Identify Develop and Engage High Potential Employees Help

Identify, Develop, and Engage High Potential Employees Help your top employees shine their light throughout the organization. Mc. Lean & Company 1

Introduction Identifying, engaging, and developing high potential employees is a key differentiator in high performance work environments. This Research Is Designed For: This Research Will Help You: üHuman Resources professionals, particularly üUnderstand what high potential employee those who partner most frequently with the business. üOrganizational leaders who are looking to better identify high potential talent in their organizations. means, and how seeking them out can benefit the organization. üSet appropriate criteria for identifying high potential employees in your organization. üCreate a process to evaluate employees for high potential. üDevelop a plan with initiatives to challenge and stretch your high potential employees. üMaintain your high potential practices to ensure follow-through in the organization. Mc. Lean & Company 2

Executive Summary • High potential practices are a critical way organizations can manage talent better with tangible ROI benefits. • Those that do it increase their succession planning effectiveness by almost 100% (Mc. Lean & Company). • Hewitt reports that organizations with formalized high potential employee practices tend to report shareholder profits in the 75 th percentile or higher (Hewitt and Associates). • The keys to effective high potential employee practices lie in leadership and performance management. • Reap the rewards of high potential employee talent management with Mc. Lean & Company’s best practice process: 1. Ensure appropriate organizational conditions are in place to support high potential employees. 2. Establish high potential employee criteria for various levels to measure employees rigorously. 3. Evaluate employees against high potential employee criteria to choose the most appropriate employees to develop. 4. Determine development initiatives for high potential employees to accelerate their growth and value-add to the organization. 5. Govern high potential employee practices to make certain that there is accountability for high potential development throughout the year. • This solution set will also provide you with tools and templates to implement high potential practices throughout your organization with leadership, manager, and employee involvement. Mc. Lean & Company 3

The case for high potential employee practices What’s in this Section: • Understand what a high potential employee is. • Learn why your organization should focus on high potential employees, and how it benefits the business. • Get to know Mc. Lean & Company’s process for identifying, engaging, and developing high potential employees. Sections: The case for high potential Employee Practices Ensure appropriate organizational conditions are in place Establish high potential employee criteria Evaluate employees Determine development initiatives Govern high potential employee practices Mc. Lean & Company 4

High potential employees are your most precious current and future talent In the Harvard Business Review, researchers Jay Conger, Douglas Ready and Linda Hill define high potential employees as those that… …consistently and significantly outperform their peer groups in a variety of settings and circumstances. … They exhibit behaviors that reflect their companies' culture and values in an exemplary manner. Moreover, they show a strong capacity to grow and succeed throughout their careers within an organization—more quickly and effectively than their peer groups do. With that said, don’t leave your organization’s human capital potential to chance. Identify, develop, and engage your high potential employees. This solution set will show you why and how. - Source: SHRM Mc. Lean & Company 5

High potential employees are not necessarily the best current performers, but can take your organization to new heights Michael Jordan was cut from his high school basketball team. His coach could not see his potential. Don’t let this happen in your organization. What high potential employees are not ü Employees at all levels possessing qualities that benefit the business inside and outside of their current roles. ü Employees who are top performers, but cannot see outside their current role or department. ü Employees with demonstrated results either in their current role, in a past role, or in a non-work related project. ü Employees who are top performers in their current role, but do not have transferrable skills. ü Employees who are engaged with the organization. ü Employees who are self-centered and see their development outside the parameters of the business. ü Employees with a desire for development and mobility opportunities inside the organization. ü Employees that want to stay in their current role or department due to comfort and lifestyle factors. ü Employees that are quick learners and adaptable. ü Employees that are averse to change. ü Employees that your organization defines as high potential. ü Employees that your organization defines as low potential. While there are generic descriptions of what a high potential employee should look like, the bottom line is that every organization will have different preferences for what they consider high potential. This solution set will show you how to merge best practice criteria with your own organizational criteria to find the most likely high potential employees in your organization. Mc. Lean & Company 6

Organizations that identify high potential employees (HPE) are more likely to perform well against key HR success factors Organizations that evaluate employees for high potential are overall 14% more effective at key HR success factors. Success with High Potential Employees Score 60% 50% The determination of success of high potential employees was measured against the following survey statements: ü Our leadership pipeline is full of very strong leadership candidates 40% 30% What are key HR success factors? 52% 20% 38% ü Our top performing employees have a very high level of cross-functional expertise ü Our organization has thorough succession plans for key roles 10% 0% Have HPE Criteria Do not have HPE Criteria Success scores are calculated as the average response to each question, which is then converted to a percentage. ü Our organization has a very high rate of retention for high performing employees Determining High Potential Employees Source: Mc. Lean & Company, n = 115 Mc. Lean & Company 7

High potential practices are especially significant for major HR stresses: succession, retention, and leadership Succession planning, high retention of top performers, and a strong leadership pipeline are the significant benefits of high potential practices. 70% High potential practices almost double the effectiveness of organizational succession planning. Have HPE Criteria Do not have HPE Criteria Success Score 60% 50% Statistically Significant 40% 30% 20% 10% 60% 54% 50% 47% 41% 51% 34% 24% 0% Succession plans High Retention Leadership pipeline Component of Success Source: Mc. Lean & Company, n = 115 High level of crossfunctional expertise. Success scores are calculated as the average response to each question, which is then converted to a percentage. The success of high potential employees was comprised of the following questions: Our leadership pipeline is full of very strong leadership candidates, Our top performing employees have a very high level of cross-functional expertise, Our organization has thorough succession plans for key roles, Our organization has a very high rate of retention for high performing employees. Mc. Lean & Company 8

High potential employees are key to combating the dramatic effects of current employee demographic trends A major shift in workforce demographics is taking place and HR directors need to be prepared for the many ramifications. Current trends How high potential practices help • A “silver tsunami” will take place in the U. S. over the next 20 years as 79 million Baby Boomers exit the workforce. • This mass exodus will cause a skills void, thereby increasing competition for talent. (UNC) • Succession planning is a key component of high potential practices, which identify individuals that could take the place of current seniors, or assume a leadership role based on assessing leadership and organizational fit criteria. • Generation Y or the Millennials (born between 1981 and 2000) are here, and there are more on the way. • Generation Y tends to be picky about the employers they choose, expect flexible work options, and only stay in a given organization for just over two years. (UNC, Kenan Institute) • Effective talent management means focusing special attention on employees that will bring the most value to the organization. With increasingly limited resources, organizations must choose the right employees to focus on developing, or risk throwing away unnecessary resources into programs that don’t benefit them with retention and skills. In Canada: The Conference Board of Canada • Internal development rather than external hiring. • A shortage of 1 million skilled workers is predicted by 2020. • 2. 6 new jobs are expected to be created for every person entering the workforce. (The Conference Board of Canada) Replacing someone, especially with an external candidate, creates costs in the areas of: headhunting and recruitment, HR administration, and productivity loss. It takes about six months for a typical employee to reach 100% productivity, resulting in missed opportunities when top talent leaves and new talent ramps up. Mc. Lean & Company 9

Evaluating and developing high potential employees aligns with both current business and HR objectives Want to bring value to the business? High potential employee practices can help you address key business concerns over the long-run. Mc. Lean & Company’s HR Trends Survey for 2012 reveals the following: 63% of business respondents and 55% of HR respondents name “Improve core management skills in the organization” as a top priority. • Organizations know that excellent managers mean better business results. • Identifying and developing high potential employees not only improves management practices in the long term, but it also gives HR an opportunity to show their value to the business. In 2010, total training and development costs in the U. S. were $52. 8 billion. – 2010 Training Industry Report, Training Magazine 55% of business respondents and 60% of HR respondents name “Develop leaders in the organization” as a top priority. • Changing demographics as well as changing business conditions require new types of leaders to attack the challenges of the future. • Identifying and developing high potential employees allows the organization to decipher and set the criteria for future leadership needs, and seek out those that show examples of it. Make sure you are investing in the people with the highest potential to bring value to your organization or you risk throwing money into programs that only benefit the employee and not the organization. Mc. Lean & Company 10

Mc. Lean & Company Helps HR Professionals To: ü Empower management to applyü HR best practices ü Develop effective talent acquisition & retention strategies ü Build a high performance culture Maintain a progressive set of HR policies & procedures ü Demonstrate the business impact of HR ü Stay abreast of HR trends & technologies Sign up for free trial membership to get practical solutions for your HR challenges "Mc. Lean & Company provides practical research, tools and advice covering the entire spectrum of HR & Leadership issues to ensure you experience measurable, positive results. " • - Rob Garmaise, VP of Customer Experience Toll Free: 1 -877 -281 -0480 hr. mcleanco. com Mc. Lean & Company 11