Few challenges weigh on today’s business leaders more heavily than employee engagement. Defined as the level of commitment and emotional connection employees feel toward their employers, research shows that across industries and functions engaged employees are significantly more empowered, creative, and productive in their roles.
Discussions around employee engagement, and the related metric of talent retention, increasingly focus on a specific segment: High Potential (HiPo) employees, who are identified as those most willing and able to fill an organization’s leadership roles.
According to research published in Harvard Business Review by Thomas Chamorro-Premuzic, Seymour Adler and Robert Kaiser, HiPos possess three characteristics that make them particularly valuable and well-suited for future leadership positions:
- Ability: the knowledge and skills required to grasp new information and act decisively.
- Social Skills: the emotional intelligence to effectively collaborate, empathize with, and manage others.
- Drive: the internal motivation and desire to complete critical work in the face of obstacles.
While there is little debate over the value of HiPo employees, today’s organizations often fail to grasp the true importance of engaging and retaining HiPos over time. Keeping high potential employees engaged isn’t just an HR statistic, it is absolutely imperative for business agility — and to driving innovation and future growth.
source: “What Science Says about Identifying High-Potential Employees” from Harvard Business Review
A Crisis of Engagement
Across industries and sectors, leading enterprises face a crisis of employee engagement.
According to 2017 Gallup data, just three in 10 U.S. employees across industries feel engaged at work, while 51% report consistently watching or searching for new job opportunities. With unemployment at historic lows and an average employer tenure among U.S. Millennials of less than three years, enterprises of all types find it harder to attract, engage, and retain talented employees than ever before.
Average time before HiPo employees leave a company
source: “Why Top Young Managers are in a Nonstop Job Hunt” from Harvard Business Review
Research data reveal that high potential employees remain particularly sensitive to their level of workplace engagement, and are highly likely to leave an organization if it fails to meet their expectations. According to Harvard Business Review, 95% of HiPo employees regularly update their resumes and research perspective job opportunities, and 75% contact search firms and interview for new positions at least once per year. The average HiPo leaves an employer within 28 months, with most citing low engagement and unmet expectations around mentoring and career development as drivers of their decision to seek a new job.
While unwanted employee attrition of any kind hurts a company’s ability to execute on its mission, the question remains: why is engaging and retaining high potential employees so critical to driving business agility.
source: State of the American Workplace from Gallup
Agility’s Next Wave
Traditional conversations about talent retention typically focus on the short term cost of losing valuable employees. HR analyst Josh Bersin, for example, estimates that the initial cost of losing a single employee can reach as high as 2X salary depending on role, tenure, and skills. HiPos on average exert 21% more effort at work than their peers and generate 91% more value for their organizations according to research by CEB, and in a world of tight budgets, it’s easy to view the need to retain them through the lens of simple cost-benefit analysis. While replacing HiPos is expensive, the immediate cost is only part of the story.
When viewed in the context of a organization’s operating model and ability to get mission critical work done, it becomes clear that HiPos have an impact far beyond that measured by line items in an HR budget.
Unlike traditional operating models based on functional silos and rigid management structures, agile operating models of the future are optimized for speed and rely on decentralized decision-making to iterate quickly and adapt to new data. Agile operating models are built on nimble, cross-functional teams that bring the right mix of skills, expertise, and experience to a time-constrained, mission-based project. Team leaders of projects optimized for business agility must excel at rapid decision-making, managing blended teams across different functions and pools of skills and expertise, and be accountable for project results.
Who are the employees within an organization with the ability to make critical decisions rapidly, the emotional intelligence and collaboration skills to lead agile teams, and the drive own innovation-focused projects? All signs point to HiPos.
Today’s HiPos, Tomorrow’s Growth
The connection between the need to engage HiPos and the ability to operate with agility may start with individual projects or teams, but it doesn’t end there. Across an organization, HiPos set the standard and pace of execution, and play a critical role in building a company-wide culture of innovation.
Today’s HiPos represent an organization’s next generation of leaders. By definition, the skills they develop and the level of engagement they feel today will form the foundation of a company’s ability to innovate and grow in the future.
organizations with an agile HIPO strategy are 70% more likely to have a strong leadership bench
According to research by Gartner, 40% of today’s leadership roles will look dramatically different in just five years, and “organizations with an agile HIPO strategy are 70% more likely to have a strong leadership bench.”
If agile operating models are the engines of innovation and future growth, HiPos are a significant portion of the fuel. Business leaders committed to the goal of building an agile future for their organizations must see beyond HR metrics and short-term thinking, and must recognize that engaging high potential employees is imperative for business agility.
Interested in learning how Catalant helps the world’s leading companies engage their most valuable employees?