Why we need to realise the full potential of our employees

After a period of cutting costs, finally there's talk of an upturn. Although IT budgets are likely to remain flat in 2010, 87 per cent of CIOs are actively preparing for a recovery; looking beyond immediate savings and starting to think about the future. CIO Executive Board, a program of the Corporate Executive Board, research shows that the main attribute impacting an organisation's long term competitive advantage is the development of future leaders and that CIOs cite skills shortage as one of the top three risks that could affect IT's ability to respond to the recovery. Organisations that successfully identify and develop high-potential talent (HIPOs) have financial advantage over their peers; it is HIPOs that drive companies forward as they become leaders in the future.

The challenge

There are two main challenges to realising the full potential of employees. The first challenge is in the IT workforce itself. Our research shows that on average only eight per cent of IT employees are HIPOs (defined as having a 75 per cent or greater chance of being a top performer at the next level) - a proportion that lags behind a number of other corporate functions. The second challenge is in the process. Alarmingly, over 80 per cent of IT executives say that their existing approach to identifying and developing high-potentials is ineffective. So, to reap benefits associated with HIPOs, IT executives need to correctly identify their HIPOs and put in place effective strategies for shaping them into future leaders.


Spotting HIPOs and helping them grow

Spotting HIPOs is not always easy, and the most common approach - equating high performance with high potential - is only effective in a minority of cases. Our research shows that HIPOs have three critical characteristics - Ability, Engagement, and Aspiration:

• Ability: The innate characteristics and learned skills that an employee uses to carry out day-to-day work
• Engagement: The extent to which employees commit to something or someone in the organisation, how hard they work and how long they stay as result of that
• Aspiration: The extent to which an employee values the intangible and tangible benefits of moving up in the organisation

When used as filters to screen employees, these three characteristics can help IT leaders distinguish HIPOs from high performers who are ill-equipped to succeed at the next level.

The next question is how to ensure that HIPOs fully realise their potential. Luckily, the factors that drive employee potential most - factors like developing a culture of openness and recognition, building knowledge-sharing peer networks, or introducing training opportunities for staff - are all under a manager's control. By focusing on these areas, IT executives can build a high performance culture in their organisations.

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Distribution of IT workforce probability of performing in the top quartile in a more senior role

Best practices

Here is how three CIO Executive Board members (please note that all company names are pseudonymed) have successfully identified and developed HIPOs in their organisations:

Company A: Build and sustain a high-potential employee program.
One way to optimise investment in HIPOs is to identify them early in their careers and expose them to challenging roles that stretch growth, backed by sufficient support to help them in those roles. Company A is a leading innovation-driven pharmaceutical corporation, does this by reviewing each ‘candidate' on past performance, learning agility, and possible behavioural barriers to advancement, and then monitoring their high-potential designation based on their merit and aspiration.

Company B: Facilitate effective knowledge-sharing peer networks to develop more high-potential employees.
A surprisingly effective approach to developing high-potential IT staff is to establish colleague network-building opportunities and allow them to interact and learn from each other. Company B, a global, science-based chemical company, does this by setting up a collective leadership program, designed to give HIPOs the opportunity to strengthen business relationships and discuss IT challenges with peers.

Company C: Provide opportunities for developing new skill sets.
Another way to ensure the development of high-potential staff is to provide development opportunities internally, and in collaboration with outside vendors. Company C, a global leader in information commerce, does this by enrolling HIPOs in external critical thinking training seminars and thus enhances their qualitative, analytical, and leadership skills through a structured methodology for problem solving and decision making.

The Payoff

Before the recession, there was a lot of talk about ‘developing leaders' and ‘up-skilling teams' as a means to driving organisation growth and generating business value. Unfortunately, these efforts gave way to more immediate cost-cutting needs. Now, as we prepare for the upturn, it is time to revisit this subject. The above examples for identifying and developing HIPOs are simple and cost effective ways to tackle building high-potential teams. This investment will pay off.

Research shows, that in the long run, companies where the IT organisation makes substantial investments in developing high-potential employees experience as much as a 20 per cent increase in total shareholder return, as opposed to those who don't.

About the author:

For additional information about the CIO Executive Board, please visit www.exbd.com/IT. The Corporate Executive Board (NASDAQ: EXBD) drives faster, more effective decision-making among the world's leading executives and business professionals. As the premier, network-based knowledge resource, it provides them with the authoritative and timely guidance needed to excel in their roles, take decisive action and improve company performance.