Performance vs. Potential: How do you rate leaders?

Assessing talent is the critical factor for businesses today. But, it is much more of an “art” than a true “science.” Many companies employ the wrong approach when it comes to securing talent.

For starters, some of the key strategies for assessing talent include a candidate’s experiences, competencies and potential. The key in talent assessment is not merely judging talent based on a list of skills and experiences but recognizing the high-performing candidates and the high-potential candidates.

To stay relevant, organizations must identify and hire the individuals who possess the skills to move a business forward. It is about finding the candidates who can understand a situation and evaluate the circumstances in order to find an appropriate solution and position an organization for long-term success.

That can be tricky, because it involves predicting how a candidate will react to a particular situation, not today but at some point in the future. The key is understanding how a candidate has reacted to past situations to predict how he or she will act in the future.

That is why companies often will promote someone who is a great performer but may not necessarily one with great potential. As a result, when that person is promoted, he or she struggles to adapt to the new role. That’s because the person is great at achieving immediate successes but not as strong at seeing the bigger picture at play.

There is a huge difference between performance and potential that many companies fail to recognize.

If a company’s need is immediate and more focused on short-term results, a high-performance candidate is the wiser option. That is because this type of candidate can hit the ground running and provide an immediate benefit to the company’s bottom line. He or she may be the flashy salesperson whose results are the envy of any organization.

The downside is if the person is not a high-potential candidate, his or her future roles with the company may be limited. While that’s not to say a high-performance candidate cannot be a high-potential employee, it is important to remember that the successes achieved today are not a guarantee of success tomorrow.

Conversely, high-potential candidates are often more analytical and often need a longer adjustment period. Their performance may initially lag behind their high-performance counterparts, but their performance will undoubtedly improve exponentially at some point in the future. Companies focused on longer-term objectives would be wise to hire this type of candidate, as long as the company has a strategic plan in place and stays true to its objectives.

The problem many companies have is the need for instant gratification. They are so narrowly focused on fixing an immediate problem they have that they cannot see the larger outcome. As a result, they are more focused on identifying and hiring the candidates who can provide them with an immediate benefit.

Admittedly, one downside to high-potential employees is that nurturing them and ensuring that they evolve and grow as needed takes time and therefore takes money. Many companies are more focused on their short-term successes and are not willing to invest in people who show high future potential.

But the smart managers know their high-potential candidates are the secret to long-term success. The smart managers are the ones who know the secret to success is not an overnight answer. Rather, it is about putting in place the people who can create — and sustain — success over a longer period of time.