You have a low-performing employee and a high-performing employee both up for the same promotion: Who do you promote? It's no contest, right?
If you said the high performer, you may be about to make one of the oldest mistakes in the book. How can that be? Because you never asked yourself which one has the most potential. And that's because managers are told over and over to only promote people who've proved their worth—those you who know are already up to the task, not those who you suspect will be.
The truth is that rewarding high-performing employees is the easy choice—as well as the lazy choice. And it's one that may come back to haunt you, especially at the higher levels, as you bulk up your senior management team with people who can perform but can’t necessarily lead.
In Deloitte’s Global Human Capital Trends 2015 survey, 86% of respondents cited leadership as the most important organizational challenge they faced, yet only 6% reported that their leadership pipelines were "very ready." That suggests there's a massive capability gap that business leaders are struggling to fill, largely because they misunderstand how to develop and promote their own talent. In fact, they're getting it backwards.
It’s possible for employees to be low performing and high potential, or high performing and low potential—they aren’t necessarily correlated.
High-performing yet low-potential employees are well placed in the organization to succeed at their jobs—but not beyond. High-potential but low-performing employees, on the other hand, are easily mistaken for bad hires. But often they're either in the wrong job, have a lousy manager, or just haven't been set up to succeed. They may have the potential to handle the job if one of those variables is corrected. In fact, they may be able to take on quite a lot more responsibility. It's just that their talents aren't being realized yet.
Here are a couple of useful formulas to keep in mind:
Performance=depth. Performance is easily measurable. You can map goals and metrics to the work someone does in order to test the kinds of results they're getting. Stretch projects can help you differentiate average performers from high performers. Since you have clear criteria to measure, usually you can tell pretty objectively who's good at their job.
Potential=breadth. It's the almost intangible qualities of a person—whether they can keep a lot of moving parts under control, manage their time well in tough situations, resolve unexpected issues quickly, and make smart decisions with limited information. Even more, potential comes down to a certain motivation, a passion, an ambition to pursue goals greater than oneself and one's job. But telling who harbors this type of potential is a more subjective challenge.
Identifying high-potential employees is more complicated than just basing promotions on typical performance metrics, as most companies do. According to the consulting firm CEB, one in two HR professionals report that they're either "dissatisfied" or "highly dissatisfied" with their high-potential–development programs.
Some organizations are alert to this, though, and trying to do something about it. Even the U.S. Air Force is now in the process of updating its master sergeant promotion system to develop an better system for promoting high-potential service members. That way they can get the resources and training they need to have the biggest impact.
Since your high-potential employees can, by definition, handle more responsibility, the fastest way to identify them is simply by offering them more opportunities. Throw them in the deep end.
For example, give a product manager a different product to oversee in addition to their regular job. "Two jobs, well that’s not fair," you might say. But it isn't about permanently burdening somebody with more and never promoting and compensating for it. It's a trial run. What you're really doing is assessing whether or not they can juggle multiple projects, work with new people in the organization, manage their time when they suddenly have a lot less of it, communicate effectively and consistently, and ramp up quickly to handle an unfamiliar situation. If they succeed, make it official. Promote them out of their old job and into a new one.
Be bold in delegating excess responsibilities and testing your employees' limits. Many times you’ll be surprised to see a low-performing employee rise to the occasion and shine with potential. After someone has shown signs of being able to do more, it's a manager’s responsibility to reinforce their strengths and fill in gaps with mentoring and training to help them consistently clear the new, higher bar you've set for them—so that, before long, you can raise it yet again.
Promoting for potential rather than a proven track record may sound counterintuitive or even needlessly risky. You might be afraid you're promoting based on (your own) blind hope. Or you may fear upsetting employees who are demonstrably better performers who will notice when they're being passed over.
Those are legitimate concerns. People are so used to being rewarded for performance that switching up how you promote inevitably means making tough decisions that will upset one side of the talent pool. This is when it takes managerial courage: the willingness to have those critical conversations that hold your team together. Truth be told, it's easier not to promote anybody, but that really isn't an option—your most high-potential employees will simply leave if they don't advance.
It's people who define an organization—and leaders even more so. The most effective managers help those who have the potential to realize it and help them build a foundation for continual success. They don't just reward people who are already succeeding, but may not be able to succeed more than they are.
Adam Miller is the founder and CEO of talent management software firm Cornerstone OnDemand, one of the world’s largest cloud computing companies, with over 25 million users across 191 countries. Follow Adam on Twitter @amiller29.