Building the Next Generation of Leaders

Identifying & Developing High-Potential Employees

Originally printed in CFMA Building Profits Magazine May/June 2018 edition.

"When an opportunity to excel presents itself, high-potential employees will rise to the occasion and deliver 400% more productivity than “average” performers. Despite this, when most managers look at workforce statistics, all employees tend to be lumped together into a category so broadly defined that it becomes difficult to make meaningful decisions,” Harvard Business Review reports.¹

In engineering and construction (E&C), high-potential programs meant to attract, cultivate, and retain key employees have garnered increasing support over the past few years. The diminished labor pool, retiring baby boomers, and overall rise in project volume have come together to drive this trend. But not all E&C companies currently put enough time and effort into the task. This article will explore the connection between high-potential employees and leadership development. It will also show how employees who demonstrate early potential can – with adequate training and development – successfully grow into their roles and exert positive influence across the organization.

Who Are High-Potential Employees?

By their very nature, high-potential employees are gifted professionals who possess outstanding drive, a strong desire to continue to develop, and the ability to adapt to changing demands or situations. These characteristics equip them to be future leaders in the organization and ultimately make them attractive candidates for competitors to recruit away from your company to their own. To prevent this from happening, companies should develop and hone high-potential programs so that individuals with strong potential are identified and developed through meaningful group and personalized learning experiences. The efforts usually pay off tenfold because these programs:

Help companies make the most out of talented young leaders;
Help them transition into future roles; and
Increase the likelihood that top employees stay with the organization.

Given the ongoing war for talent, all three of these objectives are critical in today’s market. Unfortunately, FMI’s 2017 Talent Development in the Construction Industry Survey indicates that more than half of participants have no formalized process for identifying and developing high-potential talent.² This lack of attention placed on high-potentials hurts E&C companies, many of which tend to focus more on “putting out fires” and handling day-to-day challenges instead of developing long-term leadership pipelines.

Cultivating Greater Commitment & Loyalty

Best in Class companies focus on building internal systems and structures that ensure the next generation of leaders will continue to develop their skills. This greatly contributes to long-term employee loyalty; high-potentials who see the company investing in their long-term potential tend to feel more committed to their organizations. By helping high-potentials clarify their short- and long-term developmental goals, executives show they are invested in their next generation’s career growth and potential to take on additional challenges and roles. While this type of proactive development is an intentional, focused, and purposeful process that takes time and energy, the payoffs are significant.

Creating a High-Potential Talent Development Program

There is a clear, well-trodden path to creating a successful high-potential talent development program that are outlined in the five main steps that follow.

Step 1: Align Development to Organizational Vision & Strategy

One of the first questions to ask when developing a high-potential program is, “How will this initiative advance current business opportunities or diminish challenges?” In order to truly be effective, a high-potential program must have clear objectives that tie to the organization’s vision and strategies. For example, one contractor with multiple operating regions rarely had employees engage with each other, lacked companywide alignment with organizational values, and needed to accelerate their growth in enterprise and strategic thinking in order to meet the organization’s executive succession needs.

The contractor developed a high-potential program to bring together the next generation of leaders to build relationships, become advocates of the values, and work on strategic thinking skills through an in-depth action learning assignment. This program was closely aligned with company goals and not only improved leaders’ skills, but also advanced the organization’s strategies. One of the key results of the program was that over a three-year period, all but one of the 21 high-potentials in the program are still with the company.

Word of Caution

Skipping this step can seriously harm companies looking to retain and develop top talent. High-potential employees may become critical or skeptical of programs that lack strategic alignment. Without strategic alignment, programs can be dismissed as nothing more than “nice company get-togethers” or “basic trainings.” Effective high-potential programs must acknowledge why organizations care deeply about investing in this group of individuals.

Step 2: Clarify Competencies

When building a high-potential program, organizations must first identify the specific competencies required for successful leadership. Competencies are different from the basic job duties that might be found in a job description. The most effective competency framework identifies the specific skills and traits that separate the highest performers from average performers. Moreover, great competencies will help leaders understand what is needed of them and how they can drive the organization’s strategy.

While this may seem like an easy step to skip, establishing clear criteria for success informs the overall high-potential program. Once leadership competencies have been identified, organizations can assess leaders against and develop leaders toward them accordingly. Competency-based high-potential programs are more structured and aligned with the organization’s needs. Achieving these competencies should define success as a leader, in one’s role and future career trajectory.

Word of Caution

When this step is omitted, companies may realize very little return on investment. Often, the result is a program that brings leaders together to develop skills that are irrelevant or disconnected from what they really need to succeed.

Step 3: Identify High-Potential Employees

Objectively assess each candidate’s performance and potential. This is a critical step because subjectivity and favoritism can creep in when there’s no objective process with clearly identified criteria. An objective identification process allows E&C companies to separate out current performance levels from future potential. For example, current high performers may be great contributors to the organization, but they may have relatively low potential for future growth.

Likewise, current “midlevel” performers may have great potential for future growth with the proper training and development. Without a close examination of different candidates, companies could invest in developing the wrong people or miss an opportunity to develop a future star player. Indicators for potential include the ability to adapt and change, strong drive for continuous development, and strong ambition to succeed for the organization.

Word of Caution

This can be one of the most challenging steps for contractors. If senior leaders have different conceptualizations of “high-potential,” they may hold conflicting opinions regarding who should be in the program and divert to making decisions based on tenure or fear of losing talent. It’s not uncommon to hear, “He’s been here for 20 years, so we have to include him or we will risk losing him – even though he’s not really a high-potential.” By establishing the definition of “potential” and a clear, compelling rationale for the program, these conversations become less political and emotional.

Step 4: Ensure Program Transparency

Many organizations create unnecessary issues by cloaking their high-potential programs in secrecy. Instead, the program should be fully transparent across the company, including information about the participants and selection process. When organizations invest a great deal of time clarifying competencies for success and identifying leaders based on clear and objective criteria, those who are (or are not) included in a high-potential development program will be more understanding of the leaders’ decisions.

Greater transparency can also motivate more individuals to work to be included in the high-potential group, thus creating a natural “cycle” of high-potentials. This systematic approach to identifying and developing high-potential employees is key to linking leadership development to a broader corporate succession management program that closely aligns with the company’s vision and strategy. In fact, FMI’s recent survey found that of companies with high-potential programs, 69% link those programs to structured succession management strategies.³ This is a positive sign that E&C companies are connecting talent development to broader strategic goals to sustain company growth and success well into the future.

Word of Caution

Being transparent about a program does not mean there won’t be questions or challenges to the approach. Be prepared to answer questions from employees around “Why not me?” or “Will I have a chance to get into the next program?” Employees will ultimately appreciate the honest feedback.

Step 5: Be an Active Sponsor

High-potential programs should include the best and the brightest from your next generation of leaders. In many ways, these programs provide a rare opportunity to invest in your organization’s future. Senior leaders must play a critical role in participating in these programs. Here are several ways senior leaders and executives can stay active in these programs:

Participate in identifying competencies. Since senior leaders understand the strategic direction of the business, they play a unique role in understanding what will be needed for leadership as the organization evolves. They should play a role in providing feedback for the competencies needed for the program (as discussed in Step 2).
Nominate future leaders. Senior leaders should play an active role in nominating leaders according to the high-potential criteria.
Be visible in the program. Senior leaders, especially C-suite executives, should be active members in the program. Programs are especially successful when C-suite executives kick-off workshops, act as mentors or sponsors in the program, and even share stories about their own leadership journey throughout workshops or trainings.

Word of Caution

When executives fail to be involved, high-potential programs run the risk of feeling like corporate trainings, or worse, events that are disconnected from the direction of the business. Executive involvement and sponsorship is a critical step in ensuring the high-potential program is a worthwhile investment.

Building Your Best People

Companies that want to improve their internal approach to high-potential development can start by making programs as transparent and visible as possible. A transparent high-potential program will attract and motivate high performers to their maximum potential. Be specific about who you are going to develop. Ask questions like, “Do we know who the high-potentials are? Do we really understand why they perform at a high level?” If this can be made clear to the organization, then more people will strive to become high-potentials.

Don’t overlook the power in connecting your best people across the organization. Spend time developing them together as a group, learning from each other, and challenging everyone to be better. This will build connections across the group of top performers and make them more loyal. And finally, the organization must build the necessary systems and processes and then drive accountability to ensure continued success.

Driving Enduring Companies

To succeed over the next decade, contractors must attract great people and simultaneously retain high-potential employees. Unfortunately, many E&C companies focus on rewarding high-potentials solely through raises or bonuses. While a competitive compensation strategy is critical for retaining key talent, a monetary-based strategy alone won’t maximize the impact your high-potential employees can have on your organization.

To build long-term loyalty, stronger leadership skills, and deep levels of motivation, organizations must go beyond simply offering monetary rewards for emerging potential and strong performance. Developing high-potential employees requires a deliberate, focused effort – but doing so can further help retain top talent and maximize their potential in the long term. Take a strategic and deliberate approach to help ensure that the right people are ready at the right time to both enter leadership roles and perhaps even become the future owners.

¹ www.hbr.org/2014/11/what-high-performers-want-at-work.

² www.fminet.com/wp-content/uploads/2017/10/TalentDevelopment Survey_FINAL.pdf.

³ Ibid.