Look beyond: Interview with James Martin, partner at Egon Zehnder

Written by
Changeboard Team

26 Jun 2014

26 Jun 2014 • by Changeboard Team

What is hiring for potential?

At its simplest, it is looking beyond the immediate job vacancy to see how a candidate might be able to develop in the future. At the moment, many organisations make appointments based on applicants’ past performances. But we’ve found that a person’s track record is no longer the most reliable indicator of how they might perform in future.

When we asked 800 senior executives in organisations around the world about this topic, 78% told us track record is not the best guide to future success and 87% said companies need to take a bolder, more creative approach.

We’ve invested a lot of time and effort in understanding potential and have developed an alternative approach. It looks deeper at underlying character traits and gives a more accurate indication of future potential.

Why is it important?

Many employees don’t want to be in the same job for life and many organisations would like to recruit staff with the capacity to grow and develop. At heart, understanding a person’s level of potential is about understanding how they gain energy in work. If you can align the challenges you give an employee and plan development or career growth with how they gain energy, they will thrive.

At senior level, you might have to choose between a small number of candidates who are broadly comparable. By understanding how they gain energy, you can better predict whether they are suited to the specific role in question.

At a more junior level, employees are in danger of getting written off by their line manager if they’re not performing well – but they could become stars in another department.

Any problems with leadership development?

Last summer, we invited executives from organisations around the world to share how they perceive leadership development. Just over a fifth rated their company’s future leadership pipeline as good or promising, and a third saw real cause for concern. This was particularly worrying since more than 80% also said their companies found it “moderately” or “very difficult” to attract the best talent from outside, with 32% describing this as “very difficult”.

Nine out of 10 respondents agreed that companies need to take a more creative and daring approach to leadership development and nearly all believe that personality traits are more important differentiators than skills and knowledge. Two thirds named agility as the most important characteristic, followed by engagement and sight, ranked (52% and 41% respectively).

Why is an individual’s present performance not necessarilyan indicator of potential?

Many people get promoted because they’re doing a good job. They’re given a more senior role, and they keep going like that until they plateau or, in some cases, stumble and fall. As a person develops in their career, their roles become increasingly bigger and more complex. A more senior post might require a completely different style, have longer time horizons, and involve engaging with more diverse stakeholders, geographies and cultures.

Organisations do not always prepare or support their employees adequately for these transitions. Often, people try to keep working in the same way they always have, assuming that if they just keep working hard things will be all right. Sometimes, though, the challenges are just too different from anything they’ve encountered before or they require a different approach or skill set.

What role does HR have to play here?

You can act as the ‘thought partner’ and conscience to the organisation. Learn how to assess potential, provide advice and challenge line managers about their judgments on staff. You can help spot individuals who might be overlooked or written off because they are in a department that doesn’t suit their personality, or they’ve been asked to focus on tasks that are not aligned with how they gain energy in life.

Top tips

How to use hiring for potential to build a talent pipeline:

  • Ensure that the talent management agenda is led by the line business leadership, not just the CEO or HR
  • Integrate the talent management agenda with the business leadership agenda and make sure it goes well beyond managing high potentials
  • Create an agreed simple model for what ‘good’ looks like and make it very transparent
  • Assess executives more rigorously. Separate performance from potential, use external benchmarks and get independent input on key appointments
  • Create a strong focus on development – apply an array of tools and approaches to suit individual needs
  • Manage the risk associated with making external and internal senior appointments more proactively
  • Measure how well you are performing in talent management more comprehensively.