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So what to do with High Potential Employees? A tale of two companies

performance appraisal1

Nurture high performers, they are your future

In this Blog Article we look at High Potential Employees (HIPO's as they have become known), why they are important and what organisations can do (or should not do) to attract them, hold on to them and get the most out of them. HIPO’s are simply prepared to (and can) do more and thus have a direct impact on the organisational bottom line.

This Blog Article includes a discussion of how two companies treated a HIPO very differently with very different results. 

What to do with High Potential Employees? “What a question...” you might say.

By Danie Eksteen - This e-mail address is being protected from spambots. You need JavaScript enabled to view it

“High potential employees? Well you nurture them, of course. And hold onto them. They are, after all, your future success!” What may seem obvious in theory is sadly not always practised. In fact, we have too often seen companies discard their high potential employees (HIPO’s, as they are nowadays called), like some throw away good personal relationships, thinking there’ll be plenty of other (equal or better) options just around the corner. However, just as quality lasting personal relationships are hard to establish, finding top talent can also be difficult.

The topic of this blog article was triggered by a coaching journey we recently walked with a HIPO.

Why are HIPO’s important

The point is a simple one: High Potential generally means High Performance. HIPO’s are simply prepared to (and can) do more.

Research has shown a dramatic productivity variance between top performers and other workers. Hunter, Schmidt and Judiesch found that the top 1% of workers were anywhere from 50% to 127% more productive than the average workers, depending on the complexity of the job1. A separate study by the Engineering & Construction Contracting Association in the US revealed very similar results. Top construction project managers were found to be 47.3% more productive than the average project manager (Spencer, 1997)2. It gets better – in a study of computer programmers above-average performers were 320% more productive than average programmers; top performers were 1272% more productive, adding economic value over 11 times their salary3!

We’ll leave you to do the maths of the potential impact of unnecessarily losing a HIPO on your organisation’s bottom line…

High Potential’s (Performers) Defined

Research shows that by far the majority of competences advertised for higher level jobs are EQ type competences, and some would argue that a high EQ means high potential. While we most definitely agree with the importance and relevance of EQ (and offer training in this regard), we think it takes more than high EQ to be a true HIPO4.

PatternBuilders5, in an article on ‘big data talent’, call HIPO’s A-players. “...the people who consistently demonstrate a willingness to cross chasms, to investigate new ways of doing things, and who are not afraid of technology innovations. They have an intense curiosity and are always poking around the quantitative parts of your business.”

The Corporate Leadership Council6 says HIPO’s are individuals that perform well under all conditions and can handle cross-functional or cross-business positions (read: they are comfortable with both the big picture and detail). Key characteristics of these learning agile high-potential employees include:

    • Change behaviour easily
    • Deal with ambiguity/complexity well
    • Easily learn new technologies and/or functions
    • Have a low tolerance for marginal processes or people
    • Have wide interests
    • Are clever problem solvers
    • Think strategically
    • Usually perform well under all conditions.

In our experience, much like flying cats, high performers are likely to land on their feet whatever the circumstances, and ‘flying’ is in any event just part of the fun. However important the money or the status is, that’s not what ultimately drives HIPO’s. Instead they are spurred on by the exhilaration of testing their own ability to the ultimate – they do it and enjoy it because they can.

What attracts them and what sends them running

So what do you do to attract HIPO’s7? (And, by implication, do the opposite and you'll probably lose them):

    • Recognise them: tell them that you value them – this should be done by the person with real power over them.
    • Don’t micromanage them: give them managers who are not insecure or protective of their own turf.
    • Allow them to fly: provide opportunities for them to develop, be involved, stretched and explore their own abilities.
    • Don’t let the compensation structure bog them down (it’s all about supply and demand!). Marshall Goldsmith reports that when asking more than 2000 managers to quantify the typical difference in contribution between a top performer and a below-average performer at the same pay-grade level, the average answer was “over 100 percent”. When asked what the typical pay difference was, the average answer was between 5 and 10 percent. (This just doesn’t make sense, does it?)
    • They don’t do regimented cultures well: give them freedom in scheduling their work, workplace and lifestyle.
    • Create entrepreneurial opportunities for them in-house: the FirstRand Group is a South African example of an organisation that has over the years had a specific strategy of creating ownership opportunities for HIPO’s in house – this has paid off handsomely9.

The tale of two companies

So back to our coaching client and the tale of two companies, let’s call them Lose-a-HIPO Inc and Win-a-HIPO Inc. So what happened at Lose-a-HIPO Inc?

    • As strange as it may sound, they changed the culture from extremely open and vibrant to a very controlled bottom-line driven one – this later turned out to be for purposes of improving short term bottom-line profitability and selling the company.
    • Needless to say in the process they lost a number of their HIPO’s (the category of employee we described earlier as over productive without having to be managed, i.e. they impact bottom line profitability if you allow them to.)
    • They shifted from a numerator growth-driven organisation to a denominator cost-cutting and manager controlled organisation.

So in comes Win-a-HIPO Inc, a global concern a quantum size bigger (and growing). What did they do right?

    • They communicated ‘we want you’ and offered my client any one of three different senior positions. Their mindset about HIPO’s is clearly similar to that of Microsoft’s chairman Bill Gates, who recently remarked that Microsoft would do "whatever it takes" to attract and retain the brightest [software developers] in the world.
    • They gave flexibility about office hours and office (where in the world she wanted to work). No attitude here of ‘I want to see you so I can control you’. See, HIPO’s don’t keep office hours, they work till it’s done and then some more. When asking for 4 weeks leave she got it (in a country where 2 weeks is the culture).
    • They immediately challenged her and gave her a large new global project to design and implement (it was to have 5 divisions). Her boss was impressed by her work – and by the fact that she did not obviously ‘custom’ any of these for herself (it’s about the journey and doing it right, not what you get out of it, remember). When her boss asked her which of the 5 divisions she wanted to continue leading, the humble response was, “well all of them”. The boss’s response?
    • They allowed her to stretch her wings: the boss did not shoot her down or laugh her off. Though the boss expressed reservations, she still allowed my client to take on two divisions with an interim caretaker role over the other three. After 3 months the boss handed her the rest too.
    • They gave her a manager/ boss with a ‘clear sense of self’: the boss at Win-a-HIPO is not a micromanager protecting her own turf but rather an ’airspace controller’ that creates flight paths for others to soar.

And soaring this HIPO is.

So what can we do for you?

We can assist you with designing and implementing a talent strategy based on what is right for your organisation (and your HIPO’s). We recently completed a comprehensive study of the recently published compendium Best Practices in Talent Management, How the world’s leading corporations manage, develop and retain top talent10 and would love to share some of this learning with you. And if your culture needs to transform to attract the cream of the crop we can help you design and implement a strategy to ensure you do.

Call us at +27 (0)21 434 5749 if you want to know more about how you can implement a talent strategy comparable to the best in the world. We look forward to chatting to you!



1) Individual Differences in Output Variability as a Function of Job Complexity, J. E. Hunter, F. L. Schmidt & M. K. Judiesch. Journal of Applied Psychology 75, 1990, 28-42
2) Competency Psychology, Spencer, L.M. St. Augustine, Florida: Spencer Research & Technology, 1997
The Economic Value of Emotional Intelligence Competencies and EIC-Based HR Programs. In The Emotionally Intelligent Workplace: How to Select for, Measure, and Improve Emotional Intelligence in Individuals, Groups and Organizations, LM Spencer, eds. C. Cherniss and D. Goleman, Chapter 4.
4) Understanding IT Worker Productivity & Finding Those Valuable “2x, 4x, 10x” Performers, A White Paper from Oak Enterprises, Glen Ellyn, Illanois
6) Identifying and Developing High-Potential Employees at Top Training and Leadership Companies, 2005, www.
7) Retaining High-Impact Performers, Marshall Goldsmith, Leader to Leader, Premiere Issue
8) i.e. the person who will determine their future progress.
9) An investigation into essential components of the development and learning practices of a diverse range of South African Leaders, MBA Research report, Eksteen and Witten, 2001 
10) Best Practices in Talent Management, How the world’s leading corporations manage, develop and retain top talent, Edited by Goldsmith and Carter (Pfeiffer)


#1 Danie
2013-04-08 13:34
Surprisingly a recent Towers Watson survey has now shown that High-performing employees are being rewarded with higher pay rises and bigger bonuses than their peers, despite continued constraints on pay budgets. Pay differentiation , the practice of varying pay awards, was found to be common in 93% of all UK organisations with pay rises differing as much as 67%. (

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