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The Resource for the Global Finance Profession

How Companies Can Find Tomorrow’s Leaders Today

  • By Lauri Putt Needleman
  • Published: 2014-04-23

Identifying and retaining an organization’s future leaders is key to a company’s success and cannot be left to guesswork or a manager’s personal inclination; it takes planning. But not all leaders are found outside the organization—some can and must be developed. By applying a methodical approach to leadership development, an organization can ensure its success for generations to come.

Assessing performance and potential

Most organizations use some type of ratings scale to determine an employee’s performance—an annual, semiannual or even quarterly review process. The ratings scale typically is numerical, i.e., 1 to 5, while others assign a numerical weight to each classification, such as the following scale:

  • Frequently exceeds expectations (1)
  • Sometimes exceeds expectations (2)       
  • Meets expectations (3)
  • Doesn’t meet expectations (4).

Organizations have found that performance ratings can be more effective when managers are not given the option of a middle ground or average rating, e.g., a 3 on a scale of 1 to 5. By forcing management to assess talent on an even scale, the performance review process must be taken much more seriously and an employee’s performance is, ideally, more carefully considered.

Some human resources and management teams look beyond an employee’s performance rating to other factors that may drive an individual’s performance-related contributions to the organization. For example, an employee may or may not:

  • Reflect the company’s core values by engaging in certain types of activities, whether within or outside of the workplace
  • Demonstrate the organization’s most desired competencies through their behaviors and interactions with others
  • Take on special projects and engage in company initiatives—outside of his or her daily role— that support the organization’s broader mission.

Beyond leadership aptitude

Performance itself should only be one driver when assessing leadership potential.  Ever heard of the phrase “HIPO?” That’s your high potential employee. Add high potential with high performance, and you have a HIPO/HIPER. Find someone who consistently delivers and performs well, shows an appetite for learning and an ability to continually develop his or her soft and technical skills, and you likely have a high performance, high potential employee.
When searching for your leaders of tomorrow, you’ll have to look outside of your organization first. Unfortunately, for many companies, the recruitment process can be ripe for failure. One trait that many companies lack during the recruitment process is honesty.

“Companies need to be honest with potential employees about what the company culture and the job really look like,” said Leslie Zarrelli, director of human resources for a global higher education institution.

Zarrelli emphasized the importance of thinking about potential in relation to the individual and the work environment. Zarrelli explained how her friend, Brian, was recently recruited by a company that needed to revamp its current processes and identify opportunities for efficiency. In the role, Brian would develop new policies and procedures in support of the process changes. The hiring manager praised Brian for his creativity and innovative thinking.

But, as Brian settled into his new role and learned more about the company culture, he realized that creativity and innovation were not actually welcome in the environment. While senior management talked about instituting more effective processes and documenting policies and procedures, they weren’t willing to allocate the time or resources to the effort. Every idea that Brian brought to the table received a lukewarm response and was quickly shut down.
 “What this tells us is that establishing core competencies for a company and specific job types and having a relevant, behavioral-based interview plan are absolutely essential to the hiring process,” said Zarelli.

How to keep your leaders

Once you’ve identified your high potential high performers—or HIPO/HIPERs—it’s critical to understand their likelihood to stay and grow with the organization. You’ll want to start investing in your future leaders and then protect that investment.

Yet, most top-performing employees know that they have options when it comes to their careers. They are often recruited by former employers and mentors; recruiters somehow find your top talent and will do everything possible to lure them away from your company. What can you do about it?

By monitoring key flight risk indicators and mapping your HIPO/HIPERS on the Leadership Retention Risk Matrix, your organization can decide where and how to invest in your future leaders.


According to Beth Gunzel, AFP’s director of human resources, key flight risk indicators can vary. “An employee may exhibit multiple changes in behavior,” Gunzel said. “For example, someone may have recently made a formal workplace complaint or experienced a life-changing event such as a birth, death or divorce, and that individual would plot farther right than someone who demonstrates only one change in behavior. Your worst case scenario is someone high and far right—a HIPO/HIPER and a high flight risk.”

Gunzel underscored the importance of the exercise of mapping your HIPO/HIPER flight risks by noting that when managers take a more systematic approach to managing retention risk, companies can prioritize high potential flight risks across the organization. “When any of these signs are present, managers can proactively address the issues and develop a plan with the employee to support them through the issues, where appropriate,” she said.

Essentially, what this means is that the key to success for any retention program—whether it’s based on compensation, development opportunities, a job flexibility plan or otherwise—is communication. If highly-valued employees do not know or recognize some of their value in your eyes and fail to see the effort being made to retain and develop them, then the retention program is likely to fail. As Zarrelli puts it, “Employees feel loyal when you invest in them.”

Lauri Putt Needleman is Manager of Advisor Relations for the AFP Advisors Network. Learn more about the AFP Advisors network here.

A longer version of this article will appear in the May edition of AFP Exchange.

Copyright © 2015 Association for Financial Professionals, Inc.
All rights reserved.

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