Whether it is for succession planning or leadership development, many organizations are concerned about a person’s potential. That it is, in the future, will be this person be performing at their current level (at least relative to peers) or is there something about them that will lead to an acceleration in their performance so that they’ll rise above many others. This is often reflected in faster promotions as well.
The idea that managers can use their judgment to distinguish between who is a good performer now and who has potential is ridiculous. What objective information would tell you that an average performer now will blossom in 5 years? Initiative? Curiosity? Of course, these things impact current performance, so they really are not related to potential if we assume that the two are not the same thing.
The other example frequently given is whether a person in a given role can perform the next role up. For instance, can someone in a technical job supervise others or can a current manager be an effective executive. This has less to do with potential than whether a person has a skill set that they have not been given an opportunity to show in their current role. Note that there are plenty of valid ways (Assessment Centers being one) to determine whether people have supervisory/management/executive skills which are far more accurate than judgment.
Organizations find potential is sexier than evaluating skills, so potential gets a lot more attention. And, since objectively measuring potential is time consuming/expensive and no one holds executives accountable for being wrong about potential, we get people sitting around and making up reasons why employee A is a “high po” and employee B is not. You will not be shocked to find out that this approach is loaded with bias against women.
Whether it is due to unconscious bias or stereotypes that go against women being as self-promoting as men, female employees (at least according to the large study cited above) get the short end of the potential stick. For example, in that research, women had higher performance ratings, but lower potential ratings. This leads to fewer relative promotions for woman compared to men.
Now, it could be that the lower potential ratings were justified. Perhaps men with similar potential ratings were performing better than the women down the road. In the study the opposite was true. Women with lower potential ratings outperformed men in the future.
I think we can draw a few conclusions from this study (and common sense):
- Organizations that are using potential ratings should look at their impact on women (and minorities). They may not like what they see.
- No matter how much rating systems are dressed up (I’m looking at you, Nine Box), they are subject to huge amounts of biases and stereotyping. Organizations that use this approach should look at the accuracy of the judgments and only use those who frequently are right.
- If you are interested in potential, define it (e.g., promotions, pay increases, etc.) and look at what predicts it over the long term after controlling for sex (since those promotional decisions are likely biased as well). Then you have a system for understanding potential.
Organizations should plan for succession so that those being considered get the training and development opportunities they need to succeed. However, using human judgment to identify who has potential and who does not is a fool’s errand. It is unfair to women, which means it is wrong and negatively impacts your business. There are ways to predict future performance in your organization. You just need to put in the work to discover them.
Many thanks to Dennis Adsit for sending me the cited article.