What does it mean to have potential?
While this question may seem like the subject of a philosophy course, it’s one many organizational leaders are subconsciously answering every day. How we define potential affects who gets promotions, stretch assignments, leadership coaching, and other development opportunities.
How we define potential determines an organization’s “haves and have nots.”
In other words, how we define potential can be a big barrier to diversity, equity, and inclusion, which is why it’s not surprising that many organizations told us that they have recently sought to move away from high potential programs.
However, these programs haven’t actually gone away. In our research, which included quantitative and qualitative surveying of nearly 200 HR, L&D, and DEI leaders, we find that while some respondents said they’ve eliminated “high potential program” language due to inequitable optics, they also acknowledged that these programs haven’t disappeared. Rather, they have “moved underground.” There, leaders are still making calls about who gets which opportunities without standardized definitions of high potential, or formal processes of identification.
Why does this matter? For one, inclusive development selection processes are linked to retention, engagement, and business performance. According to a recent report from RedThread Research, employees at high-performing organizations are twice as likely as those at lower-performing organizations to say that employees have equal access to development opportunities. Other research suggests that when employees don’t see a path for their development, they’re more likely to quit. Without fair processes for leadership development, organizations risk exacerbating inequities and contributing to the leaky pipeline of underrepresented talent.
What does it mean to have potential?
We found that key decision-makers are not aligned on a definition. While 70% of our survey respondents felt that they personally had a clear definition of what makes a high-potential employee at their company, only 55% agreed that their HR team was aligned on a shared definition–and only 49% agreed that senior leaders were.
Alarmingly, only 40% of respondents agreed that managers are aligned on a shared definition–even though we found that informal manager feedback is the most commonly used method for identifying high-potential employees. With so much ambiguity among decision-makers, it’s no surprise then that only 25% of respondents agree that the criteria for being a high-potential employee is clear to employees themselves. Without a shared definition across the organization, leaders may fall back on their gut instinct about what makes someone a star.
Unfortunately, our instincts are often just biases in disguise. For instance, we tend to like people who are like us (also known as the affinity bias), and we tend to extrapolate one quality we perceive as good or bad about someone to other unrelated qualities (the halo and horn effects).
Common stereotypes about who has leadership potential (tall men, white people, attractive people) exacerbate these problems.
The lack of a formal identification process for high potential is another cause of biased decision-making: Nearly half of organizations (47%) rely on a completely informal process, most commonly leveraging informal manager feedback to make selections. When selection isn’t based on fair and transparent processes, leaders make bad, costly decisions. Research on leadership transitions finds that nearly 40% of internal job moves made by people identified by their companies as high-potential individuals end in failure.
Interestingly, the leaders we surveyed are aware of many of these problems. They want to do the right thing, but they may not know what the right thing is, or how to design more equitable processes in resource-constrained environments. This isn’t easy work.
Our recommendation may sound radical at first, but it’s actually the simplest and most effective choice: Make leadership development opportunities available and accessible to all relevant employees. For example, you could give every employee a stretch assignment in their first year and open up leadership coaching to all managers and above.
If opening up development opportunities is a non-starter right now, there are other ways to make processes more equitable: Your leadership team must clearly define what makes an employee qualified for different development opportunities and get aligned on what defines a leader or a high-potential employee at your organization. As part of that definition, you must make sure to establish clear measurable criteria for how leaders should evaluate employees. Criteria should be based on demonstrated performance, not “potential”, which is highly biasing. Establishing formal criteria ensures less potential for bias than relying on informal feedback.
Next, make sure you have a process in place for selecting leaders; simply having a process in place helps ensure accountability because people know they will have to defend their selections. There’s also more you can do to reduce the bias in manager assessments. For example, when asking managers to select employees for succession planning or a leadership program, have managers rate each of their reports on 3-5 leadership factors and provide three pieces of evidence to justify their ratings. Train managers to avoid common evaluation biases. Finally, communicate both the definition and the process for identifying leaders to all employees.
Effectively identifying up-and-coming leaders is not easy–but the future of your organization depends on it. Don’t risk undermining your future success and squandering potential through biased decision-making.
Elizabeth Weingarten is the head of behavioral insights at Torch. Liz Kofman-Burns, Ph.D. is the co-founder of DEI consulting firm Peoplism.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not reflect the opinions and beliefs of Fortune.
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