Learning Development: The Hype About HiPos

high potential employees episode

Today, we’re talking about the topic of High Potential Employees, also known as HiPos and the Leadership Development Programs created to build better leaders. The average firm spends 27% of its learning and development budget on HiPo programs, and two-thirds of companies divert funds from other talent investments to fund these HiPo initiatives. But the fact is, according to research conducted by CEB, 73% of HiPo programs are not effective, showing neither business outcomes nor return on investment. It can all lead you to wonder if the buzz about HiPos is just a lot of hype – but today we are joined by Vibhas Ratanjee, a Senior Practice Expert at Gallup who has written extensively about HiPos. Here, he explains:

  • The challenge of identifying HiPos;
  • The value a High Potential Employee program brings to a company;
  • How to measure the efficacy of a HiPo program and
  • How companies can improve these programs to advance learning and improve ROI!


If you prefer to read along while you listen, we've done all the hard work for you! We listened back to this episode and took notes below, and access is free! 


Investment In High Potential Employees

  • The estimates can vary, but approximately $3-4 billion are spent each year just on leadership development programs.
  • On average, companies spend $4,000 and 39 hours of dedicated time developing High Potential Employee Programs (HiPos).
  • The investment in HiPos is somewhat of a double-edged sword.
    • While high potential employees are great for your business, they sometimes do not stick around for very long, which can make it difficult for companies to see a positive ROI on those HiPos.  
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Hallmarks Of A High Potential Employee

  • There are several ways companies identify the employees who could be HiPos.
    • Certain competencies and past performances can be utilized, but these are often very subjective measures.
    • 70% of companies actually only use one indicator - manager’s rating of that employee, which is also very subjective.
  • According to Gallup, 82% of the time, companies fail to choose the candidate with the right qualities to be a manager.
  • An accurate indicator of a high potential employee is talent.
    • Talent is distinct from things such as pedigree, skills, or knowledge - talent is innate.
    • Talent is defined as a natural way of thinking, feeling, and behaving that can’t be replicated.
    • True talent is a rare trait.

Identifying HiPos

  • There are many “diamonds in the rough” when it comes to identifying HiPos.
  • The number of employees that are tapped for HiPo programs can vary.
  • Typically 2%-5% of a workforce will be tagged as “high performing” and will qualify for these programs.
  • The importance does not necessarily lie with how many high potential employees you have, but where that talent is found.
    • Many organizations have a “limited radius” in which they search for and identify talent.
      • This includes possibly just the top two or three levels of the company, employees only located at the headquarters location, or even just employees who have been with the company for the longest time, etc.
    • Companies should expand their view of where HiPos can arise from.
    • Just because an employee shows an excellent track record or exceeds sales quotas or whatever it may be does not mean that they will be a good leader. 
  • Diversity is another important aspect of the HiPo identification process. 
    • This includes how many genders, races, ethnicities, nationalities, etc. are in your company’s talent pool.
    • Diverse teams often drive higher performance so if there is a diverse pool of talent at your company, utilize that to become a more high performing company as a whole. 

The Importance of HiPo Programs

  • High potential employees are strategically important to any company.
  • According to Galllup’s own research, by adding a HiPo to any top talent team, that team’s effectiveness can be boosted by about 15%.
  • When companies hire for their top positions based on purely talent, that company can see dividends like 10% higher productivity, 20% higher sales volume, and about 30% higher profitability.
  • A wrong hire can come at the cost of missing out on a talented candidate that could become a HiPo within the company.
  • A HiPo-focused program not only pushes your company forward from a leadership & team building standpoint, it can directly impact its bottom line and profitability.
  • A HiPo program should be seen as a business initiative, not just an HR initiative.

Impact On The Employee

  • The implementation of a focus on talent and HiPo programs can absolutely make or break careers.
  • Companies must create an environment in which a high potential employee can thrive.
    • This will directly benefit that employee as well as the potential for success for the employee and the company alike. 
  • Having good leaders and managers is also of the utmost importance to the employee.
    • Mr. Ratanjee has dubbed a bad manager leading talent as a Talent Blocker.
      • Mismanaging and poorly investing in their development can be a massive detriment to everyone involved.
    • One of Gallup’s most significant discoveries has been that a manager influences about 70% of engagements.
    • A great manager is capable of being a Talent Multiplier. Not only will they increase their own success and output, but they will do the same for others. 

Restoration of Faith In Leadership

The Current State Of HiPo Programs

  • Almost all companies typically have some type of a HiPo program.
    • It may not always be called a HiPo program or a high potential employee program, but most companies do support some type of leadership development program. 
  • One of the key differentiators between programs is how the candidates for these programs are identified, selected, and developed. 
    • Most are subjectively nominated by their managers.
  • Mr. Ratanjee has found that some high potential employees become stuck in their company’s HiPo program for multiple years.
    • This is not ideal because it does not allow for the company to refresh the talent pool.
    • It is not just about having a talent pool - it is about ensuring that your talent pool is dynamic. 
      • A diverse group of talented individuals should be moving into and out of the HiPo program frequently.

Structure Of A HiPo Program

  • Programs typically vary greatly from company to company but there are some aspects that are utilized frequently.
    • Classroom time: This can include any formal training, mentoring, speaking engagements, etc.
    • Time-based assignments: Companies may deploy a high potential employee to a longer and possibly difficult project and watch how they perform in that role. There should be coaching and encouragement along the way and once the project is completed, the employee’s performance can be presented to management.
  • One thing that Gallup finds to be missing from most HiPo programs is something called “breakthrough experiences.”
    • These experiences are assignments or experiences that truly push high potential employees out of their comfort zones. 
    • Things like navigating different cultures or assignments that require skills that the HiPos do not have or have not been exposed to.
    • These are “crucible” experiences and can be the hallmark of a highly successful HiPo program.
  • Gallup also helps companies to deploy a focus on strengths when developing a HiPo program.
  • A good HiPo program should be ongoing - learning never stops.
    • An ineffective program could resemble a 1-5 day workshop in the guise of a true HiPo program. 
      • These often have limited to no followup and accountability once the program is completed. 

Mentorship

  • Mentorship plays a massive role in an effective HiPo program.
    • There is a mentor component to all great HiPo programs, and those mentors can come from outside of the organization/company as well.
    • Mentors provide invaluable guidance, advice, and support throughout the journey as a high potential employee.

How Can We Improve Our HiPo Programs?

  • One of Mr. Rajantee’s articles about high potential talent programs details what how to improve your current program.
  • He mentions six definciencies that can be found within many programs today:
    • A lack of objective performance determination (ineffectively identifying HiPos)
    • An obsessive focus on “fixing” the weaknesses of HiPos
    • A focus on assignments as opposed to experiences
    • A heavy classroom/workshop focus
    • A competitive atmosphere instead of a collaborative and growth atmosphere among HiPos
    • A lack of a global mindset

Turnover Among High Potential Employees

  • Turnover among HiPos can often be just as high as it is among employees who are actively disengaged - which is a serious problem.
  • Talent is rare - so a high turnover rate among your company’s HiPos can be especially painful.
  • HiPo programs should be structured in a way that high potential employees feel engaged, challenged, and motivated within the company and do not feel the need to go elsewhere to develop and realize their true potential.

Measuring The Efficacy Of HiPo Programs

  • Retention is a significant indicator of how well a HiPo program is built. 
    • With all of the investment placed into the program and the high potential employees themselves, you want to see them stay and continue to perform well for and significantly advance the organization. 
  • New business and new value generated for the organization is another good indicator of how well your high potential employees are performing and is also a metric that can be easily analyzed.

Examples Of Companies Who Do HiPo Programs Right

  • Stryker
    • Mr. Rajantee says that Stryker does a great job with their HiPo program, specifically with talent assessment and development.
    • They actually list some of their high potential employees right on the home page of their website.
    • Read about Stryker’s success in HiPo programs here.
  • Highmark
    • Highmark is another company who has worked with Gallup extensively on their HiPo program.
    • Read Mr. Rajantee’s case study on their successes here.

Speaking Engagements & Blogs

  • Mr. Rajantee has also spoken at numerous summits and forums as well as online speaking engagements.
  • Mr. Ratanjee also writes extensively on leadership and organizational development. His writing and other great articles on the topic can be found at Gallup.com. His author page on Gallup can be found here.

Vibhas Ratanjee Background

  • Bachelor of Commerce from Delhi University
  • Postgraduate Degree in Advertising and Public Relations from the Indian Institute of Mass Communication
  • Executive Certificate in Mastering Design Thinking from MIT’s Sloan Executive Education Program
  • Mr. Ratanjee has worked as an Senior Research Executive, Associate Project Manager, and as a Senior Project Director for various companies in India.
  • He has since been with Gallup and now serves as a Senior Practice Expert and Executive Advisor in the Los Angeles area. 
  • Mr. Ratanjee specializes in organizational development, culture change, M&A integration and executive-level engagement strategies including strengths-based leadership and succession management.
    • He is also an executive coach, a well-known speaker, and an author.

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About the Author Jacqueline Gregory

As a creative, persuasive communications professional with extensive experience guiding projects from concept through completion Jacqui has produced custom communications for some of the world's best known brands. Producing ProjectHR has been one of her favorite ways to engage and delight HR and Labor Relations professionals!

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