For years, being secretive has been the status quo in succession planning and leadership development, and few argued against the standard practice of keeping the names of high-performers secret. According to Towers Perrin, “72 % of companies do not tell employees they have been labeled as high potentials,” which means that only 28% do. While the number of organizations that do share is growing due in large part to demands from the workforce for greater transparency, internal debates on this issue continue to be extremely difficult and controversial.
Many are cynical about transparency in people-planning processes because there are numerous real and imagined consequences associated with revealing the names of the chosen few. Regardless of where you sit personally on this subject, realize that the impact of both positive and negative consequences can often be negated with poor/great approaches to the practice. Doing anything exceptionally well requires foresight and planning, something I hope this list helps you accomplish.
(A future post will highlight the positive consequences of sharing high-potential status.)
Negative Consequences of Openly Acknowledging High-potential Status
- The probability of poaching increases— if you tell employees that they are high-potentials, it is highly likely the news will spread both inside and outside the organization. In time, many external recruiters can put together a list of your high-potential talent, which may lead to increased poaching.
- Increased frustration and turnover if opportunities don’t follow— acknowledgement leads to expectations, and unfortunately advancement opportunities do not always materialize as planned. Failure to deliver opportunity in line with the high-potentials’ expectations can lead to frustration and turnover.
- Employees may not take development efforts seriously — if the individual is not aware of their status, they may not see the value in actively self-improving. In addition, because they don’t know the reason behind them, they may not take full advantage of any improvement and development opportunities offered.
- Confusion over where to improve — if managers are not made aware, they may do little to develop the strengths of the individuals or improve their weaknesses.
- Reduced effort after “making it” — following acknowledgement, high-potential employees may expect things to happen automatically, going into coast mode as they assume their future is set.
- Ego issues — notifying high-potentials lets them know they are valuable, but may also create an ego boost that results in a change in behavior; i.e., arrogance, sense of entitlement, etc.
- Increased expectation of promotions — while in many organizations the high-potential designation is a signal of potential, for some highly motivated employees it may be akin to saying “you are ready now,” leading to an expectation of immediate promotion, which may or may not be forthcoming in the flat and lean organization of today.
- Increased expectation of more money and exposure — notifying high-potentials may cause them to expect more money and more exposure opportunities, leading to disappointment and disenchantment when those benefits don’t come as fast as they expect.
- Career micromanagement may make them dependent — individuals who are on the HiPo list are likely to be given more attention. This can result in the micromanagement of their career by the development team. Providing HiPos with a development plan and career path may cause them to reduce the effort they put into their own development and career planning.
- There may be sabotage — a HiPo could face subtle or direct attacks from individuals who feel that they don’t deserve the designation. Once identified, others within a competitive organization may work to slow them down or even sabotage them out of bitterness. Also, once they know that they are a high potential, these individuals may consciously sabotage the managers above them, in order to more quickly open up a position for themselves.
- A HiPo designation may be permanent — once designated as a HiPo, they may remain a HiPo in perpetuity because many organizations have no formal process for removing individuals from the HiPo list. This can be problematic if the skill sets for the organization change in the future, and these HiPos have not developed these new skills.
- Openness makes it difficult to later drop individuals from the list— once an individual knows that they are on the list, should they need to be removed in the future, you face the difficult task of informing them. By keeping the list secret, you avoid the difficult situation of having to confront individuals. Whenever you remove an individual from the high-potential list, you obviously need to plan for negative consequences, up to and including turnover.
- Managers may not accurately identify high-potentials — if the nomination or selection of high potentials is made by individual managers and the names are revealed to all managers, selfish managers may purposely under-rate individuals. Individual managers may learn that nominating someone on their team for HiPo status results in the quickening of the loss of that individual to their team. The end result may be that individual managers may purposely hide or refuse to designate true HiPos in order to keep them “off the radar” longer.
- Increased hoarding — if the high-potential designation is made by the leadership team, it may cause managers to realize the value of key talent and drive hoarding behavior. In order to keep them longer, managers may restrict their visibility and even consciously reduce their performance ratings to prevent them from leaving the team. Limiting their visibility and slowing their movement may result in the HiPo becoming increasingly frustrated.
- Frustration among those not designated — if the selections are announced, employees may question the validity of the identification process. If the selection or calibration criteria for HiPos are either kept secret or if they are unclear, employees who are not selected may become frustrated. In addition, if the designation process is viewed by other employees as biased or not fair, the announcement of HiPos could cause a revolt among non-designated employees. Together these factors could lead to reduced productivity, increased turnover, or even legal issues.
- The potential for class warfare — no one likes to be labeled as “low potential,” so announcing high-potentials can cause some employees to feel less valued. In addition, if the level of treatment between HiPos and non-HiPos is significantly different, the non-HiPos as a group may begin to think of themselves as second-class citizens. This can lead to reduced cooperation and collaboration and a “have” and “have-not” division between employees.
- Others will treat them differently — if employees know that an individual is a HiPo, employees and managers may begin to treat them differently and align with them, so that they can take advantage of their new power and “move up with them.” This may result in a “self-fulfilling prophecy,” in that the designated individuals (even those that turn out not to actually be hi-potentials) will actually succeed within the organization simply because everyone begins treating them differently. The self-fulfilling prophecy may skew your metrics, so that your succession program appears more successful than it actually is.
- Increased gravitation toward HiPo-rich groups — if your open designations of HiPos are concentrated in a narrow group of functions or business units, that concentration may send a signal to all employees that they must find a way to transfer into those business units. This actual or perceived designation as “talent launching pad groups,” may inadvertently weaken other important departments and functions (especially overhead and service functions). The net result maybe a disproportionate “draining” of talent from groups with no or few HiPo designations and an increased level of difficulty in recruiting new talent into these groups and functions.
Historically, there are many valid reasons why you should not tell hi-potentials about their designation, but the trend is moving towards openness and transparency. While social communication tools have played a role in making secret designations harder to maintain, there are a number of ways to mitigate the negative consequences discussed here as well as leverage the positive consequences of disclosure, which will be discussed in a subsequent post. Combined, these changes in the landscape of business are driving many corporate leaders toward transparent people planning.