16. High-Potential Employees – Human Resource Management: Text and Cases



Chapter Objectives

  • To understand the characteristics of a high-potential employee.
  • To design a development programme for a high-potential employee.
  • To understand what the engagement drivers of a high-potential employee are.
  • To design retention programmes to engage high-potential employees.

Opening Case

Krishna Menon, Head, Human Resources, ABC Finances Ltd. sat staring into his tea cup as if waiting to see if some solution would emerge in the tea leaves settled at the bottom of the cup. ABC was a fast-growing non-banking financial services company (NBFC) and among a host of other businesses ABC was into, it primarily engaged in the business of loans and advances. It was a late starter in the business; however, due to its well-crafted strategy and the leadership of Anupam Das, Chief Executive Officer (CEO), it had broken grounds where the bigger players could not and had thus made a niche for itself.

At the beginning of the year, Das had shared his ambitious plans for ABC. He confided in Menon: ‘The total funds requirement for the road transport sector in India has been increasing over the years. Demand for new trucks has accelerated due to the increased movement of goods (thanks to a booming economy) and the heavy infrastructure spending by the government. Plus, due to recent judgements, trucks that are more than 15 years old have to be phased out. This translates into an additional demand for funds. We have traditionally been very strong in the commercial vehicle financing business and I see this as a clear opportunity to make inroads into the truck financing market.’ After a lengthy discussion with him, Menon suggested infusion of young talent into the company to take care of this sudden growth in the business. His argument was that the organization was being currently driven by the leadership team while the others were just operational hands and that this situation was not a sustainable one. He was of the view that the company now needed younger versions of the senior management team. ‘Menon’, said Das putting his arm around him ‘You do what you want—all I want is to build capability so that we can achieve what I dream of—I trust you!’ Krishnan had entrusted him to take care of the entire people side of the business. And why should he not have the confidence in him? Menon had been the first to have believed in his dreams when they along with three others had decided to quit their plum jobs in a multinational bank to follow their dreams. He had put in his heart and wisdom to bring the best people into the business and had managed to get the best out of the best to cater to the ambitious requirements of the business.

‘But this is not what I knew I would have to be up against!’ he muttered to himself as he pulled Aparna Sharma's file to go through it for the umpteenth time. Aparna was one of the five Management Trainees who had been hired from one of the most prestigious business schools of the country. All management trainees were supposed to go through a one-year induction process across all business divisions and various locations of the company after which they would be placed depending on their aptitude and performance during the probationary period; they would get confirmed to the position of an assistant manager.

After going through a couple of divisions, she was posted to Lucknow to learn the ropes of the auto financing business. The Branch Head of Lucknow was an experienced hand and a bit apprehensive about how she would do in the male-dominated truck financing business. But Aparna was not an ordinary girl; she was very hard-working and went up the curve in a very short time. As providence would have it, another multinational company (MNC) opened shop in Lucknow and made Mehta an offer too difficult to refuse. His resignation came as a rude shock and no amount of counselling made him reverse his decision. Once the company had made peace with Mehta's exit, the next question was, ‘Who would take over?’ As soon as she heard about the resignation, Aparna was quick to speak to the Head of the auto financing business, Rohit, assuring him that she would take charge in the interim until they find a replacement. She was intelligent, hard working, had great attitude and definitely knew how to work around people twice her age, without making them feeling offended. In a few months, beyond anyone's expectation she had built a robust network of connections with the UP transport association officials, transporters, garage owners, in fact, all who mattered in the vehicle financing world. The Lucknow branch never actually missed having a branch manager.

Two months into this redefined role, Aparna mentioned to her Business Head about being ready to take on the job of the branch manager. The business head Rohit mentioned this to Menon in an informal talk and Menon had laughed it off thinking that it was too preposterous to be considered too. Meanwhile, human resources had made an offer and the new Lucknow branch head was slated to join in a week now.

Aparna had called on him in the morning to discuss this.



Where am I lacking that you are not sure that I can do this job? Have I not done well?


Yes, you have but then you need more experience to lead a branch!


You need experience or competence? Or do you think both are same … then it is no point having the conversation.


Of course, it is competence! But, I need not tell you that these things need to be looked at in a systemic manner. Policies have been laid out, every 12 months there is an appraisal—we can't just promote you on an ad hoc basis. Plus there are four other trainees, that they are any lesser is not true, they have not got an opportunity till now which is not their fault.


I can see this going nowhere. I just wanted to tell you that there are others who are confident that I would be able to deliver—I have an offer in hand for Branch Head, from Mehta who is the Northern region head for PQR Financial services. Please let me know how you want to take this forward. I do not have time to discuss—I have the PQR offer and I have told Mehta that I will let them know of my decision latest by tomorrow.


He replayed the conversation repeatedly in his head wondering ‘Did I go wrong in the way I handled her?’ Menon realized that the times have changed and now speed is of essence and the legendary corporate ladder has given way to the elevators and the escalators. The younger generation did not know what waiting was—even in their more relaxed moments they seem to be saying ‘God, give me patience, but, make it fast.’


  1. What is the problem?

  2. Should Menon promote Aparna to the branch head position?

Employees who prove competent in the tasks assigned to them get promoted, until they reach positions where they are no longer competent—and they tend to stay there.


Laurence J. Peter, ‘The Peter Principle

It is a common joke in corporate corridors ‘Mr X has reached or risen to his level of Incompetence’. Ask senior leaders and they would reluctantly agree with the statement. What then could be a way out? Essentially what it means is that leadership development cannot be left to the organic method of growth like promotion based on current performance. Something different has to be done for building a credible and able leadership pipeline. Is talent management the answer? Talent management represents an organization's efforts to attract, develop and retain skilled and valuable employees. Its goal is to have people with the capabilities and commitment needed for current and future organizational success. These employees may be valuable because of their area of specialization, their possession of a rare skill, their superior performance and similarly a host of other reasons. The point here is that all these valuable employees may or may not be essentially what we may call high potential. This is the reason why a robust Talent Management System should have an embedded management process for high-potential employees too.


High potentials are those individuals within the organization who are recognized, at that point in time, as the organization's likely future leaders. However, after this simplistic definition, there have been many definitions of a high-potential employee. One of those frequently used is ‘High-potentials are those demonstrating high-level contributions, organizational values, potential to move up to an identified position within a given timeframe, and potential to assume greater responsibility.’


A high-potential employee is someone with the ability, engagement and aspiration to rise and succeed to more senior, critical positions.

However, let us use the model given by Corporate Leadership Council to understand ‘who is a high-potential employee?’ According to this model (Figure 16.1), ability, aspiration and engagement are the components of a high-potential employee. Ability is the combination of the innate characteristics such as mental/cognitive agility, emotional intelligence and learned skills such as technical/functional skills and interpersonal skills that employees use to carry out their day-to-day work. Aspiration refers to the extent to which an employee wants or desires the recognition in the organization and advancement in the organization, financial rewards and work–life balance. The Engagement Model in Chapter 10 outlines the following four elements which lead an employee to perform in an organization.

  1. Emotional Commitment: The extent to which employees value, enjoy and believe in their organizations.
  2. Rational Commitment: The extent to which employees believe that staying with their organizations is in their self-interest.
  3. Discretionary Effort: It is the employees’ willingness to go ‘above and beyond’ the call of duty.
  4. Intent to Stay: The employees’ desire to stay with the organization.


Figure 16.1 Corporate Leadership Council's model


Thus, a high-potential employee is someone with the ability, engagement and aspiration to rise to, and succeed in senior and critical positions.


High potentials fall in any one of the following two distinct categories:

  1. Late-stage high potentials: They include the experienced and high-performing managers ready to make their way into the executive ranks. These senior managers are among the top 10 per cent of the organization, and they are prepared for the senior executive roles within the organization.
  2. Early-stage high potentials: They are different. They are either budding managers or individual contributors who are identified more for their talent and drive than their performance track record.

Top-performing organizations in these days recognize that the earlier potential talent is identified and put into the pipeline and very soon the entire organization reaps the rewards of a more productive and effective leadership. Hence, the focus these days is largely on the early-stage high potentials.


Characteristics of high-potential employees

  • A drive to excel
  • A catalytic learning capability
  • An enterprising spirit
  • Dynamic sensors

In a study by Pepermans and others, it has been stated that high-potential employees were a ‘specific category within the group of employees, with different needs, motivations and behaviors than “regular” employees’. Harvard Business Review in its article titled ‘Are you High Potential?’ (Ready, Conger and Hill 2010) says that high-potentials always deliver strong results, master new types of expertise and recognize that behaviour counts. However, it is their intangible X factors that truly distinguish them from the pack. They defined the factors as:

  • X Factor #1: A drive to excel.
  • X Factor #2: A catalytic learning capability.
  • X Factor #3: An enterprising spirit.
  • X Factor #4: Dynamic sensors.

16.3.1 A Drive to Excel

High potentials are not just excellent performers and high achievers. They maintain a high level of competence in technical or functional discipline and consistently produce tangible and measurable results way above expectations. They show an innate desire to go beyond the mere call of duty. They are driven to succeed. They are dissatisfied with incremental progress and the status quo. They continually search for new ideas and different approaches of seeing things. This insatiable thirst to excel tends to make them learn and grow faster than their peers. It is not unusual to find them seizing opportunities to take ‘stretch’ assignments that tax their abilities precisely, because they are stimulated by the challenge and the opportunity to increase their knowledge base about the business, people and the external world.

16.3.2 A Catalytic Learning Capability

They master new assignments quickly and effectively, learning more rapidly than their peers. They have a passionate quest to learn and grow continually. They are not ordinary quick learners, but they have a ‘catalytic learning capability’ which means that they constantly search for more information, develop a conceptual ability to rise above the details, see a broader context than their peers, and apply this learning to business situations at hand. This helps them grow phenomenal breadth and scope of thinking that characterizes successful leaders of big companies.

16.3.3 An Enterprising Spirit

The combination of the drive to excel and catalytic learning capability gives an enterprising spirit to high potentials. This makes them search for productive ways to blaze new paths. They take on the challenges of leaving their career comfort zones periodically in order to advance. Therefore, it might mean a risky move—a tricky international assignment, for instance, or a cross-unit shift that demands an entirely new set of skills; they find that the advantages, excitement and opportunity far outweigh the risks.

16.3.4 Dynamic Sensors

Being driven to excel and having an enterprising spirit, combined with the urge to find new approaches, could actually become a recipe for career disaster. High potentials not only have the judgement but ‘dynamic sensors’, which help them skirt the risks. These sensors can be attributed to their self-awareness and emotional maturity that enables them to acknowledge honestly to themselves their own strengths and weaknesses. Coupled with this, they also develop a gut that gives them a feel of timing, and an ability to quickly read situations.


Organizations have standard processes for the identification of high-potential talents. These can be formal, structured processes with carefully defined steps and their outcomes or they can be a semiformal, or even informal. Earlier, identification of high-potentials was a part of the succession planning initiative. However, recently there has been a shift from the traditional succession planning replacement approach to a more comprehensive set of long-term assessment and development practices that support a pipeline of talent.

Much has been said and written about the fact that only performance does not ensure potential. Therefore, identifying the ‘HiPO glow’ that companies desperately seek in their people is more complex than understanding who the current top performers are. Since performance trends are the only tactical and measurable evidence available, many organizations lean on them heavily to drive transparency in the system rather than depending on anecdotal evidence about an employee's potential. However, this can be at the cost of quality of identification of high-potential talents.

The identification and development of high potential is always towards meeting a future requirement. It is, therefore, increasingly important for organizations to build the competence to first define what potential means to the organization and then have a method in place to classify employees based on their potential to succeed at higher levels or in critical roles within the organization.


  • Buddy approach
  • Tenure approach
  • Manager appraisal approach
  • Decision-makers consensus approach
  • Criteria-based approach

There is a wide range of assessment approaches that organizations employ to identify high-potential talents. These approaches are listed in order of increasing level of sophistication:

  • buddy approach
  • tenure approach
  • manager appraisal approach
  • decision-makers consensus approach
  • criteria-based approach

16.4.1 Buddy Approach

This is an informal approach characterized by people with decision-making authority identifying their ‘buddies’ as high potential. The comments used by decision makers that characterize this approach are, ‘When the crisis caught us by surprise, Sanjay did a good job of not only managing it but actually leveraging it to our benefit. We should plan on promoting him’ or ‘I like Jeevan, let's give him the job when it's available.’ Such an approach works in a small organization, but in a larger one it can become a reason for lot of impression management and politicking.

16.4.2 Tenure Approach

In this approach the assumption is that the employee, due to longevity with the company, must have acquired the appropriate knowledge, skill and ability to be successful in a more critical role. Another way to look at it is that the employee has given the best years to the organization, so, now its payback time. Therefore, in this approach the employees who have been with the company for a long time are identified and promoted to key positions.

16.4.3 Manager Appraisal Approach

This approach relies on the judgement of the manager to predict or to assess subordinates as high potentials and recommend them for the appropriate development programme. This would mean that a lot would depend on the interpretation of potential as understood by the manager and can raise a lot of questions around it.

16.4.4 Decision–makers Consensus Approach

Many organizations rely on the combined judgement of its senior management team to discuss employee suitability for promotion or special development. The fact that it is a group effort and a consensus driven one generates a lot of constructive discussion which definitely enhance the quality of the identification process. Although better than the previous approaches, there is usually little in the way of criteria to help articulate what is meant by potential. This can result in unproductive or inaccurate decisions.


16.4.5 Criteria-based Approach

This is a more scientific approach to the process of identification of high potential. Here the organization or the decision makers are required to articulate how a high-potential employee would behave. They are then required to define criteria for identifying these behaviours. These criteria then become the basis for the identification of high potential. Typically, assessment tools are used to help measure the criteria. The examples of such tools are multi-rater feedback (360-degree) and assessment centres. Now various leadership development consultancies and product development companies offer tools and processes to aid in the identification and assessment of high-potential employees.

HRM in Action

Tata Group

The Tata Group as we know is a large conglomerate of companies. What is distinctive about it is the leadership infrastructure that it has created with a common leadership thread running through and across different Tata enterprises. So how does the group nurture such high-potentials.

The group believes in picking up high-potential employees and grooming them into future leaders. JRD Tata conceived of TAS—the Tata Administrative Services—to select and groom some of the best young Indians, provide them opportunities for professional growth, and use that pool of talent as a group resource, one that could be tapped by companies across the Tata organization. TAS is an intensive 12-month training programme which recruits and prepares for lifelong mobility, across companies, industries and functions. This imparts perspective to young business managers which is so critical for leadership positions.

Besides TAS the group has adopted processes to identify high potentials from inside the firm who could be groomed for future leadership positions. The group looks at (a) leadership of results, (b) leadership of business and (c) leadership of people to assess employees to ascertain who could be a high potential. They used a tool called ‘People Planning Meeting’ (PPM), to ascertain these three qualities. Since 1997 this exercise has covered 14 Tata companies and 307 managers and recommended 156 cross-company moves. This process thus facilitates the preparation of a ready list of employees who could be developed. Another important aspect of this leadership development programme is the involvement of the Group Corporate Centre (GCC). This group constitutes of the senior leaders of the organization such as the vice-chairman or a board member and they play the role of coaches and mentors for this group of identified high-potentials.


Source: Adapted from ‘The Pipeline Is in Place’ by Satish Pradhan, Chief, Group Human Resources, Tata Sons accessed at http://www.tata.com/careers/articles/inside.aspx?artid=qVn7/Vz98rU= and TAS at http://www.tata.com/article.aspx?artid=teU3Hb/7cYo, accessed on 29 July 2011.


You might spend hours creating a list of 100 high potentials but if you don't develop them through key job assignments, leadership training exercises or by pairing them with mentors, its just a list of names.


James Kauffman, Senior Consultant DDI

When planning and implementing an integrated programme on high-potential development, there are many factors that ought to be considered. The most critical step which is also the first is often overlooked. The organization needs to be crystal clear about what it wants to achieve for itself as well as the high potentials with the development programme.

16.5.1 Critical Success Factors of a Development Programme

An experience or an intervention can be termed as developmental only if it has three critical characteristics. These characteristics help in both planning and motivation during the design of the development programme.


  • Assessment
  • Challenge
  • Support


This is an activity that measures an individual's performance against certain preset benchmarks. Needless to say what is measured improves, hence its importance. The measurement can be formal like a 360-degree review or informal assessment in the form of casual conversations for which feedback is given. For obvious reasons, it is difficult to aggregate informal data and draw concrete conclusions; hence formal structured assessment is always more favourable than unstructured informal data. Assessments can be used to select and develop the strategies for improvement. For example if individuals struggle with managing conflict in a team, a formal assessment would diagnose the root cause of the problem, i.e., are the individuals incapable of empathizing with others? or are they incapable of finding compromise solutions? The assessment is also of increased importance for high potentials because more often than not it is likely that they get positive feedback for their work and they lose out on precious feedback on their developmental areas. The continuous formal assessment supports development by allowing individuals to measure their progress against defined benchmarks or personal goals.


In order to learn new skills it is very important to challenge high potentials out of their comfort zone. If they are allowed to stay in their comfort zones they will apply the same strategies which have served them well in the past and thus lose out an opportunity to experiment new approaches. What constitutes a challenging situation will vary from person to person; however, three important sources of challenge are:

  1. Novelty: Novel situations prove to a person the futility of using time-tested strategies in all kinds of situations and pushes a person to experiment and thus develop new approaches to handle diverse situations.
  2. Stretch goals: Setting aggressive performance targets would push an individual to apply new methods to achieve these stretch goals. One word of caution though that stretch goals will be successful only if the employee develops new approaches rather than put in extra work in the number of hours and days to achieve the stretch targets. Therefore, a salesperson trying to achieve an aggressive sales target should learn delegation, effective team management, negotiation and communication rather than putting in extra hours to do more of what they were doing earlier.
  3. Conflict: The exposure to conflict also takes people out of their comfort zones and helps them develop not only important interpersonal skills but also gives them wider perspectives on diversity of people and points of view.


While challenging situations can be leveraged to build skills and perspectives in the employee, if not handled properly they might end up in a developmental disaster. This is because it is very likely that challenging situations lead to stress, anxiety or fear. This is especially true for high potentials who are more accustomed to feeling comfortable with their abilities and instincts. While the optimum level of stress goads on employees to give their best beyond the optimum level, it may impair their ability to develop new skills. While friend and family might be there to give emotional support, what matters the most is the acknowledgement by the organization of this stress and creating a psychologically safe environment—one in which mistakes can be openly discussed and used as a learning tool. This supportive environment can be created by the support systems built in the organization and the culture which celebrates successes and rewards those who achieve developmental goals.


Planning a development programme:

  • Step I: Articulation of strategy, capabilities and competencies
  • Step II: Definition of the organizational context
  • Step III: Factoring in individual differences
  • Step IV: Choosing the development method

16.5.2 Planning a Development Programme

There are many experiences that develop leadership skills in a person; hence development must be approached like a process and not an event.

Step I: Articulation of Strategy, Capabilities and Competencies

Leadership can mean different things to different organizations. (A leader of an organization in the entertainment industry would be expected to have a different set of competencies from the leader of a manufacturing firm.) Hence planning of the development process begins with the articulation of what the organizational strategy is. The next step is to translate the strategy into a list of organizational capabilities; these would be the skills that the organization needs to possess, allowing it to retain its competitive advantage. These organizational capabilities are then used to identify competencies or skills that will be required by future leaders.

Step II: Definition of the Organizational Context

For development efforts to be fully effective they need to be aligned with the performance management system in the organization as well as the organizational structure and other features in the organizational context. For example, in an organization which measures and rewards only attainment of financial targets, it is unlikely that development efforts designed to building coaching skills are likely to be received as little more than a rhetoric. Similarly organizational structures, both formal and informal, are very important. Formal structure defines who has authority and who has formal reporting relationships. Informal structure defines the norms, values and relationships among people in a group. Understanding this is very important for choosing the right development tool or experience. Culture in an organization plays a very important role in the development of people. Consider an organization where mistakes are looked upon very harshly, the culture of admitting mistakes or taking risks would be missing, then this can hamper learning in a big way.

Step III: Factoring in Individual Experiences

While designing development plans around the organizational context and the strategy, an important point to be borne in mind is that every individual going through a development programme comes in with a set of unique skills and disposition. For planning a development programme it is very important to achieve personal goals for certain employees. The level of skills would ascertain the starting point for each individual. The personality of the high potential would decide the kind of development experience which would work for the person.

Step IV: Choosing the Development Method

Once the competencies have been specified in the organizational context and individual differences are well understood, the development methods can be selected. When evaluating each possibility, the fit between the method and the individual should be checked. Another fact is that no single development method can teach a range of knowledge, skills and interpersonal capabilities needed for successful leadership. Effective development needs a variety of experiences, appropriately sequenced over time, with ample time for feedback and reflection.

16.5.3 Development Methods


Feedback is a usual occurrence in working life. A good presentation might elicit positive feedback from the boss and a bad one might elicit a reprimand about it not being good enough. However, can such feedback be developmental? Obviously not! Similarly can feedback from just one source (say, the boss) be relied upon to give a holistic picture about an employees performance? Thus, such informal unstructured feedback can do little for development. In contrast, formal and structured feedback has to be planned and can be used as a great development tool.


Development methods consist of

  • Feedback processes
  • Training programmes
  • Job assignments
  • Development relationships

These days 360-degree or multirater feedback is gaining ground. In this, feedback is solicited from employees superiors, peers and subordinates and where appropriate from external sources such as customers and suppliers. All raters use a standard form to indicate an employee's level of performance along multiple dimensions. The fact that the feedback comes from multiple sources makes it more complete, unbiased and rich. Once all the feedback has been collected, a counsellor who is trained in the process meets with the individual to help them interpret and understand the results.

However, this also has its set of challenges. One is the interpersonal threat of having colleagues express their opinions about an individual's performance. Then the difference of standards of all raters can also cause some problem in aggregation. However, all said and done, this feedback process if done well can be effectively channelled towards attaining development goals. One must also remember that as the feedback to high-potential employees is usually positive, a negative feedback to them, if not communicated well, could cause more harm than good. It is, therefore, very important to have a psychologically safe environment for feedback processes to bear best results.

Training Programmes

Formal training programmes can be used to build knowledge as well as skills. Feedback-intensive training programmes can also shape attitudes. These training programmes can be either classroom or experiential in nature. Chapter 13 explains all training methods which can be used as a part of the development plan. Some important bits of training which need to be focused on especially for high-potential employees are the following:

  • Action learning: In this, groups of high potentials are put together in a cross-functional team to work on an organizational issue or problem. An executive sponsor or a mentor supports the work of the team. The projects are designed to integrate getting important work accomplished and learning from the process of doing that work too. Such action learning methods are not used as standalone methods but as a part of a larger multi-method development method for high-potential managers.
  • Structured leadership development programme: Many organizations now have a well-defined leadership curriculum in place. The curriculum is more voluntary than mandatory in nature. Some organizations do have specialized, highly customized, mandatory leadership development tracks for their high-potential employees. The recent trend is to use technology-enhanced learning to improve leadership behaviour on the job. The combination of synchronous and asynchronous tools and content is not only improving the high-potential employee's performance, but all this is achieved at a fraction of the cost of classroom training.
  • University-based programmes: Many organizations rely on premiere management institutes to build certain identified skills in high potentials, for example ‘Finance for Non-finance Professionals’. Some organizations also send their high potentials on a 6–12-month executive development programme as a part of their grooming for senior positions in future. In Titan Industries, senior management trainees are nominated for business/leadership development programmes at Harvard, international trade fairs and exhibitions.

Job Assignments

Job assignments can be developmental when they put an individual in a situation that they are not fully equipped to handle. These can be full time, part time or project based. The advantages of developmental job assignments to high potentials are that they give an avenue to think differently, try new strategies, learn new competencies and interact with a diverse set of people, and all of these in a supportive environment. No single assignment can teach every leadership lesson; however, there are some assignments which are associated with building specific skills.

  • Supervisory assignments: They require the overseeing of subordinates. Such an assignment teaches high-potential employees that success is not contingent on their own technical or functional expertise, but on their ability to lead, motivate and get work done out of other employees.
  • Cross-divisional assignment: This requires managers to work effectively with diverse contingencies in situations where they have little or no formal authority. In order to be successful, the person has to learn to deal with and resolve conflicts and also influence rather than command. Apart from these imminent benefits, participants are also able to develop a wider perspective of the organization.
  • Organizational change assignments: It usually includes tackling business challenges that are transformational in nature. This could mean either start up of a new business or the turnaround of a failing unit. Such assignments build strategic skills and the ability to handle sophisticated and complex interpersonal relations.
  • International assignment: It builds the global strategic perspective in employees. Apart from this, the ability to handle cross cultural interpersonal relations is an important component of this learning.

The situation teaches them to cope with ambiguity, think strategically and also develop an effective team.

Lessons from job assignments have four broad categories:

  1. Self-awareness: What are the functional and dysfunctional behaviour patterns that one has? How to cope with challenges using one's inherent strengths and overcoming weaknesses.
  2. Handling relationships: How to interact successfully with all, without a defined line of authority and handle diverse points of view on one issue.
  3. Setting and implementing agenda: How to critically analyse a situation and draw out and articulate a strategy. How to convert the strategy into a plan and then get it implemented through people.
  4. Leadership values: Discover the characteristics of successful leaders and practice them—such as credibility, accountability and integrity.

It is important to reiterate that job assignments can be leveraged to develop people only in a supportive and psychologically safe environment.


Among many other things, the Leadership Development Initiative (LDI) at Fortis Hospitals creates more opportunities for the junior-most employees to have regular chats with the company's CEO or seniors managers. How do you think this helps?

Development Relationships

Relationships can be a great way to plan, develop and assess the development of high-potential employees. What are the different kinds of development relationships that can be present for a high-potential employee for their overall development? There are various types of relationships that they can have:

  • Formal mentoring: When an organization has a system for establishing development relationships for its employees, the relationships can be classified as follows:
    • One-to-one mentoring: This is the typical mentoring relationship in which a senior professional mentors a younger one. A mentor can be of invaluable contribution to the development of a high potential. They can set challenging goals while guiding the protégé to achieve it and keep giving constructive feedback on the skills that they acquire. A mentor can be the route to a broader exposure to the organization. A mentor can actively coach on tactical skills required for the job. A mentor can pursue developmental opportunities across the organization for the employee and can also advocate their case from the knowledge acquired about the employee in the course of the interaction. Apart from this, a mentor also becomes a kind of a role model for the employee. Potential problems can come if the mentor lacks time or even motivation.
    • Peer coaching: This is effective for cross-departmental or cross-divisional exposure. This helps the employee vicariously experience and gain points of view which might be difficult for them to come by and also appreciate in their day-to-day transactions within the company.



    • Executive coaching: This is usually meant for late-stage high potentials. Often there is no one in the organization who can mentor the senior managers. At such times, the assistance of a professional from outside the organization could be used to guide and support the employee. Such coaches deal with usually identified tactical and behavioural skills.
    • Shadowing: This means that the employee observes rather than participate in the work of another employee. This gives an opportunity to the employee to see how strategic decisions are made without actually going and working there.
  • Informal relationships: Many organizations encourage informal relationships which can prove to be developmental. Here, organizations do not actively build development relationships, but give the employee the avenue to build informal relationships with executives who could prove to be mentors for them. Such opportunities might be organized in the form of:
    • Forums such as networking groups can be made around organizational themes or other areas of interest. A cricket club can have an older manager who can mentor a younger one on the values of the organization and its history.
    • Informal gatherings give employees the opportunity to meet their seniors and colleagues from other departments in an informal setting. These opportunities might lead to fruitful relationships.

Though these relationships can be a great developmental method, they have their share of challenges. Mentors and coaches need to be trained, so that they know what is expected out of them and what their responsibilities are. Trust and respect are the bedrock of such relationships to be fruitful. Where the relationship is between culturally diverse people, extra care has to be taken to sensitize the mentor or coach as well as the employee.

Trail Blazers

Aditya Birla Group

Until now, we have heard about high potentials being identified from within, and then groomed for future leadership. The Aditya Birla Group has gone a step ahead or should we say taken a step back to integrate new hires into a HiPO management programme. It is increasingly difficult to find many manufacturing experts in the industry in India today. First, the jobs are seemingly not as glamorous, and second, good manufacturing talent is getting pulled into allied industries such as IT. To tackle this challenge the Aditya Birla Group has initiated the ‘Global Manufacturing Leadership Programme’ across the group. The programme intends to select high-potential manufacturing professionals at the middle and senior levels, taking them through a high-potential management programme by investing in them and thus producing leaders to take on challenging roles in projects, production/operations, maintenance, supply chain, electrical, instrumentation and power plant functions in their plants across the group. Since this is a group initiative, the management is centralized with the Central HR team. Take a look at the entire process as they have described more on their Web site (http://www.abgmlp.adityabirla.com/).

Hiring Process of the HiPOs

The key essential required by the candidate is that he should be an engineer from a leading institute, having at least 12–20 years of well-rounded experience in the manufacturing/process industry in certain specific areas such as operations/production and maintenance. The candidate also needs to have a proven track record of superior performance. There are various steps to the hiring process including psychometric and behavioural assessment and interviews by senior leaders in the manufacturing space as well as human resources. The final interview is with Business Heads/Business Directors and Director, Group Human Resources.

Development Programme

Socialization of the HiPOs: The programme begins with a socialization process for the newcomers. The purpose is to immerse the employee in the company culture and values. They do this by rotational assignments across different businesses of the group, exposure to key group processes such as world class manufacturing, research and product development and project management. Besides their current area of expertise they are provided opportunities to work in cross-functional areas.

Assignment of roles: HiPOs are then assigned roles which may be roles to lead the entire operation for a small unit, lead a function in a small unit or to lead a department in a large unit.

Performance management: The feedback about their performance is taken from the unit head as well as from the human resources for that unit. The final review of the employee is based on a ‘one-on-one performance review discussion and feedback session’ conducted by Chief People Officer and business heads/directors.

Support mechanism: The development programme has also got support mechanisms to mentor the employee to facilitate accelerated learning. Some features of this support system are:

  • Buddy system: Each participant will have an assigned buddy
  • Coaching program: A dedicated Aditya Birla Group Coach is given to each participant
  • Communication: There are regular meetings/discussions with Programme Manager about the progress of the development programme.

The result is that the identified HiPOs from the external world are invited in and groomed to provide a steady pipeline of leaders for all their manufacturing businesses.


Source: Adapted from http://www.abgmlp.adityabirla.com/, accessed on 25 July 2011.


Management literature everywhere is full of woes of retaining talent in India. Needless to say that Retention of High Performers is crucial to the company as the loss of losing one can actually hit the business of the organization. To understand what can be done to retain them, it is important to understand what motivates these people. All retention measures will have to be designed around these factors that are so important to them.


Motivators for HiPOs

  • Quality of relationships at work
  • Credible commitment to development
  • Challenge in the job experience

16.6.1 Motivators for High-potential Employees

  • Quality of relationships at work: There are three sets of people that high-potentials have to deal with: (1) their manager, (2) colleagues and (3) direct reports. What high-potentials looks for and expect as behaviour from their managers is recognition praise for good work, opportunity to work on projects of their interest, exposure to more senior leaders and empathy which gives them the leeway to maintain work-life balance. For example, in Titan Industries most senior leaders are exposed to the board processes through the participation at board meetings. Another important thing to note is that too many supervisors are not very good for employee engagement. Also the experience with past managers continues to have an impact on people for a long time. They would also expect to have employees with whom they could socialize at work and discuss their career as well as life in a way which is engaging as well as value adding. Apart from managers and colleagues very important bits of relationship at work are the direct reports to the high potential. The studies have proved that the presence of highly skilled and intelligent direct reports who are committed to the organization, bring valuable perspective to work, are willing to work hard go a long way in keeping the tempo up for high potentials.
  • Credible commitment to develop: The high-potential employees are always very sensitive to the commitment of the organization towards their development. They tend to take a critical (constructive) view of the (a) development plans, (b) the training methods and (c) the executive commitment that they see around them. They would expect an achievable development plan customized to their aspirations (obviously in tune with the organizations too) in place. They would also expect not only the support but also the active participation by the manager and the organization at large to achieve the development objectives. The training quality the content and delivery should be such that it enables current and future job performance, enables deeper understanding of the business and helps them build networks internally within the organization and also in their professional community outside. They would also expect respect and support from the senior management in pursuing their goals within the organization. For example, in Godrej Industries MD's Club, an exclusive club of high performers who set high standards for themselves and their team members receive recognition from the MD, get to interact with the top management.
  • Challenge in the job experience: It gets often repeated for high potentials, that the biggest motivator is their ‘job’. What they expect from their job is enriching day-to-day experiences as well as management experiences. In their day-to-day experiences they want to utilize their specialized skills, involvement in forecasting and planning, launching new businesses, designing new products, working with different departments, handling crises, get opportunities to do creative problem-solving etc. In terms of management experience, the most important is the people management experience bit. Leading and driving people is the most energizing to high potentials. They want to be involved and gain experience in hiring new employees, developing work plans for direct reports and assessing employees’ performance and also potential. Apart from this, they would want to drive department strategy, handle budgets, lead business turnaround and participate in change management.

Views in the News

Retention Measures to Target High-potential Employees

Till some years back retention was targeted at the masses, but with the maturing of the economy the Human Resource Departments are carving retention measures specially targeted at the high-potential employees. Speaking at the two-day national summit in 2011 on ‘Emerging Trends in Compensation and Rewards’, P. V. Ramana Murthy, Vice-President, HR, Hindustan Coco-Cola Beverages, said: ‘There will be a strong focus on the overall value proposition to support retention of high potential employees by organisations.’ ‘Strengthening and examining compensation fundamental, questions of equity, pay for performance and communication are taking centre stage’, was emphasized by Nishchae Suri, Managing Director, Mercer Consulting.

In his speech, the chairman of Siemens India mentioned that the company has also initiated various development initiatives to enhance the existing skill sets of high-potential employees. These initiatives include trainings organized by prestigious institutes such as the Indian Institute of Management, Ahmedabad, and the Siemens Core Learning Programme, which delivers global learning programmes developed and customized to suit Siemens, job requirements. Executive coaching programmes too were made available to key potential employees so as to groom them for future positions.


Source: Adapted from PTI (2011).

Retention measures of HiPOs

  • Leverage employee relationship and networks
  • Ensure credible organizational commitment to employee development
  • Structure the challenge within the job

16.6.2 Retention Measures for HiPOs

Given the above factors of motivation for high potentials, the following could be the takeways to design a retention programme for them:

  • Leverage employee relationship and networks: It is important not to give them quick change of managers and also to surround the HiPO with top quality people to work with in terms of manager, colleagues and direct reports.
  • Ensure credible organizational commitment to employee development: Development plans need to be designed and implemented with seriousness. It is important not to be ambitious to an extent that it becomes unachievable. It is also important to manage the HiPO's expectations because that is where the key to their engagement lies.
  • Structure the challenge within the job: Focus should be on providing challenges within the job in terms of the versatility and depth of experience. It is also important to accelerate people management roles for the HiPOs.

Global Perspective

How Are Employers Incentivizing and Engaging High-potential Employees?

Most organizations are using a total rewards philosophy and are fine-tuning and communicating their employee value proposition. Earlier, the belief was that cash is king … at least for the areas least affected by the economic downturn. However, there are companies who are offering high-growth potential for workforce. However, time has proved that cash—in the form of base and incentive pay—can only go so far.

Actions to Consider

  • Multiple reward levers have to be developed, as cash compensation is not the only way to encourage employee engagement.
  • With the economy on a fast roll it is important to consider creating multiple career paths to provide development opportunities. Alternatively, focus on how to enhance employability and visibility of the high-potential employee.
  • Performance management systems have to be made technology driven, process and analytics driven to add value to the employee.
  • Implement an employee communication plan to minimize distractions and increase productivity.

Country/Region Specifics

Asia: In Asia, cash still remains the king. However, there is a strong focus on the overall value proposition to support retention. Companies will increasingly develop targeted strategies for retaining and developing high potentials. In Australia/New Zealand, there is an increasing and genuine consideration given to creating and communicating the employee value proposition. Total reward strategies are being reviewed, now that the tax benefits of packaging are extremely limited.

Canada: Employers are critically assessing the people situation. They are assessing manpower requirements and their current manpower supply to ensure that they have a clear view of which jobs are critical and exactly which employees are key (critical role, top performer and high potential). A lot of energy is being spent on thinking and structuring development programmes and mentoring programs for high-potential employees. More employers will do differential spending to retain their high-potential workforce.

China: Like other parts of Asia, cash rules in China too. It can come in as upfront cash as retention and deferred bonuses. Cash remaining same what is used to attract and retain high potentials is career planning, including job rotation and leadership development programmes, and supplemental medical and pension plans; and other benefits, such as education and car benefits, are also on the rise.

Japan: Non-monetary measures are being used by companies are successful in engaging high-potential employees. These could be training and career opportunities. Overseas assignments are also used as an effective way to develop the global leadership pipeline, to achieve a company's global strategies.

France: Apart from pay rise global mobility and career pathing is used to nurture high-potential employees.

Germany: The focus is on total rewards, especially increased job responsibilities, career development and, if possible, career opportunities.

Gulf Countries (GCC—Gulf Corporation Council): As the employment market matures in this region, trends are changing for the longer-term retention of employees. The primary focus is on offering employees the opportunities for development and growth. Short- and long-term incentives are also growing as a part of compensation. Until now, expatriate employees are not offered any form of pension benefits, but this may change in the years ahead to help retain certain categories of employees.

Mexico: Money more than the industry median, plus international assignments and providing accelerated career plans are common company practices to retain and engage the high-potential Mexican.

UK: Money is important and it is finding its way to the most deserving. Because there is pressure on income, given increased taxes for most and high inflation.

USA: As the economy recovers, the risk of losing key employees is top of the mind. In the downturn, intangibles such as career development and training were effective in retaining employees and employers now realize that top-performing employees may not be thrilled about a low or no pay rise. Hence, companies will do well to balance all levers of total rewards and deliver holistic value propositions to their employees.


Source: Adapted from Mercer Consulting (2011).

Application Case

Aarohan: Leadership Development Programme at Engineers’ India Ltd (EIL)

EIL is India's leading design, engineering and turnkey contracting company providing a complete range of project services needed to conceptualize, plan, design, engineer and construct projects. To keep pace with the growth of the company the leadership realized that they needed to have leaders in place to steer the company on a steeper growth path. In 2009, EIL in partnership with a global management consulting firm Accenture developed ‘Aarohan’, a programme for nurturing high-potential leaders for EIL.

Objectives of the Programme

The objectives of the programme as stated in their annual report were:

  1. Strengthening organizational capabilities to sustain EILs growth aspirations.

  2. Developing leaders from within the organization for the existing business needs and future growth plan.

  3. Enabling sustainable leadership development at EIL.

Identification of the HiPOs

EIL used the tenure approach for the identification of HiPOs. It selected 26 managers for the pilot round—all these managers were technical experts and had been with the organization for more than 25 years and were poised to take on leadership roles.

Planning the Development Programmes

The programme team applied Accenture's Desired Culture Survey, a web-based benchmarking tool for assessing the organization's aspirational culture. The team also interviewed executive management to discover the leadership needs of the organization vis-à-vis its strategic goals. This gave them an idea of what EIL needed and what would work for the company given its own peculiarities as an organization.

Accenture and the programme management group at EIL then teamed up to design and implement a programme, which was named ‘Aarohan’, which means ‘to ascend’.

To understand how the team drew out objectives for the development programme, it is important to know the philosophy that Accenture brought to the table in terms of development. This philosophy is explained in detail in Crucibles of Leadership: How to Learn from Experience to Become a Great Leader by Robert J. Thomas, the executive director of the Accenture Institute for High Performance. As per Robert James experience is the best teacher, but work is not the only experience that matters. This is the reason why two people can have identical experiences, but one blossoms while the other is depleted. The other belief is that leadership is a performing art and that it takes deliberate practice to improve performance as a leader. Put together this means that great leaders are distinguished from not too great ones by their personal learning strategy. The trick is to help every high potential develop a personal learning strategy which becomes their personal roadmap for success.

Based on their survey and backed by this idea of designing a crucible of learning for each participant, the team set about designing the programme.

Description of the Programme

The programme had two phases:

Phase I lasted for two months and was focused on self-reflection by the participant. This self-reflection was facilitated with personality profiling, self-evaluation instruments and 360-degree feedback. The purpose was to help the participant identify their learning needs in terms of their personality, learning style and leadership strengths and gaps. The next step was to design a crucible of learning customized to the requirements of the individual. Participants were then introduced to the concept of the ‘personal learning strategy’ and development planning workshop among other things helped them design an ‘individual leadership development plan’ that addressed development needs for both the short and long term. Each person was then assigned a senior leader within EIL to provide ongoing guidance on personal development. These senior leaders were also coached on how to become good coaches!

Phase II was about implementing each participant's personal learning strategy. Diverse learning events were planned for each participant–

Action learning projects: These were projects crafted by the programme team with the senior management. The idea was to expose the participants to critical business issues which impact the organization's growth and performance, for example, setting up of a joint venture in the area of alternative energy. When participants worked through these projects for several months they got the opportunity to learn by doing. All this was done under the watchful eye of the company senior who would actively support and guide them in this personal learning journey. Participants discussed and debated their projects in several fish bowl meetings in front of sponsors, guides and other senior leaders of EIL for valuable inputs and direction. Doing these for extended periods gave them a platform to practice their leadership lessons and thus master the art of performance as a leader.

  • Action labs: In three off-site action labs the participants participated in workshops to build in diverse leadership skills. The workshops used case studies, simulation-based exercises, interactive games, role plays, videos and concept-based movies to make learning an interesting experience.
  • Sessions with their personal coaches.
  • Immersion sessions with successful leaders in EIL to learn from their experiences.

One participant stated, ‘Practicing while performing, being conscious of one's own behavior, really helped in improving performance.’ At the end of the structured eight-month programme the group made a presentation to the senior management about their specific actionable recommendations. The executive committee also took this recommendation handed them over to special action committees made for the purpose. After this pilot EIL has replicated this development programme to keep developing its high potentials for the future.


  1. EIL's Aarohan is a programme targeting late-stage high potentials. Can the same programme be replicated for early-stage high potentials too?

  2. What challenges do you think EIL might have faced in implementing this programme?


Source: Adapted from ‘Director's Report—45th Annual Report of Engineer's India Ltd’, Engineers India Limited; Accenture Helps EIL Develop Leaders for the Journey to High Performance, available at http://www.accenture.com/us-en/Pages/success-accenture-engineers-india-develop-leaders.aspx.


  • A high-potential employee is someone with the ability, engagement and aspiration to rise to and succeed in more senior, critical positions.
  • The characteristics of a HiPO are a drive to excel, a catalytic learning capability, an enterprising spirit, and dynamic sensors.
  • There are many approaches for the identification of HiPOs—(a) The buddy approach (b) The tenure approach (c) The manager appraisal approach. (d) The decision-makers consensus approach (e) The criteria based approach.
  • The three important characteristics of a development programme are assessment, i.e., the measurement of performance against set benchmarks, challenge which would mean novelty, stretch and conflict and support by creating a psychologically safe environment.
  • The development of a successful programme goes through the various steps. These are the articulation of strategy, capabilities and competencies, definition of the organizational context, factoring in individual differences
  • All development methods for high potentials can be categorized under four heads—feedback processes, training programmes, job assignments and development relationships.
  • What keeps a HiPO motivated to stay on the job are quality of relationships at work, credible commitment to development and challenge in the job experience.
  • Retention of HiPOs has to be focused on leveraging employee relationship and networks, ensuring credible organizational commitment to employee development and structuring the challenge within the job.

Drill Down

  1. ‘The Manager's Guide to Maximizing Employee Potential: Quick and Easy’ by William J. Rothwell.
  2. ‘Coaching Corporate MVPs: Challenging and Developing High-potential Employees’ by Margaret Butteriss. The book provides a very effective guide for developing a small group of high-impact performers within an organization.

Book Review

The Talent Masters—Why Smart Leaders Put People Before Numbers—Bill Conaty and Ram Charan.

The book rests on three principles that characterize the legendary Jack Welch approach to management:

  1. A focus on talent development.

  2. Differentiation. Talent masters create a meritocracy by constantly evaluating their people—a process which, in Mr Welch's case, was derided by critics as ‘rank and yank’.

  3. Candor. This is the ultimate Welch trademark: ruthless honesty in evaluating the performance of people and businesses.

The book is divided into three parts.


Part 1:

Describes the talent management system at GE.

Part 2:

Has the expertise of four organizations articulated at great length. The organizations considered are Hindustan Unilever, P&G, Agilent and Novartis.

Part 3:

Describes the special expertise required by organizations to develop Talent Mastery in them.

The book describes in detail the best practices developed by some of the world's best organizations and, therefore, make an interesting read too.


Source: Adapted from Charan and Conaty (2010).

Review Questions

  1. Who is a high-potential employee?
  2. What are the characteristics of a high-potential employee?
  3. Should performance be the only approach to identify high-potential performers? Explain your answer.
  4. What are the critical success factors of a development programme?
  5. What are the steps to planning a development programme for high-potential employees?
  6. What are the different development methods which can be used for high-potential development programme?
  7. What motivates HiPOs? Keeping this in mind what retention measures can be taken by an organization?


  1. Individual exercise: Should HiPOs be told of their status? Discuss the ramifications within your group and dwell on the advantages and disadvantages of the same. Find out organization which do or do not reveal this to their employee—also find out how their stand has benefited them.
  2. Individual exercise: What should be the role of HR and the line manager in high-potential employee management. Discuss and prepare a list of accountabilities for both.
  3. Individual exercise: For most of their lives high potentials have been told that they are better than the rest—they are more intelligent, they work harder and are more creative. This creates an unfortunate dilemma. When these gifted people are brought together, each one assumes they are carrying more than their fair share of the load. They find their contributions superior than others. How would you facilitate a team of high potentials to work and learn together?



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