Current Challenges with High-Potential Employees

By Bob Nelson

Organizations invest millions of dollars to identify and develop high-potential employees (also known as “high potentials,” or “HIPOs”) within their workforce. There are three primary challenges with high-potential employees in any organization today: high turnover, low engagement, and “troubling” performance.

  • High turnover: In a study by the Corporate Executive Board, the turnover rate of high-potential employees (the rate at which HIPOs are leaving their current jobs) is 30 percent. And a survey of 174 North American organizations by OI Partners corroborated this finding by identifying that HIPOs are the organizational level with the highest turnover, followed by frontline employees (27 percent), middle managers (26 percent), and senior executives (20 percent).

    Currently, 14 percent to 33 percent of HIPOs are actively job hunting, according to a study published in the Harvard Business Review, and the executive staffing firm Challenger, Gray, and Christmas reports that 42 percent of employers are worried other companies will steal their top talent. As you can see in the following table, these statistics are of great concern to CEOs, 90 percent of whom report they are most concerned about losing their high-potential employees. According to the Corporate Executive Board, over 50 percent say their organizations are ineffective at managing and keeping top talent.

  • Low engagement: According to research by the Corporate Executive Board, 33 percent of emerging stars report feeling disengaged from their companies, 20 percent believe their personal aspirations are substantially different from (as opposed to being aligned with) their organization’s mission and vision, and 40 percent report having little confidence in their coworkers and even less so in senior management of their organization. The Harvard Business Journal amplified these findings when it reported that the discretionary effort on the part of disengaged workers can be 50 percent less than other employees.

  • Troubling performance: Worse yet, for a group that you would expect to naturally have the highest level of performance in the organization, research suggests that is anything but the case. The Corporate Leadership Council reports that 40 percent of HIPOs have “troubling performance,” 40 percent of internal job moves by HIPOs end in failure, and less than 15 percent of direct reports are ready for immediate transition to subsequent roles.

    Why do high-potential employees fail? It’s not that they lack ability. Most fail because they are not engaged and because their assignments don’t inspire or interest them. Based on this research, focusing more on engaging HIPOs could have a significant impact on their current level of performance, their level of engagement, and their subsequent level of retention with the organization.

Employee Turnover and CEO Concern
Employee Type Turnover Rate (%) % of CEOs Concerned about Retention of Employees
High potentials 30% 90%
Frontline employees 27% 72%
Middle managers 26% 60%
Senior executives 20% 45%

Following are six strategies that can help you better engage your organization’s high-potential employees.