Chief Human Resources Officers believe that high-potential employees are 91 percent more valuable to their organizations than average employees, so it is no surprise that HR's main concern is retaining them.
High-potential employee (HIPO) generally refers to an employee that leadership expects to progress to a much higher level at a much quicker pace than an average employee.
Organizations have different ways of measuring this expectation, but typically the designation is determined by the employee’s manager, either through performance review or direct nomination. Once identified, companies will provide HIPOs with more development, opportunity, and reward to keep them engaged.
The problems with HIPO
Performance itself is difficult to measure, so predicting performance at a higher level is nearly impossible. A survey of 134 companies found that a manager's ability to accurately identify high potentials was about 50/50, like flipping a coin.
Furthermore, managers often select people like them, which is an obstacle for diversity and innovation. A former Coca-Cola director, for instance, observed that the company's high-potential employees seemed to all be Type A, competing for power.
Negative side effects
Focusing too much on a minority of employees neglects and disengages the majority of employees, who may infer that less is required of them and less is possible for them.
It can even set up a sense of entitlement among those identified as HIPOs, leading them to expect to accelerate through promotions before they’re ready and even become actively disengaged if they lose the distinction in following years.
Even those who remain engaged may feel so much competition between them it becomes destructive, resulting in less collaboration, more sabotage, and greater burnout.
Still, we continue to believe in HIPOs because it just seems to make sense. It is a foundational assumption from elementary school that some students are gifted and thus perform exceptionally well when given special attention.
Research has shown for decades, however, that believing someone is gifted, even absent them knowing their own label, can be a self-fulfilling prophecy.
This phenomenon is known as the Pygmalion Effect, a teacher’s belief that a student will succeed causes the student to be more likely to succeed. Teachers subconsciously behave differently when they expect high performance, offering:
- Warmer non-verbal cues
- More challenging material
- More opportunities to contribute
- More detailed feedback
Likewise, employees identified as “high potential” could be more likely to advance as a result of their leadership’s expectations, not as a result of actual potential. It stands to reason, then, that all employees could perform better if provided with the management practices that are too often reserved for HIPOs, including:
- Responsibility and decision-making
- Regular communication and feedback
- Timely credit for effort and result
Companies known for creativity and innovation don’t have star employees because everyone really matters. Instead of trying to motivate through competition, they build social capital for people to motivate each other.
Social capital — the shared norms, trust, and reciprocity that bond strong communities — is particularly valuable as teams become more central to modern organizations.
Deloitte’s Global Human Capital Trends 2016 report found 92 percent of over 7,000 business and HR leaders from over 130 countries prioritized building their organizations around networks of teams to better engage employees and operate more quickly.
Yet when it comes to social capital, it is not group norms like loyalty and cohesion that improve team performance. In fact, Amy Edmondson’s study revealed those norms prevented healthcare team members from making suggestions and reporting errors.
Rather, high performance teams had what Edmondson called psychological safety —members felt mutual trust and respect that allowed them to be honest in ways that would have otherwise seemed too risky interpersonally.
As much as researchers have tried to identify what team compositions lead to team successes, there has yet to be a consistently reliable pattern. They instead found group norms tend to override individual preferences and shape individual emotional experiences.
MIT studies demonstrated that team success didn’t correlate with intelligence or leadership, but every single successful team had members who each:
- Spoke in about the same proportion as each other
- Asked about each other's thoughts and feelings and were sensitive to nonverbal cues
Likewise, when Google compared all their teams against one another, teams didn’t perform better when they had individual high performers — more than anything else, teams performed better when they had psychological safety.
"It's important that everyone on a team feels like they have a voice, but whether they actually get to vote on things or make decisions turns out not to matter much. Neither does the volume of work or physical co-location. What matters is having a voice and social sensitivity."
— Laszlo Bock, Head of People Operations, Google
Better ideas emerge when constructive conflict builds social capital, which creates the psychological safety to engage in more constructive conflict. As the president of Pixar describes in his book, Creativity, Inc., collaboration and innovation depend on candor.
How to build psychological safety
1. High potential assessments may be worthwhile for succession planning and internal selection, but you must account for their limitations and avoid excluding the rest of the workforce from opportunities to develop and contribute.
2. Psychological safety starts with role models. Leaders can foster it in their teams with consistent key behaviours:
- Avoid interruptions because they block new ideas and set up people to fight for airtime.
- Demonstrate active listening, i.e. summarize what you hear, to encourage discussion.
- Ensure every team member speaks at meetings and don’t reward the loudest people.
- Express your feelings and encourage others to express their feelings without judgment.
- Listen for contradictions to your assumptions and discuss them openly.
While it may seem less efficient in the short-term, it is proven to be more productive over time. Check out Google’s re:Work website for more recommendations based on their research.
3. Align HR programs and practices with psychological safety. No matter how much leaders talk about teamwork, employees are not going to risk looking bad to work through conflicts unless that behavior is measured and rewarded. For example:
- When assessing candidates to join a team, consider their social sensitivity, willingness to voice an unpopular opinion, response to feedback, and unique perspectives.
- Make training accessible to all employees with on-demand technology-supported peer learning.
- Establish a culture of open communication between teams and with senior leadership.
- Celebrate small and large contributions to a task/ team/ project in timely ways that publicly recognize the individual or all the members on the team for their specific actions.
- Rather than only assigning big bonuses to high potentials or high performers, empower your employees to distribute small bonuses for all the little behaviors that help your teams and organization grow.
More than individual ability or potential, what matters most is how people work together. Take the time to build psychological safety for innovation and performance.
If you're ready to take the next step in building a stronger organizational culture that supports psychological saftety and maximizes your team's potential, check out our latest resource: