Defining High Potential
High-potential employees (HiPos) are individuals who have the ability, aspiration, and engagement to rise to and succeed in more senior, critical positions. The distinction between high performance and high potential is important: high performers excel in their current role, while high potentials demonstrate the capacity to succeed at significantly higher levels of responsibility. Research suggests that only about 30% of high performers are also high potentials.
For SHRM exam candidates, high-potential identification is a key topic within the People competency area and connects to succession planning, leadership development, and talent management. Understanding how to identify, develop, and retain high-potential talent is essential for strategic HR practice.
The Three Components of Potential
Ability
Ability encompasses the cognitive, technical, and interpersonal capabilities that enable an individual to perform at higher levels. Key ability indicators include learning agility (the speed and effectiveness with which someone learns from experience), cognitive complexity (the ability to deal with ambiguity and make connections across different domains), and emotional intelligence (the capacity to understand and manage one's own emotions and the emotions of others).
Learning agility is often considered the strongest single predictor of leadership potential. It encompasses mental agility (comfort with complexity and ambiguity), people agility (skill in navigating interpersonal dynamics), change agility (curiosity and willingness to experiment), and results agility (delivering outcomes in new and challenging situations).
Aspiration
Aspiration reflects the individual's desire for advancement, including willingness to accept greater responsibility, make personal sacrifices associated with senior roles, and pursue continuous development. Without aspiration, even the most capable individuals may not fulfill their potential because they choose not to pursue advancement opportunities.
Aspiration can be assessed through career history patterns, expressed career goals, willingness to relocate or take on challenging assignments, and engagement in voluntary development activities. It is important to note that aspiration may change over time based on life circumstances, organizational culture, and the individual's perception of advancement opportunities.
Engagement
Engagement measures the individual's emotional commitment to the organization and its mission. Highly capable individuals with strong aspiration but low engagement may develop elsewhere, resulting in a loss of the organization's development investment. Assessing engagement ensures that development resources are directed toward individuals who intend to grow within the organization.
Assessment Methods
Multi-Source Assessments
360-degree assessments gather feedback from supervisors, peers, direct reports, and other stakeholders. When designed to assess leadership competencies and potential rather than just current performance, 360 assessments provide a well-rounded view of an individual's strengths and development areas.
Assessment Centers
Assessment centers use multiple exercises (simulations, case studies, group discussions, presentations, in-basket exercises) to evaluate candidates against defined competencies. Assessment centers have strong predictive validity for future performance when well-designed and administered by trained assessors.
Psychometric Assessments
Validated psychometric instruments measure cognitive ability, personality traits, motivational drivers, and leadership potential. These assessments add objectivity to the identification process and can reveal potential that is not visible through performance data alone.
Manager Nomination with Calibration
Manager nominations are commonly used but carry significant bias risk. Managers tend to nominate individuals who are similar to themselves, who are most visible, or who perform well in their current role without necessarily demonstrating potential for advancement. Calibration sessions where leaders review and challenge nominations against defined criteria help reduce bias and improve the quality of identification decisions.
Building a High-Potential Development Pipeline
- Individual development plans: Customized plans that address specific development needs identified through assessment
- Stretch assignments: Challenging roles or projects that require new skills and expand the individual's perspective
- Executive mentoring: Pairing high potentials with senior leaders who provide guidance, sponsorship, and access to strategic conversations
- Cross-functional exposure: Rotational assignments or project participation that broadens understanding of the business
- External development: Executive education programs, industry conferences, and professional associations that expand networks and perspectives
Communication and Transparency
Organizations face a choice about whether to communicate high-potential status to identified individuals. Transparent communication can increase engagement and retention among HiPos, but it may also demotivate those not identified. A balanced approach involves communicating development opportunities and expectations without necessarily labeling individuals as "high potential" or "not high potential."
Retention of High Potentials
High-potential employees are disproportionately targeted by competitors. Retention strategies should include meaningful development opportunities, competitive compensation, exposure to senior leadership, involvement in strategic projects, and clear communication about career paths. Research shows that the most common reason high potentials leave is not compensation but lack of development opportunities and career visibility.
SHRM Exam Preparation
Understand the distinction between high performance and high potential. Know the three components of potential (ability, aspiration, engagement) and common assessment methods. Be prepared for scenario questions about identification processes, development strategies, and the ethical considerations of high-potential programs, including fairness, bias, and transparency.