REFLECTIONS ON “HOW TO ASSESS EXECUTIVE POTENTIAL?”

Dr. Prakash V. Bhide

How do we accurately assess Executive Potential is a question which is challenging many CHRO’s and CEO’s. A 2005 survey, found that world’s largest companies ‘mishired’ people 80 % of the time and mis-promoted people 75% of the time. This is really very costly and serious. A large number of organizations are heavily investing in Talent Management and Succession Management to build a strong leadership pipeline. They use 3x3 matrix of potential and performance but struggle to assess and measure POTENTIAL. However, most of them report that they are not happy with the results. According to Human Capital Institute, 70% of succession plans fail within two years. One of the challenges is ‘Identification of potential’ especially in young executives.

In my earlier blog on ‘Reflections on Executive Talent and Potential’, we have seen in detail about the concept of potential. I would strongly recommend you to read it as a backdrop paper and setting the context to this blog. From Talent Management perspective  “Potential is the latent future capability of an individual to build upon existing strengths, knowledge, experience and improving on major weaknesses, so that they do not become derailers, to perform effectively at higher levels of responsibility within an appropriate environment”. Each organization should define Talent and Potential aligned to its Business Strategy and Industry Context.

We will now explore several ways of assessing ‘Executive Potential’. Corporate Leadership Council (2005) has defined Executive Potential in three dimensions:

1. Aspiration:

Extent to which an employee desires

a.) Advancement & influence

b.) Prestige & recognition in the organization

c.) Financial rewards

d.) Overall job enjoyment

e.) Work – life balance

2. Ability:

A combination of innate characteristics & learned skills that an employee uses to carry out their work. Mental/Cognitive agility, emotional intelligence, technical and functional skills and interpersonal skills.

3. Engagement:

a.) Emotional commitment for the organization

b.) Rational commitment to stay with the organization

c.) Discretionary effort i.e. willingness to go beyond the call of duty.

d.) Intent to stay with the organization.

Corporate Leadership Council believes that all three dimensions need to be present simultaneously for a high potential employee. Infact High Potential is the area of overlap  of the 3 circles of Aspiration, Ability & Engagement. High Potential employees are those with 75% chance of being in the top quartile of performance at the next level, within the first year in the new role. They recommend measuring employee potential through a questionnaire survey (total 64 questions) given to employees & their managers to assess aspiration, engagement & ability of employee.

In ‘Leadership@Infosys’ by Matt Barney, It is reported that two best methods for assessing potential are “Cognitive Ability” & “Work Samples” at entry level. My research on a sample of 640 High Performing employees correlates with this. At more senior levels ‘Follower Perceptions’ are more than two times better at predicting Leader Effectiveness than actual objective measures of intelligence. My experience shows that 90 degree feedback from subordinates is a great predictor of Leadership Potential. At middle and senior levels ‘Learning Orientation’ and ‘Team Playing’ become important. Infosys has developed ‘Computer Adaptive Multi-Source Assessment’ to gauge the likelihood of effective performance and potential. 360 degrees surveys using Rasch Measurement Technique that removes the leniency and severity bias of raters, to make sure that all the ratings are fair, accurate and sufficiently precise. The “Leadership Journey Series”, a 360 degree assessment based on Zaccaro, Kemp and Bader (2004) model of Leadership Predictors (e.g. personality, values, motivation, interests and cognitive ability) as well as processes (e.g. performance)has an impact on Leadership Outcomes. This assessment measures Leadership Performance and Leadership Potential. The potential is measured in terms of  Distal predictors of leadership (e.g. personality, values, etc.) and Goal Orientation (e.g. motivated to learn versus looking good).

Morgan McCall in his book ‘High Fliers’ recommends “LEARNING ABILITY” as an essential and excellent predictor of future potential. Several ‘Thought Leaders’ have recently expanded added dimensions and terms like LEARNING AGILITY, LEARNING ORIENTATION etc. Centre for Creative Leadership in collaboration with Columbia University has come out with a white paper on ‘Learning and Learning Agility’ (April 2012). Their research shows five main facets of ‘Learning Agile’ behaviours of Leaders.

 The 4 ‘ENABLERS’ are:

1. INNOVATING

2. PERFORMING (Remaining calm, present and engaged in the face of difficulty and quickly adapt in order to perform)

3. Reflecting (Hungry for feedback and understand own behaviours and assumption for deep insight of self awareness)

4. Risking (Putting themselves in a challenging situation)

And 1 ‘DERAILER’:

Defending (Defensive in face of adversity and avoiding learning opportunities as they arise)

They found leaders with high learning agility to be:

a.) More Extroverted

b.) More original

c.) Less accommodating

d.) More Focused

e.) More Resilient

Several new assessment instruments are being developed to assess ‘LEARNING ABILITY’. Many of them use 360 degree multirater feedback response on specially designed questionnaires.

Spreitger (1997)has developed a tool POSPECTOR with 14 dimensions on ability to learn from experience. Several authors have also come up with Development Activities for improving Learning Ability.

Ram Charan, in his book “Talent Masters” says that companies like GE, P&G, Hindustan Unilever etc. do not only rely on batteries of mechanistic tests to assess talent & potential. Instead, they study the behavior, actions and decisions of individuals and link them to actual business performance. Their observations are rigorous, specific and nuanced. Over time , as other senior leaders discuss them openly and candidly, the observations become verified as facts. They dig to understand an individual’s unique combination of traits. The purpose is to know what the person is, describe his characteristics in complete thoughts using full sentences (not words) and learn how key items combine in a unified whole. They become “Intimate” with their talent by observing and listening to know the essence of each individual through ‘Depth of Knowledge’ about people, a database in their minds. Accumulation of these observations on job by line managers and experts, produces a complete picture of the whole person which helps in taking high quality decisions about leaders. Talent Masters besides the formal reviews, have important “Social Processes” that can’t be easily seen. Senior leaders spend at least 25% of their time in spotting & developing leaders. At GE and P&G it is close to 40% of time.

Morgan McCall, in his book ‘High Fliers’, has identified eleven dimensions of early identification of global high potential executives. My experience shows that these can be assessed through a BEI dialogue by a trained assessor.

1. Seeks opportunity to learn

2. Acts with integrity

3. Adapts to cultural differences

4. Is committed to make a difference

5. Seeks broad business knowledge

6. Brings best out of people

7. Is insightful – sees things from new angles

8. Has courage to take risks

9. Seeks and uses feedback.

10. Learns from mistakes

11. Open to criticism

Assessment of Potential only through discussions by Boss or Senior leaders many times is biased. If open discussions are based on AC/DC data and recorded observations at work with incidents, then they become powerful.

DDI has developed a “Leadership Blue Print” assessment with four dimensions of attributes of leadership. Leadership Promise, Personal Development Orientation, Mastery of complexity & Balance of values and results.

My experience shows that BEI (Behavioural Event Interview) technique by a trained assessor can adequately assess the ‘Learning Ability/Learning Agility’ of young leaders, which is an excellent indication of future potential. I also recommend that simultaneously ‘Derailers’ should also be assessed periodically. Individual Development Plan for HI POTENTIALS should include activities/action to improve & enhance “Learning Agility” and overcome “Derailers”

I  firmly believe, based on my extensive experience of assessing more than 2000 High Performing young leaders, that a well developed Leadership Competency Model, incorporating future competencies for success (5 to 10 year time frame) and robust Assessment/Development Centre methodology can excellently predict future potential. We in JK Organization have developed an internal norm (Based on data). At least 10 out of 12 Leadership Competencies to have a score of 3.0 & above, on a 1 to 5 scale, and out of which at least 4 competencies to have a score of 3.5 & above to be rated at ‘A ’potential. Yes, the AC/DC is rather a costly process and takes more time. I feel the investment is worth it as it has a high ROI. As per me it is a small investment for assessing and identifying future leaders more accurately with high probability of success.

Ultimately, the success of assessing potential, talent management and leadership development, is evaluated by CEO’s with respect to meeting the objectives e.g. Succession Management, Developing Strong Leadership Pipeline etc. Hence, identifying High Potentials, is the first step in the Leadership Development Journey. The grooming, nurturing of these High Potentials (or assessment of potential during hiring at senior levels and their induction) is equally important. The ingredients of the ‘CAKE MIX’ is important, but so is the Love, Tender Loving Care and Expertise to ‘Bake ‘it by passing (the HI POTS) through ‘Fire of Experience’ so that it is neither half baked nor gets burnt, but really comes out “Well Baked” with all the aroma of success.

We will explore the Best Methods of Talent Management and Leadership Development in our future blogs.

REFLECTIONS ON EXECUTIVE TALENT AND POTENTIAL

Dr. Prakash V. Bhide

“In future TALENT will be a big differentiator between companies that succeed and those that don’t. One organizational competency lasts. The ability to create a steady, self-renewing stream of leaders. Talent is the edge.” (Ram Charan – Talent Masters)

I find that there is a lot of confusion on the meaning of TALENT and POTENTIAL in organizations and even among many HR professionals. The meaning also changes with context.

It is surprising that the definition & concept of TALENT eludes description. Different thought leaders view talent in entirely different ways. Many organizations do not define what they mean by talent and use it rather loosely.  Economist (2006) reports “Companies do not even know how to define talent, let alone manage it.” Some use it to mean people like Aldous Huxleys ALPHAS in the “Brave New World”- those at the top of the ‘Bell Curve.’

Talent as a noun – is a natural aptitude, skills, a marked innate ability for a natural endowment or ability of superior quality. Other synonymous words are gifted, aptitude, ability, faculty, genius and capability leading to a consistent and far superior performance. Names of Lata Mangeshkar (singing), Sachin Tendulkar (cricket), Tiger Woods (Golf), Michael Jordan (Basket Ball) and Amitabh Bacchan (Acting) immediately come to mind.

The word ‘Talent’, in Latin, means ‘a variable unit of weight/money used in ancient Greece, Rome and Midde- East. Indian Vedas say that every person has some unique talent and potential.  

EXECUTIVE BURNOUT & PREVENTIVE ACTIONS

Dr. Prakash V. Bhide

Kiran was a Hi Potential STAR in a financial company. He was an Engineer from IIT and MBA from IIM. He had a dream successful career and was promoted as Vice President at the age of 32. His boss and company had very high expectations from Kiran. Unfortunately even with long hours of work, within a year after promotion, Kiran is a wreck and facing burnout. Why? How can he be helped?

Even though executive burnout is reported to be growing at an alarming rate, it is not talked about much. The cost of burnout both for individuals as well as organization is very large. In a survey, it is reported that the cost is $200 billion per year for Australia as a country.

The term burnout was coined by Freudenberg (1974). The term burnout is described as “a state of physical, mental and emotional exhaustion that often result from a combination of very high expectations and persistent situational stress. It describes a state of depletion of person’s resources, particularly energy due to excessive

demands made on the person as a result of which the individual becomes apathetic and impassive towards work and other aspects of life.”

Radha Sharma (2005): “Executive burnout is marked by persistent feeling of inadequacy, ambiguity, dissatisfaction and powerlessness accompanied by behavioral manifestations of apathy, indifference and physical and emotional exhaustion.”

EXECUTIVE DERAILMENT – TEN TOP REASONS AND PREVENTIVE ACTIONS

Dr. Prakash Bhide

Executive derailment is very common but not much talked about. As per Jay Conger (2005) sixty five percent of top executives promoted or fail or hired, derail within the first one year. As reported by McCall; about fifty percent of high potential executives derail at some time during their career. At senior leadership levels of CEO/CXO, the cost of derailment is forty times the annual CTC which we can translate to a loss of 25 to 100 crores. It is hence crucial for the organization and high potential individuals to understand the reasons for derailment and ways to prevent it.

“Derailed Executive is a person who has been very successful in his/her managerial career but who failed to live up to his/her full potential, as the organization saw it.”The derailed executives are fired, demoted, forced to resign/retire, shunted aside, or passed over or stagnated at the same level.

“When a manager who was expected to go to a much higher level in the organization and who was judged to have the ability to do so is fired, demoted or plateaued below expected levels of achievement, it is considered as Derailment.”

It is interesting to note that there are amazing similarities between successful high potentials and derailed executes. The derailers are often noticed in advance but frequently overloaded or forgiven because of individual’s high potential, high performance or because their strengths were highly valued – Denton (2006). Several studies have been made by Centre of Creative Leadership from 1980’s and several other researchers such as Hogan, Buhler, Huges – Brown, Jay Conger, Dotlitch and others.

The major derailment factors are clubbed under following four themes:

1. Failure in interpersonal relations.

2. Failure to meet business objectives.

3. Failure to build and lead teams

4. Inability to change/adapt during the transition.

LEADERSHIP DEVELOPMENT THROUGH EXECUTIVE COACHING

Dr. Prakash Bhide

Traditionally coaching in India was perceived as a stigma and often clubbed with counseling which was primarily meant for corrective actions Executives were reluctant to be coached as it was viewed by peers and subordinates as something against the coachee. Bosses and organizations sometimes considered it a last resort for correction of negative behaviors or performance before an exit, stagnation or sidelining of executive. This perception is now changing as executive coaching is being seen in positive light and is being sponsored by the CEOs and organizations to develop and motivate high potential employees for accelerated growth. In fact, executive coaching is today viewed as a special leadership developmental initiative for 'high potential leaders' who are on accelerated career path.

Today, executive coaching is seen as for 'successful leaders to become more successful'. Many CEOs and top leaders feel lonely and isolated. They have their fears, doubts and at times feel their inadequacies. In spite of these, they have to display that they are in total control as their own personal stakes in terms of reputation are high. The business consultants have given their expert recommendations, now CEOs and executives have to take the final call they are looking for a sounding board - an external confidential trusted friend, philosopher and guide. CEOs also realize that 'What got them here, won't get them there' (Ref. Marshall Goldsmith*). The top executives realize that they need to have a global mindset, entirely new skills and must overcome certain derailers. The increasing number of organizations opting for executive coaching for its leadership and potential leadership team is a positive indicator for the nascent industry in India.

COACHING THE INDIAN WAY

One shoe does not fit all. What works best for the west need not work in the Indian context. The western coaching methodologies which resort to asking questions and expecting the coachee to find answers or solutions, is not appreciated by coachees in India.