If your organization is like most, you find your next leaders from a pool of your top performers. They might be salespeople or project managers skilled developers, or engineers, but in any event, they have a reputation for delivering results. You need to find your high performance—high potential employees.

“Every new member in a hierarchical organization climbs the hierarchy until he/she reaches his/her level of incompetence” — The Peter Principle

Fifty years after Lawerence J. Peter introduced Peter Principle, Alan Benson from the University of Minnesota, Danielle Li of MIT, and Kelly Shue from the Yale School wrote a research paper for the National Bureau of Economic Research — Promotions and the Peter Principle. They looked at the career paths of more than 53,000 salespeople at 214 US companies over six years.

A salesperson who closes twice as many deals as their average colleague is about 14 percent more likely to get promoted to management according to the study. However, businesses pay a hefty price for that promotion: Sales decline an average of 7.5 percent when led by former stars. Meanwhile, the inverse was true: Sales thrived under managers who were lacklustre in their earlier sales roles.

Talent Analytics to Find High Potential People

In my insight How to Keep Your Stars and Have Remarkable Managers, I offer the Allen Axiom.

Analytics that predict career success and satisfaction help you find your high potential employees. This insight is beneficial for selection and succession planning. As well, it offers a basis for meaningful, personalized career planning one, two and three steps ahead. By finding their strengths and development opportunities, we help an individual know which leadership roles are right for them. We provide insights that help them progress up the leadership ladder.

“Firms appear willing to forgo a 30 percent improvement in subordinate performance to achieve better incentives or to avoid costly politicking — evidence that those in charge of promotions may be victims of the Peter Principle themselves.” — Alan Benson

Solid performance and the results it produces are good. However, it does not necessarily indicate that an employee will make a good leader. Moreover, according to research from the member-based executive team advisory organization CEB, organizations are hurting themselves by failing to discriminate between potential and performance.

What is Potential?

Few, about one in six high-performance employees also have the attributes that show high potential. Consequently, leadership development programs that stress performance can amount to a considerable waste of resources for organizations looking to develop leaders.

What goes into a high-potential employee?

“The chief behaviours include, for starters, an aspiration to eventually serve in a leadership role. Other attributes include autonomy, flexibility, interest in the organization, and the ability to work in fast-paced settings.” — Eugene Burke, Chief Science and Analytics Officer, CEB

Moreover, high potential reveals itself in the day to day actions of the worker. Beyond meeting their goals and objectives, a high-potential employee,

• seeks innovation in process and products
• advocates for new opportunities for the organization
• makes decisions and acts on them
• leads and supervises groups
• inspires others

These traits are some of the elements of an Agile Leadership Style. It is one of the seven styles we measure. It is a leadership style where the leader can stay flexible, grow from mistakes, and handle a magnitude and diverse range of challenges.

Eleven times more likely to succeed in a senior role

High potential is far more than hitting or exceeding performance metrics. Employees with strengths in these areas are eleven times more likely to be successful in senior positions than staff who are lacking across in these areas.

The CEB report also says,

• Forty-six percent of employees brought into leadership development programs do not meet their business goals once they assume managerial roles
• More than half of misidentified employees brought into these programs—employees who display high performance but not high potential—drop out before they complete the program

Why You Need Leadership Development

So, organizations are wasting a lot of time and energy—and potentially hurting themselves overall—by bringing the wrong employees into development programs.

Organizations stand to cost themselves their best and brightest employees much more by not offering leadership development opportunities.

• Fifty-nine percent of engaged high-potential employees plan to stay at their current job, vs.
• Twenty-three percent of disengaged high-potential employees are looking to move on as soon as they can find something

You need to ensure they realize the opportunities within the organization. Putting them in a leadership development program is one way to keep them excited about the organization and their careers.

Climbing the Corporate Ladder vs. Climbing the Corporate Lattice

Today, many organizations are reducing levels of management. So, your career path is transitioning from a Corporate Ladder to a Corporate Lattice. Moreover, movement routinely is diagonal or horizontal versus moving up. While it may take you a little longer to reach to the top, these lateral moves build your talent stack.

Cathy Benko and Molly Anderson define the emerging “Corporate Lattice” model in their book — The Corporate Lattice: Achieving High Performance in the Changing World of Work. They argue that a lattice is better suited for today’s global business environment.

So, you need to change how you think about and plan your career path to take advantage of this new structure.

Ladder of Leadership

In addition to the technical skills, academic background and professional experience gained, a person’s natural performance tendencies are crucial elements to achieving success at work. We offer better ways for your organization to capture these natural tendencies and use them to develop the strong, resilient leaders needed to drive your business strategies.

We measure 85 performance traits and statistically derived using factor analysis to determine which 85 traits may be related to each other. They combine in different dynamic combinations to predict business and career success. Clusters of three to six validated traits combine to become the performance competencies.

They predict a broad span of complex performance dynamics that a single trait may not encompass. These combinations are the dynamics that we see in the workplace. As an example, the Leads Decisively competency is a rich mix of assertion, power, decisiveness, negotiation, self-confidence, and leadership. Together they translate into a strong and forceful leadership style. This means there is a readiness to influence others directly.

Building Blocks of A Leadership — High Performer Role Profiles

Leadership continues to evolve. New criteria define success in leadership roles at distinct levels of an organization. It is essential to understand the nature of work in terms of performance that drive success at each level.

Two fundamental performance competencies are essential at every level of management, from the supervisor to the CEO. These competencies are: Leads Decisively and Thrives in Chaos.

Different competencies are necessary at each leadership stage. In addition to the two fundamental competencies, specific competencies are critical in more than one level as one moves up the ladder. We explain the core competencies by level. We help you address transitions between levels. Some of the competencies stay important through a leadership transition, and some performance competencies are less relevant at the next level. Therefore, their demonstration must be adjusted to be an effective leader. Otherwise, the Peter Principle grabs another victim.

What if you could predict success?

Would you change the course of what you are doing today if you could see into the future?

When it comes to careers, Gallup research points to a resounding “yes.”

• Seven out of ten working adults believe they are in the wrong job
• One out of those dissatisfied seven believes that they are in career hell

What if, like your chromosomal DNA can predict your future health, you could analyze your unique performance make-up and career interests (let’s call it your performance DNA) to predict your potential success across more than 500 of the most sought-after job roles?

Our elegant solution gracefully extends from the individual or team to the organization. We offer a platform for evidence-based decision making across the employee lifecycle,

Recruiting → Onboarding → Development → Performance → Succession

What makes us different?

We predict career success and satisfaction with up to 85 percent predictive validity. We predict career satisfaction and success based on an individual's unique superpowers. Along with skills and experience, these traits are critical differentiators in determining performance. High performers share a subset of performance traits that they are extremely adept in using. Identify in these traits uncovers your high potential people. Few people know how their talent stacks up.

Succession Planning

The chart below is a snapshot of our talent analytics to support succession planning. The data below is from a group of fifteen professionals.

In our ladder of leadership, you need to have at least four of the critical ten competencies at the given level of management. It is rare to see people high is six or more competencies. The competencies where the individuals score below 60 are central for their development plan.  The leader needs to develop strategies to manage these challenge areas.

Chance of being a marginal performer or worse:

• 2 percent with a score of over 80
• 8 percent with a score in the 70s
• 14 percent with a score in the 60s
• 46 percent with a score in the 50s
• 78 percent with a score below 50

These results show that Kirk should be on the fast track to the C-Suite — excellent leadership potential. However, some development will be required to support him at the manager level. Angela, Jon, and Bonnie are ready for manager roles immediately. Three other people have the potential to become managers. Darrel has excellent potential. However, he will likely struggle in a leadership role.

Bonnie, Jenny, Angela, Jon, and Kirk have excellent potential to advance to the executive level eventually. Jon has the potential to make it to the C-Suite along with Kirk. Angela has an interesting profile. She would be well-received as a manager. However, a more in-depth assessment of her competencies (not shown on the chart) reveals that she has challenges overcoming adversity, seeking innovation, and driving achievement.

Leadership positions will be a struggle for Libby, Noel, and Linda. Along with Darrel, Libby and Noel are high potential people in the various technical area. Linda works best in her current role.

Dual Career Path

A development path that allows upward mobility for staff without placing them into supervisory or managerial positions is known as a dual career ladder. This type of program typically serves to advance employees who have deep technical skills but who are not interested or inclined to pursue management track. Having a dual career path is beneficial. As part of your talent management strategy. This is an essential strategy to keep top employees critical to business success.

One advantage of a dual career ladder is that it gives companies an alternative career path to offer employees instead of traditional promotions to supervisory or managerial positions. Some employees have no desire or aptitude for management, so the dual career path provides upward mobility. Besides, a dual career ladder program reduces turnover among senior staff by offering more career opportunities. It allows employees to stay in their chosen careers and not be forced to move into managerial jobs to get a pay increase.

If proactively managed, this type of program can also decrease pressure to create jobs to give pay increases to keep and reward talented employees. It encourages staff to continually develop their skills and enhance their value to the organization.

Moreover, it is critical that a dual career ladder program is managed to prevent the program from becoming a dumping ground for poor-performing managers. Also, there may be resentment from employees not chosen for the program or from managers who feel the employees in the dual career ladder program are not "earning" their pay because they are not managing other employees.

Focus on Development

When you create a succession plan, the last thing you want is for your best talents’ performance to plateau—you want to see continual growth and development.

Unfortunately, in the Deloitte Global Human Capital Trends survey,

• only 20 percent of respondents said that their organizations develop people through experiential learning
• fewer than 1 in 5 managers feel that they offer opportunities for employees to promote themselves actively
• most companies surveyed (54 percent) said their organizations have no programs for building and developing future skills

Ongoing one-on-one conversations are essential for development. Managers should ask their employees,

• Where do you want to be in one year, five years, ten years?
• Moreover, what training and experiences can I offer to help you get there?

Then, follow through by supplying the resources, experiences, and opportunities they need to stay challenged and grow.

Concluding Thoughts

Executives leave organizations for many reasons. So, an organization should be ready to continue when essential figures move on. However, most businesses do not grasp it happens regularly.

Many organizations are not successful in executive succession planning. They continue to follow the Peter Principle. So, their talent pipeline is filled with high performers rather than those who can take on the duties at a higher level — high potential.

This lack of preparedness and proactive planning puts an organization at risk. It is irresponsible.

Invest in an evidence-based succession plan that shows high-performance potential. Then invest in leadership development. People leave managers, not organizations. The top benefit you can provide an employee is an excellent leader.