Description
Percentage of workforce designated as high potential.
Formula
End of period headcount . High potential / End of period headcount * 100
Interpretation
Staffing Rate – High Potential indicates the percentage of the workforce that is classified as high potential (HIPO).
A high-potential designation will likely have different connotations across different organisations. For some, the high-potential workforce is simply defined as the likely future leaders of the organisation as identified by direct managers. Other organisations may have specific criteria around competencies and promotability that define high potential.
Some organisations also restrict the job levels at which an employee may be deemed high potential. Despite the various methods for identifying high-potential staff, for virtually all employers, this group becomes a population to monitor for development and retention.
Staffing Rate – High Potential enables employers to monitor the size of this population relative to the size of the workforce. Especially as organisations grow, use of this measure can help to ensure that there is an appropriately sized group of potential future leaders being groomed and developed for that purpose.
High results for this measure may signify high calibre of hires, highly successful employee development or broad criteria for HIPO designation. High results should also be matched to high levels of dedicated development resources to ensure that high-potential employees are adequately nurtured and engaged.
Low results for this measure may indicate strict criteria for HIPO designation, or they may signal that an organisation needs to review its recruitment adequacy or that employee development is lacking.
Data Sourcing
Organisations sometimes capture a high-potential flag within the personal characteristics table of an HRIS. Otherwise, such data might be stored in a separate spreadsheet list, or in a succession management or development database.
Analysis
Organisations frequently analyse the high-potential workforce by demographic characteristics to monitor the diversity of current and future leaders, using dimensions such as gender, ethnic background and age.
Additionally, organisations can analyse this measure by organisational unit, location, organisation tenure, pay grade, occupation, job function and job family to monitor both the potential succession gaps and the pockets of high employee development within certain areas.
Limitations
The value of this measure is directly linked to the accuracy with which the high-potential designation is given. This measure does not indicate, without added analysis, the volume of high-potential staff within key skill areas or at key job levels. It does not indicate the turnover of this workforce or their level of engagement.
Also, measuring the size of the high-potential workforce does not in itself ensure the appropriate development of this group.
Targets
Because different organisations have widely varying guidelines for who are considered to be high- potential employees, targets are rarely set on a relative basis against a benchmark group.
Instead, organisations frequently set absolute targets based largely on their appetite and capacity for monitoring and developing the high-potential population.
Targets may also be informed by the forward-looking succession management needs of the organisation based on the expected turnover, including retirement, of the organisation’s leaders. Such targets are likely to fall anywhere from 1 to 10 per cent of the workforce as a whole, or up to 20 per cent or more of a specific job level.