Potential ratings – confidential or transparent?
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One of the questions I’m most frequently asked when working with clients to develop their talent pipeline is whether or not they should be transparent with their employees about the way they rate potential – should they or shouldn’t they let their employees know that they’re being rated in terms of their potential?
It’s an interesting question, and when deciding you should be aware of the potential downsides to each approach.
The problems with confidential potential ratings
- People don’t know you’re actively looking to progress them. If you don’t let people know you’re rating their potential and planning their next promotion(s) you run the risk of losing your high potential employees to opportunities elsewhere.
- You think it’s confidential, but it’s more transparent than you think! Once you start engaging your managers to rate the potential of their direct reports, you create a situation where only the most junior level of your team don’t know about the rating system. Most managers who are making ratings, can figure out how they are categorised by their bosses.
- You risk creating an “expectation” culture. Once people know they’re being rated for their potential, you may find that some of your high potentials stop their self-development and begin to expect moves to be made for them by HR, or worse, that they’re entitled to a certain opportunity or promotion. In one instance I’ve seen a Project Manager who was managing a £0.5m contract turn down a significant advancement to manage a £3m project because “I’m in a High Potential pool now, and I want to see what opportunities the business is going to produce for me”.
- You could demotivate people with lower potential. Across your business you’ll have a significant number of people who are delivering excellent performance in their role, but not seen to have potential for a promotion. I’ve worked with businesses who’ve lost almost a quarter of these high performing staff as a result of making their rating system transparent – without considering that a positive message needs to be conveyed to these staff who are making the business great. All too often, what they hear is “They’re not interested in me. They are only interested in the fast track 5%.”
Most organisations see transparency as the best ethical solution. If you want to go this route, then one key suggestion is that your documents only consider the potential of those with satisfactory and above performance ratings. Don’t have a ‘9-box grid’ that maps performance against potential, and includes under-performers. Under-performers are the subject of performance management, not talent management.
In addition, if you are going to be transparent about potential ratings, do your potential documents send a positive message to EVERYONE on the grid, who is delivering satisfactory-plus performance? This is also important in confidential systems – as we said above, even confidential systems are semi-transparent.
Take Away
If you want to take one step to make your potential rating process more motivational, it is to limit potential rating to people who are currently performing at satisfactory levels or above. By doing this you send a powerful message – earn the right to have your long term potential considered, by performing well in your current job. And every description on your 9-box grid can be positive.
More on defining potential next month.