When it comes to promotions, logic might dictate you pick the best performing candidate. That is
what large bureaucratic organisations usually do. Unfortunately, that often creates a piquant
situation in the long run. Laurence Peter spelt it out most convincingly in his classic book, ‘The Peter
Principle: Why Things Go Wrong.’ If organisations keep promoting competent people until they are
no longer competent in their role, he said, they will eventually come to be manned by people who
are all at their level of incompetence. The bestselling book was published in 1969, but its insight still
remains relevant.
In the absence of deeper assessment systems, organisations find it easier to promote on the basis of
performance. Shouldn’t the salesman with the highest sales be promoted to area sales manager? It
only seems fair. But experience has shown that the best salesmen often make for bad sales
managers. Which is why most organisations today separate promotions from increments. The best
performers are given financial rewards in terms of bonuses and increments. But promotions are
determined by a measure called potential, loosely defined as the ability to do well if promoted to a
bigger role in the future.
In a volatile, fast-changing world, high potential employees are not those with the best skills but
those who have the capacity to learn new ones. Unlike performance, which speaks for itself,
potential is not easy to measure. It comes with a large measure of subjectivity, which often makes
for extensive discussion and debate among those responsible for making these crucial promotion
decisions.
At WNS Global Services, a Mumbai-based BPO service company with 50,000 employees, 25 top
leaders meet twice a year to take decisions on promotions. Keshav Murugesh, WNS Group CEO,
once gave me a flavour of these meetings: “We are constantly on the look-out for candidates who
are high on both potential and performance. Identifying high performers is easy, but the discussion
heats up when it comes to potential. The system is very dynamic and it is not uncommon for
someone thought to be high potential to be reassessed as being low potential.”
Operations, finance, marketing, human resources all have their own high potentials and they may be
very different. But as they climb the ladder, high potentials are expected to have some common
traits, like self-awareness, agility, the ability to work in a team and think strategically. Organisations
could save themselves a lot of heartache if they were able to recognise high potentials at the
recruitment stage. But this is easier said than done, given the time constraints of the interview
process and the ability people have of presenting a false picture of themselves.
That hasn’t stopped organisations from making the effort. Many of them bring in specialists, with
structured questions aimed at assessing qualities such as agility, curiosity and social skills, all
considered to be a part of the high-potential package.
Campus recruitments give organisations an opportunity to recruit almost wholly on potential, which
is why many CEOs make it a point to be a part of the exercise. In some companies, the entire Board
of Directors is involved in hiring management trainees. Given the high investment required to train a
raw graduate, the stakes are high. And for a senior leader in an organisation, there’s no greater
source of pride than picking someone who turns out to be a winner.
