Sunday, February 22, 2009

How to “Score” Leadership Potential When Using the Performance and Potential Matrix

Managers can usually assess performance, but they struggle assessing potential.

In this post, we’re look at why this is and I’ll offer a “formula” to help assess potential.

I’ve written posts on how to use the nine-box performance and potential matrix, and numerous posts on how to develop A, B, and C players.

I’ve also written quite a few posts on how to identity potential; in other words, what criteria do you look for? What’s that magical, predictive “right stuff”?

If you’re familiar with the nine-box method for assessing talent, you know that performance is defined as:

A= outstanding performance
B= good performance
C= poor performance

Managers usually are able to rate their employees fairly accurately and with confidence when it comes to assessing performance. The discussions are also pretty unemotional and non-controversial. They often bring copies of employee performance appraisals or business scorecards to talent review meetings, and come up with some kind of algorithm that translates to A, B, or C performance.

When it comes to assessing potential, that’s a whole different animal. Again, using the nine-box method, potential is often defined as:

1= high potential
2= medium potential
3= low potential

This is where the science of leadership assessment takes a left turn to the art of predicting potential. It’s easier to look back and assign a grade; but when assessing potential, you’re forced to look into the future and predict performance. If predicting the future were easy, we’d all be rich from the stock market and gambling on sports, and there would be no #1 draft pick busts in sports.

Given this murkiness around assessing potential, managers will often ask for a “formula”; some way to assign numbers to grading potential. To address this, here’s a scorecard, adapted from Harvard ManageMentor, for managers to assign numbers to their judgment.

Scorecard for Assessing Leadership Potential (answer yes or no to each question):

1. Could the employee perform at a higher level, in a different position or take on increased responsibilities within the next year (consider the person’s ability only, not whether there is a position available to support this growth)?

2. Could the employee perform at a higher level, in a different position, or take on increased responsibilities within the next three years (consider the person’s ability only, not whether there is a position available to support this growth)?

3. Can you envision this employee performing two levels above his or her current position in the next five to six years?

4. Is the organization likely to value growth of the skills and competencies of this employee over the next several years?

5. Could the employee learn the additional skills and competencies he or she needs to be able to perform at a higher or different level?

6. Does the employee demonstrate leadership ability—by showing initiative and vision, delivering on promised results, communicating effectively, and taking appropriate risks?

7. Does the employee demonstrate an ability to comfortably interact with people at a higher level or in different areas?

8. Does the employee demonstrate comfort with a broader company perspective than his or her job currently requires?

9. Does the employee demonstrate flexibility and motivation to move into a job that might be different than any that currently exist?

10. Does the employee welcome opportunities for learning and development?

To evaluate this employee’s potential, calculate the total number of “yes” responses and use the following scoring:

0-3 = Low; 4-7 = Medium; 8-10 = High

Keep in mind, there’s a danger to putting a number to a subjective assessment – it can create the illusion of certainty. While the numbers only provide a way to quantify judgment, having a common scoring system might help improve predictability and at least reduce some of the anxiety for managers.


Anonymous said...

Excellent post, Dan! Thanks for summarizing the key challenges and offering a tangible way to get started. What are your thoughts about including leadership-related competencies, if available, in the "calculation" (e.g. as outlined by Hall in "The New Human Capital Strategy" - Influence and collaboration, Drive to achieve, Team leadership, Integrity, Flexible, Learning agility, Emotional intelligence, Love of challenge)? Some of these attributes are of course present in the very things you outlined, so perhaps it's a process that occurs *if* you were to eventually develop a competency model?


Anonymous said...

Excellent post, Dan, and a good explanation of how to handle a difficult task. You rightly warn against "the illusion of false concreteness." There's also a danger of seeing what we want to see.

We're going have biases and shortcuts in any human system. What I like about what you've shown us here is that it's possible to make a reasonable and rigorous effort at evaluating potential and not just leave it to what "everyone knows about Bob" or informal, unstructured discussion.


Dan McCarthy said...

Mark –

When I assess on performance and potential, I’ll use a leadership competency model and results to assess performance. High ratings in leadership competencies don’t necessarily predict success in a larger role, so we need something else to measure potential. Most of the ones you’ve mentioned do, at least in the research I’ve seen, so yes, they could be added to the mix.
I do try to separate the two, especially when assessing potential in individual contributors, who are not in roles that they can demonstrate many of the competencies we use to define leadership & management.

Dan McCarthy said...

Wally -
Thanks! Right, at least it can help reduce some of the "not like me" bias.

Angelique Andrae said...

Thanks, Dan. We do this exercise on everyone in the company on a quarterly basis and I agree that figuring out what "box" to put someone in can sometimes be tough. Especially when you have an excellent performer who probably will not move beyond their current position. I like your questions, they really seem to help clarify the "potential" question.

Dan McCarthy said...

Angelique -
Good, I'm glad it will help!

Anonymous said...

Very useful points. It is very important for supervisors to understand the potential and then groom the future leaders. After all, everyone wants to grow and support is always welcome. Moreover, when the managers move to the next level, it is their responsibility to have someone ready to take on their roles.

Anonymous said...

Dan, way to go.

You've done a clear job of explaining what to do, how to do it, and acknowledged the "art" of the process.

Having just gone through this process with a client organization your concise explanation would have proven hugely helpful.

Nice job...

Dan McCarthy said...

Steve -
Thanks, that means a lot coming from a pro like yourself.

Anonymous said...

Congratulations! This post was selected as one of the five best business blog posts of the week in my Three Star Leadership Midweek Review of the Business Blogs.

Wally Bock

Dan McCarthy said...

Thanks, Wally!

Tom said...

The list of questions to identify potential is wonderful! Thank you for providing that clarity to the 9-block process.

Anonymous said...

I'm relatively new to the leadership "industry" where I know I'm not a natural born leader, but I seek ways to improve myself. One of the things I like to do is read quotes that other people think are good enough to share because you can learn quite a bit simply by doing so.

I came across a quote I thought may contradict with some of the things that are said here:

"The function of leadership is to produce more leaders, not more followers."
- Ralph Nader

How I perceived this post was that you take the people with the most potential to lead and promote them by using the "Scorecard for Assessing Leadership Potential."

I understand the value of putting the people who have the greatest potential to lead in leadership positions, but shouldn't there be some focus on recognizing how the people with the least potential can improve and get them to where they need to be?

Now, I'm also new to the Corporate world as I just graduated college and just started a real job. Money seems to be the #1 issue all around, where by training everyone up in such a way may not prove to be worth its return on investment. (Who knows, maybe by doing so, a greater than expected ROI will result...)

What does everyone else think about Nader's quote and how it applies to this post? Did I misinterpret the intent of the original message?