How Much to Spend on High-Potentials?

Keeping Your Best Employees Informed Helps Keep Them With Your Company

In an era of limited resources, organizations focus training dollars in a way that will have a cost-effective impact. In many cases, this means the training budget is not allocated equally across all employees. This might be contrary to our sense of equality. But in the end, it’s good business.

Running training like a business would dictate that learning and development efforts focus on methods and individuals most likely to create value for the organization. This means a lack of parity in training dollars spent on the average employee versus high potential employees.

A high-potential (HiPo) is expected to excel beyond his or her peers, often the top three percent to five percent of employees. Companies often make this more specific to their needs, incorporating a specific leadership level, time horizon, and — most importantly — based on the foreseeable needs of the business. So high-potentials are identified partially by what they do, but also by what the organization values and believes it needs.

Today’s training and HR organizations must make difficult decisions about where to focus and invest scarce resources. Training’s greatest ROI — especially in challenging economic times — is going to come from focusing on HiPo’s, and not from planning as if employees are a homogenous mass, each offering the same level of potential ROI.

Here are three reasons why focusing on HiPo’s is a sound business investment:

>> They’re critical to future success. HiPo’s give immediate return on investment,
with estimates averaging from more than 50 percent additional value, to as much as a 100 percent increase in productivity over average performers.

>> Many organizations report they aren’t confident they can staff key leadership positions in the next five years. Internal programs that focus on HiPo’s can provide a more reliable source of qualified supervisors, managers and executives to meet forecasted needs.

>> Top companies — by almost any definition — focus disproportionate resources on identifying the top 10 percent to 15 percent of their current leadership population, give them a rapid series of developmental assignments to assess or confirm potential, and base future development and rewards on that potential.

Also consider that in a recent study, HiPo’s who were not formally told of their status, 33 percent were looking for another job. Of those told, only 14 percent were looking.

Training professionals could construe this as a proposal that companies spend disproportionately on developing their high potentials. Perhaps a more accurate interpretation is that companies should spent appropriately on developing them.

—For more information on planning and managing corporate training go to www.ecornell.com/whitepapers.

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