Performance does not necessarily mean potential. A high-performer will typically give an immediate return on investment, often averaging from more than 50% additional value to the venture, and as much as 100% increase in productivity over average performers. However, the high-potential (or HiPo) typically demonstrates high-level contributions, organisational values, potential to move up to a higher position within a given timeframe, and potential to assume greater responsibility. Often times a high-potential employee will demonstrate high productivity, but it does not work the other way around. When looking to identify a high-potential, keep in mind that performance does not mean potential. Of course, a high-performer stands out in your organisation—and for good reason—but it may be a costly mistake to promote them to a leadership position. That is why it is important to evaluate an individual’s potential, performance, output, etc. It is important to make the distinction between high potential and high performance; confusing the two may be costly. For example, say you have a top-selling sales rep. You promote him to manager, and he ultimately fails; because while he had the performance skills, he had neither the aptitude nor desire to lead. He did not have the initial potential. What’s worse, the high-potential employee that you overlooked feels snubbed, and leaves the company, looking for better growth opportunities elsewhere.

High-potentials need to know that they are appreciated, which can be one of the biggest obstacles for employers. HiPo’s know they have the ability, so they can be flighty if they feel they are underappreciated. Giving them encouragement and challenging assignments are good ways to both maintain high-potentials, and simultaneously test and season their abilities. Remember, Robin Hood’s arrow wouldn’t go as far, and the carpenter’s wood wouldn’t take shape, if a great amount of force—attention, stress, testing—wasn’t applied.

On one hand, in order to retain a high-potential employee, you must groom them, meaning you must first designate them as a HiPo, thus running the risk of alienation. On the other hand, HiPo’s may become restless and leave. You could argue that it is best (and studies confirm this) that transparency is the preference for identifying, maintaining, and grooming high-potentials. The good outweighs the bad. Identifying high-potentials will ultimately lead to a high-performance workplace.

The problem is, giving recognition where recognition is due is a lot harder than you might think. As a rule, managers don’t want to differentiate between employees; it can cause animosity within the group, among other hassles. The overall benefits have been proven to develop high-potentials, and increase productivity across the board, but being too open and encouraging to high-potentials can have negative consequences. Research claims that there are several reasons why openly identifying a high-potential employee may be a bad idea, which include:

• The probability of poaching increases.
• Increased frustration and turnover if opportunities don’t follow.
• Employees may not take development efforts seriously.
• Confusion over where to improve.
• Reduced effort after being acknowledged.
• Ego issues.
• Increased expectation of promotions, exposure, and financial compensation.
• Career micromanagement may create dependence.
• There may be sabotage from co-workers and class warfare.
• A HiPo designation may be permanent.
• Managers may not accurately identify high-potentials.
• Frustration among those not designated.
• Others may treat them differently.

Please read part 3 – High Potential Development = High Performance Workplace