Did you know your high-potential employees are twice as valuable as other staff? This might explain why 66% of companies invest in programs to identify high-potentials and help them advance. 

But 73% of those programs show no ROI, and 95% fail in their follow-through, according to the Corporate Executive Board.

For most companies, the talent is there, but many organizations haven’t fully figured out how to develop prospective leaders. Ignoring or demoralizing internal talent can have dire consequences. It can result in low engagement and high turnover. More than half—51%—of managers feel disconnected from their job, and 55% are looking for outside opportunities, says Gallup. If the employees jumping ship are your high-potentials, it can get extremely costly. So as competition for smart talent heats up, organizations can’t ignore their internal talent. They must grow their own leaders.

“Turning Potential into Success,” an article in Harvard Business Review written by Claudio Fernández-Aráoz, Andrew Roscoe and Kentaro Aramaki, offers a road map to help employers. To prevent your talent from walking out the door, identify the competencies that are most critical for your top roles. A competency is measurable or observable knowledge, skill, ability or behavior that is important to successful performance in a job. Here are eight competencies Fernández-Aráoz feels are important for leaders, along with baseline and extraordinary measures for each.

  • Results Orientation—At its most fundamental level, this is completing assignments and working to make things better. At an extraordinary level, this is redesigning practices for breakthrough results and transforming the business model.
  • Strategic Orientation—The baseline is to understand immediate issues and define a plan within a larger strategy. At its highest level, it creates high impact and/or breakthrough corporate strategy.
  • Collaboration and Influence—At a basic level, this is demonstrated by responding to requests and supporting colleagues. At its highest level, this competency establishes a collaborative culture and forges transformational partnerships.
  • Team Leadership—This is exhibited at a fundamental level as directing work and explaining what to do and why. At the extraordinary level, it motivates diverse teams to perform and builds a high-performance culture.
  • Developing Organizational Capabilities—This competency, at a baseline level, supports development and encourages others to develop. At the extraordinary level, it builds organizational capability and instills a culture focused on talent management.
  • Change Leadership—Accepts and supports change at a fundamental level, drives firmwide momentum for a culture of change, and embeds that change.
  • Market Understanding—The baseline for this competency shows up as knowing immediate context and knowing general marketplace basics. At its highest level, it identifies emerging business opportunities and sees how to transform the industry.
  • Inclusiveness—At the baseline, it accepts different views and understands diverse views. At the highest level, it strategically increases employee diversity and creates an inclusive culture.

The second step in the road map to high-potential leadership development is to assess the potential of your aspiring managers. The authors suggest you “check their motivational fit and carefully rate them on four key hallmarks—curiosity, insight, engagement and determination.” Fernández-Aráoz defines these hallmarks in Harvard Business Review’s “21st Century Talent Spotting”:

  • Curiosity: a penchant for seeking new experiences, knowledge, and candid feedback and an openness to learning and change
  • Insight: the ability to gather and make sense of information that suggests new possibilities
  • Engagement: a knack for using emotion and logic to communicate a persuasive vision and connect with people
  • Determination: the wherewithal to fight for difficult goals despite challenges and to bounce back from adversity.

You can assess your potential leaders through a deep review of their work experience, direct questioning and conversations with their bosses, peers and direct reports.

In the third step, you create a growth map that shows each person’s strengths (hallmarks) and how they align with the required competencies. This will allow you to predict where each person will succeed. According to the authors, curiosity correlates with all eight competencies, so it is critical to be considered for a promotion. The other hallmarks—insight, engagement and determination—correlate with different competencies.

For example, people with high determination exceed at the competencies of results orientation and change leadership. Those with high engagement scores are strongest in team leadership, collaboration, influence and developing organizational capabilities.

Step four is where the work is done to turn high-potentials into leaders. This can be done by giving them opportunities, coaching and support to help close the gap between where they are and where you need them to be in the eight critical competencies. Job rotations, stretch assignments, coaching, mentoring programs, and formal and informal training are all ways to help your high-potential leaders succeed.

“When companies take this approach to leadership development—focusing on potential and figuring out how to help people build the competencies they need for various roles—they see results,” say the authors.

Having a defined approach to talent development can be an extraordinary competitive advantage. It allows you to hold on to your top talent and helps your most valuable employees turn into invaluable leaders.

McDaid is The Council’s SVP of Leadership & Management Resources. elizabeth.mcdaid@ciab.com