Accurately identifying who is going to do well in those slots is becoming a real challenge.
Pitney Bowes Inc, the world’s largest maker of postal meters, has spent 18 months grooming manager of technology analyst relations, Angel Peoples, for growth at the Stamford, Connecticut-based manufacturer.
As with many professional development programmes, this investment in Peoples is a gamble. Despite the company’s best efforts to identify future leaders, there is no guarantee she is cut out for advancement.
What’s more, if Peoples is lured away by a competitor, all the training could come to naught. So Pitney Bowes is taking a counter-intuitive approach to making sure Peoples sticks around: It has made her training even harder. She has been asked to take on extra workload and additional training. So far, it’s working.
“You come to work ready to put your best foot forward,” said Peoples. “Having people take notice of that is rewarding.”
Finding and grooming those high-potential employees doesn’t come cheaply. Companies on the Fortune Magazine Global 500 list of the world’s biggest companies spent $1,034 on learning and development per employee in 2011, with an average of 35 hours spent on training, according to the American Society of Training and Development, a trade group. For employees identified as high-potential, that figure is much higher.
Spotting a corporate leader "takes a tremendous amount of time and expenditure,” said Robert Kabacoff, vice president of Management Research Group, a research firm that conducted a study of almost 30,000 managers on what makes high potential employees, was completed last year. “Accurately identifying who is going to do well in those slots is becoming a real challenge.”
The number one quality found in high-potential employees? Demonstrating long-term thinking and planning skills, said Kabacoff, citing the Management Research Group study. Promising candidates also showed strength in setting and meeting ambitious goals, along with a desire to be influential, he said.
Tried-and-true methods for finding future leaders who possess those skills include noting which employees routinely show the most enthusiasm, or who were promoted quickly. As large, global companies struggle with replacing aging senior leaders, they are using some new approaches to identify, train — and keep — their best potential managers, including assessing their high-potential employees with formal evaluations and putting such employees on the frontlines of business dilemmas by asking them to solve real corporate problems during training programmes.
Pitney Bowes, for one, started pushing those in management training programmes to take on extra-challenging projects after an internal review showed high-potential employees want to work through uncertainty, said the company’s chief human resources officer Johnna Torsone.
Spotting future leaders
Hospitality giant Starwood Hotels and Resorts’ three-year-old Leadership Development Experience programme now calls for high-potentials to spend time away from the office solving company dilemmas alongside senior leaders. Participants use the company’s financial history to help with analysis, and recommendations are discussed with top executives, said Jeff Cava, Starwood’s chief human resources officer.
“It’s centred around simulation and allows them to test their strategy,” he said of the five-day programme. Recently, the company’s chief executive spent eight hours discussing strategies with the group. While there’s no formal assessment process, this kind of programme gives senior leaders a chance to build stronger relationships with highly-qualified employees, he added.
“We want people who have fully-formed personalities and a predisposition for service,” Cava said.
General Electric Co, the largest US industrial group, started Rise, an early-career programme for 500 high-performing employees from emerging markets such as Russia and China. The company is “filling regional roles and developing people much more locally,” said Laurie Bevier, an executive development leader at General Electric in Bristol, Connecticut, who helped launch the programme this year.
To get quality employees to stay for the long-term, GE, which spends upwards of a $1 billion on all of its training programmes, screens its prospective leaders twice.
The company first asks managers from 12 global hotspots for recommendations for prospective leaders and then asks those in human resources to vet candidates. Market need and developmental potential determines who gets in.
“It’s a thorough selection process that weeds out who has a real desire (to participate),” Bevier said of the time investment.
Other companies, including Pitney Bowes, are also moving toward a more centralized approach when training potential leaders. For the past two years, a group from human resources scans applications for skills that are applicable for future leaders such as the ability to influence others and good communication skills. This is a change from the company’s previous policy of asking individual managers to recommend younger employees to the training.
“They are nominated by the different parts of the organization, vetted by my talent organization and signed off on by senior leadership,” said Torsone.
As companies standardize selection processes, new challenges are cropping up.
“We encounter a lot of people who are pleasantly playing along, but may not be motivated,” said Matthew Paese, vice president of executive succession management at Development Dimensions International Worldwide, a Pittsburgh, Pennsylvania-based talent management firm that works with multinational corporations. Since assessments and training may have a one-size-fits-all approach, job requirements need to be constantly reassessed to include extra challenges for high potential employees, said Paese.
“Training programmes are not motivating,” he said. That is especially true if high potential employees do not have a hand in working to solve real business problems.
To add to confusion, managers say high potentials have similar qualities to other valuable employees but identifying them so publicly could be de-motivating to other employees. That means companies have to both identify and prepare future leaders and also keep other strong employees happy. “Not everybody is going to be a high potential, and you don’t want to turn off people who are good,” he said.
But the biggest threat to finding, grooming and keeping the best employees, however, may be something companies have been hoping for: an improving economy. As US, European and other economies stabilize; keeping high-potential employees may become even more difficult as top candidates are lured to competitors or smaller start-ups with new opportunities.
"Organizations (have) become very nervous," Paese said.