Why Performance Does Not Equal Potential

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Welcome to the third stop on our journey in the cloudy country of Potential. As pointed out in previous posts, this has become a real key concept in HR in general and talent management in particular. With disruptive change being the new constant for organizations, HR has shifted a significant part of its focus from assessing what employees have accomplished in the past, to what they could accomplish in the future.

Or, so it is said. Reality is somewhat less flattering, which is not so strange if we take a step back to look at the concept of potential. In a nutshell, potential denotes something that has yet to realize. This something is, by definition, not observable in the here and now. Instead, you have to use some kind of indicator to assess its probability. In short, you have to make a prediction. Now, if you were a manager charged with assessing the potential of your subordinates, which would be your most readily available indicator of how someone will perform in the future? Probably, their past performance.

This amounts to one of the most common fallacies in talent management. Research has shown that managers, when assessing employees’ future potential, keep sliding back into past performance (Hewitt, 2008; Rogers & Smith, 2007). There are, however, several important reasons for why current or past performance does not equal potential. Here are some of the core ones.

Potential is about doing something new. Anyone who has taken Psychology 101 is familiar with the motto “the best predictor of future behavior is past behavior”. That can very well be true, but only if situations remain relatively constant. When you are assessing potential, you are assessing the person’s ability to take on different tasks and roles than today – usually more complex and demanding ones. Walter Mischel, nowadays more famous for The Marshmallow Test, showed several decades ago that past behavior is a pretty lousy predictor of future behavior if that future involves significantly different situations (Mischel & Shoda, 1995). Of course, past performance is not unrelated to potential, but it is far from sufficient.

Not everyone has equal opportunities to perform. As pointed out in a vast literature, performance is not only about ability and motivation – it is also about opportunity. A person could have immense potential, but be held back by e.g. the wrong manager, a non-supportive environment, or a bad-fitting role. A sharp and fair assessment of potential must be able to take this into account. For instance, if a certain employee has many of the foundational factors for potential in place – such as personality and general mental ability – consider moving that person to another unit, role, or team, that you think would be a better fit (see e.g. Silzer & Church, 2009).

Development needs reveal themselves when the bar goes up. This is a classical case when it comes to the group usually referred to as “junior top talent”. In their first one or two jobs, they often live well off their intelligence, drive, and general social skills. This usually also earns them a reputation as “stars”, that managers are swift to promote. Potential weaknesses, e.g. perfectionism, sensitivity to criticism, or narcissism, are often overlooked because they are not critical at this level. However, things may change once these individuals get into a role that is in some way qualitatively different – for instance, moving into a people leader position, or moving from the operational to the strategic level. This has been identified as one of the main reasons for why so many promotions decisions fail (some estimates say over 50 percent; e.g. Burke, 2006; Hogan & Hogan, 2001).

As the above argument shows, confusing performance for potential is as risky as it is common. This of course begs the question: If not past performance, then what? Next week, we will delve deeper into that question.

 

Photo: https://www.flickr.com/photos/manoftaste-de/

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