Often, performance and the number of appraisals are what define high potential employees (HIPO). According to the NTMN Potential Study in 2015, practitioners rate their effectiveness in defining candidates’ potential as much as 50%

Hence, evaluating talent’s ‘worth’ based on a single data point — such as performance appraisal and management recommendation, is not enough.

This implementation is wrong for several reasons. Here we point out why performance does not equal potential:

Why Performance Does Not Equal Potential

Firstly, the performance has a formula of P (Potential) – I (Interference) = Performance.

The I factor is meant for external and internal factors, such as lack of confidence, low self-esteem, complexity, boredom, or a natural tendency of humans — trying to impress others and trying too hard to achieve perfection.

Have you ever succeeded in performing a task, and failed on the next level?

When that happens, it is not uncommon for companies to regard their employees as failure (when they are not). Performance evaluation tends to be biased, like how much the supervisor likes the employee rather than their actual performance.

Moreover, employers often evaluate the employee’s current performance as a forecast of their future performance. Performance does not equal potential, as ‘potential’ is what you can do, whereas ‘performance’ is what you do.

While high-potentials are high-performers, not every high-performer suggests a high-potential. Thus, not every employee will perform well when they climb to the next level.

This is often the major reason for employee disengagement problems at the office. Promoting the wrong people could cause a leadership problem.

These ‘leaders’ are holding their position based on performance evaluation alone. A high PA score doesn’t mean they are good leaders and vice versa.

The Difference

  • High potential employees are receptive. They are truly open to feedback, and implement the feedback right away.
  • They are proactive. HIPO plan the future, they don’t wait for crisis to react.
  • High potential employees seek the opportunity to lead. Instead of focusing on their own performance, they focus on the team’s performance as a whole. And they always seek the opportunity to contribute.
  • They are looking at the big picture. Not only focusing on self achievement, HIPOs always look on how to do well on both sides (including the company).

Resources: one & two & image