Performance vs potential in talent management

Competences show up as observable behaviour in a position. Beneath them lies personality. It is the foundation for behaviour and competences, and depending on personality, competences are easier or harder to learn. Three aspects are distinguished. Potentials are what others see when the person is at their best. Risks are what others see when they come under stress. Motivators describe which values and interests guide their actions.

Under stress, during major changes and when they are not suited to the task, people display behaviours without paying attention to their public image. This is when a person's risk factors become visible.

Potential in the narrower sense is a person's ability to learn from work-related experience. It includes learning new skills or refining existing ones in order to perform in unfamiliar situations. There are also career derailers: behaviour that can end a career prematurely. How strongly they have an effect depends on the respective corporate culture.

A different role can require different decisions, relationships and competences. Without these requirements, a judgement of potential remains vague. The strategy and the future tasks provide the point of reference.

Companies assess potential in very different ways. In the intuitive type, individual people, usually at the top of the company, decide on the basis of experience and knowledge of human nature. There is no language for their search criteria, so reasons can hardly be discussed. In the evolutionary type, the same thing happens in many places at once. Each manager develops their own young talent, without coordination. As a rule, this leads to different leadership cultures in the same company.

The expert-oriented type relies on describable criteria and scientifically tested procedures. The line delegates the assessment to internal or external specialists, who are credited with an objective view.

The fourth type understands potential assessment as a joint leadership achievement. It moves away from the assumption that there is a single correct view. Self-assessment, assessment by internal recipients of the work and test procedures are brought together. Top management actively helps to formulate the requirements. What matters is the quality of the conversations: openness and trust, directness and respect for the individual.

Experience, observed performance, development dialogues and suitable diagnostic information can complement each other. Different perspectives help to avoid hastily equating professional strength with leadership suitability.

In 360° feedback, the manager, colleagues, employees and customers give feedback based on standardised descriptions of observable behaviour. Ideally, a company-specific requirements profile for the function is available beforehand, against which the current level of competence is mirrored. The report is first explained to the person assessed, then to their line manager. This is followed by a facilitated conversation between the two. Blind spots on both sides become discussable.

The conversation results in a development plan with goals, challenging tasks, personal measures and deadlines. Behind this is the assumption that development largely takes place through demanding tasks and experience. A smaller part comes from targeted, timely feedback and only a small part from training, courses and coaching.

In the development conversation, questions for self-reflection help. Do I know how I come across to those around me? Which behaviours am I not aware of? Which could hinder my progress in the company? The procedure is suitable for periodic repetition.

A possible next role is linked with the necessary development and practical learning opportunities. This also includes the interests and expectations of the person concerned. Specialist career paths must be taken into account as well as leadership career paths.

Requirements and people continue to develop. Talent management therefore needs recurring conversations and comprehensible criteria. Forecasts remain assessments and must not be treated as fixed characteristics.

In many selection processes, professional qualification alone is in the foreground. However, people often fail in a function not because of a lack of specialist knowledge, but because of their behaviour. Personality therefore belongs in the requirements profile.

The second fallacy concerns general benchmarks. Every organisation has its own conditions for success and its own requirements for a function, which global norm samples do not reflect. A selection becomes accurate when the requirements profile is company-specific and has been tested to see whether it predicts performance.

Talent management distinguishes between competence, potential and performance. Performance describes observed achievement in a current task. Potential looks at learning opportunities for new requirements. Competence refers to available knowledge, will and ability. Very good current performance can be an important signal, but is no proof of suitability for a different role.

Leadership and HR must therefore first describe the future function and its requirements. Self-image, external image, work samples and suitable procedures can then be considered together. A development dialogue links this assessment with the person's interests and specific learning opportunities. The result is a well-founded decision on development or staffing, not a permanent label for a person.

When managers are asked about their high potentials, the majority name their high performers. Performance and potential are then not assessed separately. For many managers, the question of potential is a black box, so they base potential on current performance. The consequence can be that employees are promoted to their level of incompetence, which benefits neither them nor the company. A valid assessment therefore separates three variables and assesses each according to its own criteria.

Competences are personally acquired abilities and skills that make a certain level of performance possible. They are neither aptitude nor a personality trait. Six categories are distinguished: strategic skills, operational skills, courage in management, energy and drive, the ability to position oneself in an organisation, and personal and interpersonal skills. For the assessment to be comparable, uniform company-wide definitions are needed. Everyone must be clear about how a strongly or weakly developed competence can be recognised and when it is overused.

For the assessment of potential, Michael M. Lombardo and Robert W. Eichinger distinguish four factors: mental agility, people agility, change agility and results orientation. Performance is measurable achievement, i.e. the contribution to the company's results. It requires clear key figures or at least definitions that indicate performance. Assessed are quantity of output, quality of output, adherence to deadlines, cost-benefit management, use of resources, contributions to continuous improvement, change agility and results such as turnover, contribution margin or costs.

There is a connection between the three variables: competences and potential lead to performance. If performance is not right, the first thing to check is whether the competence profile matches the requirements and where development would be needed. If performance is to change significantly, competences and potentials must be developed. Developing potentials is more demanding than targeted competence development, which is therefore a good place to start.