive research, which has been used to define new strategies for implementing the high-potential programme you want and need.

Eugene Burke is Chief Scientist and People Intelligence Officer at CEB. He is a regular contributor at scientific and professional events on topics including talent acquisition and development, innovations in assessment, as well as addressing the people issues in driving business outcomes such as customer service and safety.