Spotting and nurturing high potential (HIPO) employees for leadership positions within an organization isn’t easy. Especially, if those in charge don’t have clear definitions of what makes an employee HIPO. There are many different strategies and tactics management can focus on when trying to figure out who in their workforce is ready to be molded and who isn’t. But first, let’s quantify why it’s important that management create objective to boost employee morale and identify who their HIPOs are before they leave for other opportunities.
If high potential employees leave, how much does it cost to replace them?
According to Josh Bersin, Principal and Founder, Bersin, “The total cost of losing an employee can range from tens of thousands of dollars to 1.5-2x their annual salary.” He notes the “total costs” can be added up by this criteria:
- Cost of hiring a new person (advertising, interviewing, screening, hiring)
- Cost of onboarding a new person (training, management time)
- Lost productivity (a new person may take 1-2 years to reach the productivity of an existing person)
- Lost engagement (other employees who see high turnover disengage and lose productivity)
- Customer service and errors (new employees take longer and are often less adept at solving problems). In healthcare, this may result in much higher error rates, illness, and other very expensive costs (which are not seen by HR)
- Training cost (over 2-3 years you likely invest 10-20% of an employee’s salary or more in training, that is gone)
- Cultural impact (whenever someone leaves, others take the time to ask “why?”)
How to identify and retain high potential employees
According to EmployeeConnect, there are five possible key characteristics HIPO employees demonstrate daily, regardless of what department they are in within an organization:
How to identify high potential employees
This is based off learned skills or innate qualities. If an employee exhibits aptitude in other areas than just their basic job functions, they may be a HIPO candidate. The more skills they demonstrate, the higher their potential will be.
Various experiences in aspects of business, management or production can be a good indicator of a HIPO employee. These employees often have experience in leadership positions at other companies, school projects and extracurricular functions outside of work. With experience comes respect, people will generally feel better working for someone who has the “know-how” rather than someone placed in the position without much practice.
3. Learning Agility
This is how fast someone learns. If your organization has an employee who can adapt and learn how to navigate difficult work tasks, situations and/or new business needed software–they just might have themselves a HIPO employee. Employees who demonstrate the ability to learn quickly tend to embrace change, new ideas and career development opportunities more than those who don’t.
This quality is measured by employees who are ambitious, self-starters. Typically, these employees will ask for expanded responsibilities, seek career advancement opportunities, and will ultimately be successful when confronted with preposterous work-related hurdles. These people often have goals for their career, whether they be a few or many years down the line. They work to build experience, expertise, security, freedom and balance into their lives.
Assessing how engaged an employee is, involves measuring their commitment to a company’s culture and industry. Typically, engaged employees will participate in volunteer projects, support the company’s products and services, while finding creative ways to improve operations. They will also often lead outside group activities, mentor team members and look for ways to connect with other departments and teams.
It’s not imperative that your HIPO employees exhibit all these characteristics to be considered for leadership positions. If they show signs of leadership qualities in some areas, they probably have the aptitude to develop the other characteristics as well. Smart employers will acknowledge these characteristics within a HIPO employee and nurture them in various ways.
How to retain high potential employees
Once an organization identifies their HIPO employee(s), they must help nurture their abilities. According to CBE, “25 percent of HIPOs are planning on leaving their company within the next year, and the remaining three quarters are 10% more likely to leave than other employees.” An organization can implement these four strategies within their business to help keep HIPOs engaged and excited about their future within it.
First, an organization needs to have the ability to spot HIPO talent using the criteria above. After they do so, they must recognize the employee in a way that doesn’t foster a sense of entitlement. If management can consistently provide recognition to work that deserves it, it can reinforce greater self-esteem and higher job satisfaction for the employee.
While higher compensation typically ranks highest for employees overall–rewards such as bonuses, PTO hours, gift cards and career development opportunities can be a good alternative to a pay raise as well. Employees will feel more enthused to be productive if they know there are potential rewards for the hard work they put in.
You can challenge your employees by assigning tougher projects, special duties and/or give them expanded responsibilities. These types of challenges can keep HIPO employees engaged and satisfied with their work responsibilities. Keep pushing employee potential by offering these challenges.
Show your HIPO employees you appreciate their tenacity and continuing hard work by promoting them. If your HIPOs are not rewarded or promoted over a period of time of producing quality work, they will begin to slide into a more passive role within the company because they don’t believe their efforts are being recognized. If there isn’t a promotion currently available that they would fit in for, you can offer one-on-one mentoring, and/or certification and training opportunities in the meantime.
It’s important for management and human resources to identify their HIPO employees early and often. Then they need to develop strategies to retain them. If an organization is passive or just doesn’t care to find these golden nuggets within their workforce, then it’s on them when the HIPO leaves for “greener pastures.” Missing out on these potential leaders can cost a company thousands of dollars at a time.
If you thought this blog post was helpful, check out the 5 Toxic Workplace Policies Employers Should Avoid or have a laugh by reading The 7 Most Outlandish Excuses for Being Late to Work You’ll Read.