So a few weeks ago I wrote about my concerns around the use of psychometric testing. Since then I have had a few people ask me what the alternative is. To sum up, the common question has been “So how are we supposed to identify high potential employees if we don’t use psychometric testing?” This leads to today’s blog which poses the question, what is more import to consider in recruitment, previous performance or future potential?
As a starting point let us distinguish between employee performance and employee potential. Performance is simply the ability of employees to achieve outcomes and to meet organisation goals. High performers consistently exceed expectation, and are manager’s go-to people for difficult projects because they have a track record of getting the job done. The distinction between good performance and bad performance is non-subjective and can be easily assessed.
Managerial potential on the other hand is far more subjective. The Corporate Executive Board claim that high potential employees have the 3 key attributes of aspiration, ability and engagement.
The first issue with this position is that unlike management performance the characteristics are subjective and cannot be assessed in a quantitative manner. Furthermore the definition is circular in nature. We define a high potential individual as someone with the ability, aspiration, and engagement to rise into and succeed in more senior roles, but we can only know that they do indeed have this potential once they have actually succeeded in a more senior role.
Despite this, a lot of thinking in the business world suggests that potential is more important than performance. A recent journal article that surveyed Human Resource Managers across various industries claimed that “potential wins out every time. Further, firms are willing to hire and pay more for high-potential candidates than those with proven performance. The research found that participants were more excited about the candidate with the thinner achievement score and greater potential score.”
However, I maintain that when we step back, ultimately all businesses survive on their results, not their potential. Shareholders invest capital into companies on the expectation they will get a return based on the businesses actual performance not on its potential. Even when investors do invest into a company for the long term, their decision is always grounded on previous results. To be successful this mindset must ultimately extend to the management team. Every employee needs to deliver if the business in question is to survive and grow. As such performance must be manager’s number one consideration and the main criteria by which employees are judged.
So what is your focus when recruiting, performance or potential??
James Hamilton & NEIL HALLs
The founders have years of experience across a diverse range of industries and business areas. Their aim is to ensure the team at Clear Path Commercial Consulting use this experience and their individual knowledge and skills to help our clients in their own business.