The Paradox of High Potentials

To retain high-potential employees, the conventional wisdom is deceptively simple: Identify, develop, and nurture them. By paying special attention to the very best people, they will stay with the firm and eventually emerge as key leaders.

But translating this into action is much more difficult. As the former head of executive development at GE used to tell me, "There's a difference between doing it and really doing it." Many firms have trouble keeping their best people, despite their investments in talent management. In fact, a study last year by the Corporate Executive Board indicated that "25 percent of employer-identified, high-potential employees plan to leave their current companies within the year, as compared to only 10 percent in 2006."The study also found that 40% of the internal job moves for high potentials ended in failure.

So despite the focus on high potentials and the importance of effectively managing them, why do so many organizations struggle to do it well? Let me suggest two reasons.

Discomfort with Differentiation: In order to focus on high potentials, some employees need to be singled out. And, truth be told, most managers hate to differentiate. They would prefer to treat everyone the same, avoiding the uncomfortable process of sorting people by levels of performance. As a result, managers will identify certain employees as "high-potential" simply because they don't want to tell them that they're outperformed by their colleagues. And others, who are appropriately selected, are not told because it would create an uncomfortable two-class system. In other words, managers avoid declaring who the high potentials are, for fear of upsetting people who were not selected.

Discomfort with Developmental Dialogue: Even if high potentials are identified properly, bringing them to the next level requires a continual, complex dialogue. Managers need to stretch, challenge, and coach their high-potential employees and make sure their assignments push them beyond their comfort zones. To do so, they have to work with senior business leaders and HR to clarify assessments, identify opportunities, and coordinate possible moves. Without multi-dimensional dialogue about these issues, managers tend to hold on to their high-potential people instead of helping them along an intentional developmental pathway. High-potentials then may interpret this as a lack of company support and will be inclined to look elsewhere.

Unfortunately, engaging in this kind of developmental dialogue is foreign to many managers and can cause just as much anxiety as the need to differentiate. In fact most managers avoid coaching discussions, particularly with employees who have more potential in their careers than they do.

Taken together, the twin discomforts of differentiation and dialogue hinder high-potential programs, even when senior line and HR executives do a good job of centrally structuring assessments, rotations, and training. This may at least partly explain why so many company-identified high potentials don't remain with their firms.

To increase the odds of success, senior executives need to focus not just on the high-potential programs, but the underlying anxieties of managers who have to execute them. One way to do this, for example, is to require managers to mentor one of their high-potential direct reports. Not only will this approach be good for the chosen employees in the short-term, but also it will force managers to get more comfortable with performance differentiation and developmental dialogues. As anyone who has done it can attest, mentoring benefits the mentor as much (if not more) than the mentee.

How well does your company retain and develop its top talent?