The Paradox of Potential: More Than Just Performance

High potential development is the strategic process of identifying and nurturing employees who show exceptional ability, aspiration, and engagement to become future leaders.

Key components of high potential development:

• Identification: Using assessments to spot future leaders.
• Development: Providing targeted coaching and stretch assignments.
• Retention: Creating clear career paths and growth opportunities.
• Measurement: Tracking promotion velocity and leadership bench strength.

I once worked with a pharmaceutical company that promoted Sarah, their top sales director, to VP of Global Sales. On paper, she was the obvious choice. Six months later, she was struggling. The strategic thinking, complexity of leading leaders, and political navigation required by the new role left her overwhelmed.

Sarah’s story illustrates a critical distinction: high performance doesn’t automatically equal high potential. Research shows only one in seven high performers are true high potentials. Yet organizations consistently make this costly mistake, promoting top individual contributors into leadership roles without the right development.

This isn’t just about career paths; it’s about organizational survival. Companies with strong leadership pipelines are better positioned for growth and innovation. Those without face succession crises and talent flight.

The stakes are significant: High potentials can boost team productivity by 5-15%, but they’re also far more likely to leave if they don’t see growth opportunities. With a large portion of the workforce considering job changes, getting high potential development right is a decisive advantage.

I’m Bill Berman. For over 30 years, I’ve helped companies build leadership pipelines through evidence-based high potential development programs. My experience shows that successful organizations treat potential development not as an HR initiative, but as a core business strategy.

Decoding High Potential: The Crucial Difference Between Performance and Promise

When executives ask me to identify their next generation of leaders, I start with a simple question: “Tell me about your best performer.” Then I ask the harder one: “Now tell me why you believe they’ll succeed as a leader.”

The pause that follows reveals everything. High potential development begins with understanding that exceptional performance in one role doesn’t guarantee success in another, especially in leadership.

A high-potential employee is someone who demonstrates the capacity to excel in roles of significantly greater complexity. Identifying them requires looking beyond obvious metrics.

My assessment approach centers on three critical dimensions:

Ability is more than technical skill; it’s the cognitive horsepower to process complex information, solve novel problems, and learn quickly. I look for learning agility and strategic thinking—inherent talents that can be developed but not created from scratch.

Aspiration is the inner drive to take on greater challenges and lead others. Many brilliant individual contributors are content in their roles, but high potentials are energized by the prospect of driving organizational success through leadership.

Engagement is a deep commitment to the organization’s mission. High potentials think like owners, not renters, investing emotionally in outcomes beyond their immediate role. This is crucial for senior leaders who must make decisions for the good of the company.

To visualize these dynamics, organizations often use the Performance vs. Potential Matrix (or 9-Box Grid). This tool plots employees on current performance and future potential, helping ensure you’re not just promoting your best doers into leadership roles they aren’t suited for.

The cost of misidentification—promoting someone based solely on past performance—can be devastating. This is why rigorous assessment is essential. At Berman Leadership, our Executive Assessment approach combines psychological insights with business acumen to identify true potential.

Key Characteristics of High-Potential Employees

After three decades of assessing leaders, I’ve identified five characteristics that consistently predict leadership potential in complex environments.

Learning agility is the most critical trait. It’s the ability to learn from experience and apply it to new situations, demonstrating cognitive flexibility and adaptability.

Emotional intelligence separates good managers from great leaders. High potentials have sophisticated self-awareness and social awareness, using emotional data to make better decisions and build trust.

Strategic thinking is the ability to see beyond immediate tasks. High potentials connect dots across the organization, anticipate future challenges, and think systemically.

Drive and ambition manifest as an internal engine for continuous improvement. They take initiative, seek challenges, and maintain high standards.

Resilience enables them to bounce back from setbacks. They view failures as learning opportunities and maintain effectiveness under pressure.

As Harvard Business Review notes in their analysis of what science says about identifying high-potential employees, these traits predict leadership success far better than technical skills alone.

Why HiPo Development is a Business Imperative

Only 20% of companies report having a strong pipeline of ready-now leaders. This is a fundamental business risk.

Leadership pipeline development ensures continuity and reduces disruption. Internal candidates who understand your culture can step into new roles with shorter learning curves.

Succession planning becomes strategic rather than reactive. Instead of scrambling to fill critical roles, you make deliberate choices about who is ready. Our Succession Management approach helps organizations build these pipelines systematically.

Innovation and agility flow from high-potential employees. Investing in their development is an investment in your organization’s capacity to evolve.

Employee retention is a compelling immediate benefit. The top reason talented employees leave is a lack of development opportunities. High potential development is a critical retention strategy.

The cost of losing high potentials extends beyond replacement expenses. You lose institutional knowledge, relationships, and their multiplier effect on team performance, signaling to others that your organization doesn’t invest in its people.

A Strategic Blueprint for High Potential Development

Once you understand the “why,” the next step is the “how.” My approach to high potential development moves beyond informal processes to a structured, strategic program designed to intentionally cultivate growth.

This requires a shift from treating development as a bonus to a strategic necessity. The journey begins by integrating development with your overall business strategy. Development programs must be aligned with future needs—understanding what roles and capabilities will be critical down the line.

Strategy alone isn’t enough. The foundation of any successful program is fostering a culture of growth. This means creating an environment where learning is valued and continuous improvement is everyone’s responsibility. Psychological safety is crucial, as it empowers high potentials to be vulnerable about their development needs, seek guidance, and learn from both successes and setbacks.

Identifying Your Future Leaders

Effective identification requires moving beyond gut instinct to a multi-faceted approach that combines multiple data points for a comprehensive picture.

• Performance reviews provide the foundation, but must examine how results are achieved, not just what was achieved.
• 360-degree feedback adds depth by gathering perspectives from peers, direct reports, and supervisors, revealing how an individual truly influences others.
• Manager nominations bring valuable front-line insights, but only when managers are trained to distinguish between high performance and high potential.
• Technology and assessments, like psychometric tools, provide objective data to reduce bias and identify underlying traits that predict success.
• Ensuring diversity and inclusion is critical. This requires actively challenging unconscious bias and using objective criteria to build a leadership pipeline that reflects your entire workforce. Our Team Assessment approach specifically addresses these challenges.

Essential Components of a High Potential Development Program

Once identified, the real work begins. A robust high potential development program is a carefully orchestrated experience, not a one-size-fits-all training session. I use the 70-20-10 model as a framework:

• 70% Experience: Most development happens through challenging, real-world situations. This includes stretch assignments that push HiPos beyond their comfort zones and cross-functional projects that expose them to different parts of the business.
• 20% Exposure: Learning from others is key. Mentorship programs connect HiPos with experienced leaders for guidance. Sponsorship programs are even more powerful, as senior leaders actively advocate for their protégés and create opportunities.
• 10% Education: Formal learning provides frameworks and best practices. Our Leadership Development Programs build specific competencies like strategic thinking and financial acumen.

The thread tying it all together is Executive Coaching. While group programs build general capabilities, personalized coaching addresses each individual’s unique strengths and blind spots. It’s where real change happens, shifting how someone thinks about leadership and their role in the organization. Our psychology-based Executive Coaching creates this lasting change.

Navigating the Pitfalls and Maximizing ROI

I once worked with a tech company whose high potential development program was backfiring. Their best people were leaving, and those who stayed were resentful. They had created a secretive “chosen ones club,” which demotivated everyone else.

Even well-intentioned programs can stumble. Common challenges include lack of buy-in from leadership, inconsistent application across departments, and creating an “elite” vs. “non-elite” culture. This last point risks demotivating the majority of your workforce.

A growing challenge is HiPo burnout. Statistics show 81% of high potentials feel used up at the end of their workday. They often become the go-to for every crisis, and without support, they can become overwhelmed.

The solution lies in clear communication and transparent criteria. Be open about what high potential means, how people are identified, and what development looks like. Manager training is also critical, as is committing sufficient resources to show that development is a real priority.

Best Practices for Retaining Your Top Talent

Identifying and developing high potentials is only half the battle. You also have to retain them.

• Clear career paths are foundational. HiPos need to see a roadmap for their growth, which may include lateral moves or cross-functional projects, not just promotions.
• Meaningful recognition goes beyond bonuses. Involve them in strategic planning or give them visibility with senior leadership.
• Continuous feedback is essential. These individuals are hungry for growth and need regular, specific input.
• The manager’s role is crucial. High potentials are 2.7 times more likely to leave if their manager doesn’t provide growth opportunities. Managers must act as coaches and advocates.
• A sense of purpose creates a powerful retention force. Connect their development to the organization’s mission.

Measuring the ROI of Your High Potential Development Initiatives

Every CEO rightfully asks, “How do we know this is working?” The returns must be measurable.

• Key Metrics: Track promotion velocity (how quickly HiPos advance), retention rates (HiPos should stay longer than the general employee population), and bench strength (having multiple ready-now internal candidates for critical roles).
• Qualitative Measures: Monitor engagement scores among HiPos and gather regular feedback from participants and managers to gauge program effectiveness.
• Business Results: The ultimate measure is tying program outcomes to broader business results, such as improved team performance, agility, and innovation. This demonstrates that high potential development is a strategic investment, not just an HR program.

Frequently Asked Questions about High Potential Development

Certain questions come up repeatedly when organizations begin their high potential development journey. Here are my answers to the most common ones.

How do you tell an employee they are (or are not) on a high-potential track?

This conversation requires empathy. When speaking with an identified high potential, focus on behaviors and opportunities, not labels. Frame it around the investment the organization wants to make in their growth and be clear about the expectations.

For those not on an accelerated track, emphasize their current contributions while discussing development opportunities relevant to their role and aspirations. The goal is to avoid creating a sense of exclusion. The message should be that while investment types may differ, growth opportunities exist for everyone.

What percentage of employees are typically considered high-potential?

In my experience, high potentials typically represent 3% to 5% of the workforce. This can vary by industry, but the critical principle is quality over quantity. It’s better to have a smaller group of true high potentials receiving meaningful development than a larger group where resources are spread too thin.

Can a high-performer become a high-potential?

Absolutely. A high performer can develop into a high potential, but it requires intentional effort. The transition involves building aspiration and leadership competencies that weren’t necessary for their individual success.

This requires a shift in mindset and skills, often moving from being a top “doer” to enabling others. This is where targeted development like executive coaching and stretch assignments becomes crucial. Potential can be developed, and organizations that take this view often find hidden talent and create more diverse leadership pipelines.

Conclusion: Investing in Potential is Investing in Your Future

The journey we’ve taken together through this exploration of high potential development brings us to a fundamental truth: this isn’t about quick wins or checking boxes on an HR scorecard. It’s about making a strategic, long-term investment in the future of your organization—one that requires patience, intentionality, and unwavering commitment.

Throughout my three decades of working with leaders across industries, I’ve witnessed the change that occurs when organizations accept the paradox of potential. They stop assuming that yesterday’s star performer will automatically become tomorrow’s visionary leader. Instead, they develop the discipline to look deeper, to assess not just what someone has accomplished, but what they’re truly capable of becoming.

The power of a psychology-informed approach lies in its ability to see beyond the surface. When we understand the cognitive patterns, emotional intelligence, and motivational drivers that separate high performers from high potentials, we open up something remarkable. We don’t just identify future leaders—we actively create them. This deeper insight allows us to nurture leaders who aren’t just effective in the moment, but who remain resilient, adaptable, and aligned with your organizational values as they face increasingly complex challenges.

But here’s what I’ve learned matters most: the most important question isn’t “who are our HiPos?” but “how are we systematically creating our next generation of leaders?” This shift in mindset—from talent identification to talent creation—is what truly transforms an organization. It moves you from hoping the right people will emerge to ensuring they will.

The companies that get this right don’t just survive market disruptions; they lead through them. They don’t just fill leadership gaps; they anticipate and prevent them. They don’t just retain their best people; they help those people become the leaders who will define their industry’s future.

At Berman Leadership, this is exactly the kind of change we help create. We specialize in designing and implementing comprehensive, custom programs for organizations across pharma, insurance, legal, industrials, finance, investment, and corporate sectors. Our unique approach combines psychological science with business expertise, creating development experiences that don’t just build skills—they build the kind of leaders who thrive in mission-critical situations.

The investment you make in high potential development today will determine whether your organization has the leadership bench strength to seize tomorrow’s opportunities. To build a robust leadership pipeline in your organization, explore our High-Potential Development solutions.