The future leadership of an organization depends on its ability to identify the right people before they move into critical roles. Yet many companies still confuse current performance with future leadership potential.
This article explains why top performers do not automatically become top leaders. It shows how high-potential identification processes, when they rely too heavily on performance, recommendations, or internal visibility, can lead organizations to promote the wrong people.
For executives, HR leaders, and Talent Management professionals, the challenge is strategic: building a reliable succession pipeline requires assessing potential using objective, contextualized, and scientifically validated criteria. Hogan Assessments personality inventories make it possible to identify leaders who are not only able to emerge, but above all able to lead effectively.
The future leadership of your organization matters. Think about it: who would be ready to lead if your CEO left the company?
Organizations naturally want to include their best employees in a high-potential program. Yet identification processes based on performance simply do not work well enough.
One might expect nearly 100% of participants in high-potential programs to be above-average leaders. But that is not the case. More than 40% of participants are actually below-average leaders, and around 12% fall into the bottom quartile of effectiveness.¹
Imagine what happens when one of these unsuitable leaders reaches the executive committee and then fails. The CEO alone can influence up to 55% of a company’s overall value.² Any degree of executive derailment — meaning unmanaged behavior under stress and pressure — can easily cost millions.³ Added to this are the indirect losses in productivity, engagement, and reputation.
Smart organizations know they need a strong pipeline of talented, high-potential employees ready to step into leadership roles. But most still rely on performance to identify high potentials, when they should be assessing potential.
It is therefore unsurprising that an estimated half of new leaders fail in a new role.³ The success of future leadership depends on one essential distinction: the difference between high potentials who look like leaders and those who actually lead effectively.
By assessing high potentials against the right criteria and with the right tools, organizations can stop promoting the wrong people and start developing the right ones.
Short definition — Leadership potential: Leadership potential refers to the likelihood that a person will succeed in a broader, more complex, or more strategic role, based on measurable characteristics such as personality, values, adaptability, and the ability to lead others.
The central problem with using performance to identify potential is that performance is subjective.
Performance evaluations are more a matter of opinion than fact. Interviews mainly highlight charisma. Organizational politics often operate under the influence of unconscious bias.
According to Trish Kellett, Executive Advisor of Strategic Initiatives at Hogan Assessments, identification processes too often give excessive weight to affinity bias: the tendency to choose someone who resembles us.
Performance and potential are not the same thing. Confusing the two is precisely the mistake many organizations make.
Performance refers to a person’s apparent effectiveness in their current role and context.
It indicates how someone succeeds today, with the responsibilities, relationships, resources, and expectations that characterize their current position.
Potential refers to a person’s readiness for an expanded role and a broader context, based on objective and measurable characteristics of personality and values.
According to Jackie Sahm, Vice President of Integrated Solutions at Hogan Assessments, high-potential programs focus too heavily on current performance when selecting participants.
Performing well in a current role does not simply show how a person is likely to behave in new circumstances, with new demands. The definition of leadership potential is not identical at every level or in every organization.
The first question to ask is therefore simple: potential, yes — but potential for what exactly?
Short definition — High potential: A high potential is a person likely to succeed in more complex or more strategic roles in the future, provided their potential is assessed in relation to the context, expected competencies, and real demands of leadership.
The definition of leadership potential depends entirely on the organization’s context and the role being targeted.
Potential to occupy the next position should not be linked only to performance in the current role. High-potential employees should also demonstrate future leadership capability aligned with what the organization will need.
Adopting a forward-looking perspective does not mean leadership potential is subjective. It is possible to determine which competencies are likely to matter most for a leader in a given context, and then assess those qualities.
When identification is subjective, organizations risk perpetuating unfair Talent Management systems. Jackie Sahm explains that using performance evaluations to judge who has potential can bias decisions, with significant consequences.
According to her, the politics of potential are not only about money spent. They are also about who is given opportunities to lead, and who is denied access to them. The organization may overlook someone who could have made the world of work far more effective, fair, and human.
Personality is the best way to measure potential at every organizational level because it provides fair, accurate, and reliable information about how someone is likely to lead.
Personality data cannot predict every small decision a leader will make. However, it can predict whether a leader is likely to make decisions based on spreadsheets or on intuition.
Current performance may serve as a prerequisite for entering a high-potential program. But candidate identification should remain as objective as possible while taking into account the specific and contextual needs of the organization.
According to Jackie Sahm, a personality inventory is one of the least biased methods for assessing potential during the identification process and for supporting the development of participants in a high-potential program.
Short definition — Affinity bias: Affinity bias is the tendency to favor people who resemble us, share our codes, or confirm our own style, at the expense of objective criteria of potential.
Knowing how to identify high-potential employees also requires distinguishing leadership emergence from leadership effectiveness.
Successful leaders accomplish their work indirectly: not only through their own efforts, but through the efforts of their team. According to the Hogan perspective on leadership, leaders succeed or fail based on the success or failure of their teams.⁴
The difference between emergence and effectiveness is therefore about the real ability to lead teams.
Leadership emergence concerns holding leadership titles, progressing through the hierarchy, and seeming “leaderlike” — that is, having the appearance of a leader.
Performance-based identification methods, such as nominations by supervisors, tend to identify emerging leaders.
These individuals may appear confident and charismatic. They are often interpersonally skilled, good at forming alliances, and excellent at self-promotion.
However, emergence characteristics are not enough to succeed at the top.
Short definition — Leadership emergence: Leadership emergence refers to the ability to be perceived as a leader, gain visibility, move up the hierarchy, and acquire leadership titles.
Leadership effectiveness is the ability to build and maintain a team that outperforms the competition.
Effective leaders excel at leading people. They know how to motivate others to pursue shared goals. High-potential employees overwhelmingly say that their main challenge is leading teams.⁵
On average, managers spend only about 7% of their time managing people.⁶ An above-average leader probably devotes more to their team than the 34 minutes that represent 7% of an eight-hour workday.
But the best managers quickly discover that people-centered leadership is what makes a team perform. According to Erin Lazarus, Senior Director of Business Development at Hogan Assessments, to work through others, leaders must know what inspires and motivates their employees. They must balance coaching and guidance with the ability to give up some control.
Team orientation is a particularly valuable natural inclination in a high-potential candidate. Scientifically validated personality inventories can measure not only a person’s social and communication style, but also their energy, motivation, approach to learning and problem solving, and tolerance for stress.
Personality data can also help high potentials adapt their behavior to increase their effectiveness compared with the competition. Hogan Assessments calls this ability strategic self-awareness.
This capacity for development explains precisely why potential requires different tools and criteria from those used to assess performance. It is also why measuring both requires a more nuanced approach.
Short definition — Leadership effectiveness: Leadership effectiveness refers to the ability to build, engage, and maintain a team capable of achieving superior results over time.
The measurement of leadership potential must be context-based and adapted to different managerial levels.
According to Erin Lazarus, potential will look different depending on the role for which a person is being prepared.
Organizations should use a competency model to measure leaders from the first level of management through to the board of directors.
Early-career leaders must demonstrate the fundamentals of managing others.
They must be able to clarify expectations, support execution, give feedback, create a climate of trust, and support day-to-day performance.
Middle and senior leaders should be measured against an organizational framework for success.
In addition to leading a high-performing team, they must demonstrate alignment with the organization’s values and future direction.
Executive leaders should be measured using criteria tailored to their individual roles.
These criteria may also reflect how a candidate’s strengths and challenges complement those of the other members of the executive team.
Succession planning throughout the Talent Management cycle depends on precise, objective, and reliable measurement of high potentials.
According to Jackie Sahm, when used well, a personality inventory can help challenge how an organization’s leadership thinks about its current and future leaders.
Short definition — Succession planning: Succession planning is the process through which an organization identifies, develops, and prepares people likely to occupy critical roles in the future.
According to Hogan, potential can be predicted using objective data about a person’s personality and core values. These data reveal the likelihood that the person will perform well in their next role.
The Hogan Leadership Framework provides the theoretical foundation for how Hogan Assessments understands leadership potential.
This framework includes four domains:
Intrapersonal: managing oneself.
Interpersonal: managing relationships.
Operational: working in the business.
Strategic: working on the business.
Each leader takes an individual approach in each of these domains. Context determines whether that approach is effective.
Leadership potential is therefore not about whether a person leads, but about understanding how effectively they lead in a given context.
According to Jackie Sahm, the Hogan Leadership Framework accepts the fact that leadership requires different approaches depending on the situation.
An effective leader must be flexible, coachable, and receptive to feedback. It is no coincidence that learning agility is an identification criterion for high potentials in more than half of talent-focused companies.³
Jackie Sahm connects coachability with humility. Leadership requires a willingness to learn and self-correct, as well as a tendency to focus on the needs of others rather than on one’s own career.
One could argue that the most important competency to develop in high potentials is the ability to manage others. Trish Kellett suggests that high potentials take on a project leader role in order to experience several dimensions of the business.
Leading a team or project also helps differentiate top individual contributors from those who truly know how to work through others.
Short definition — Strategic self-awareness: Strategic self-awareness refers to the ability to understand one’s reputation, strengths, behavioral risks, and impact on others in order to adapt one’s leadership to the context.
According to Trish Kellett, the ability to lead a team will be more important than ever for high potentials.
Why? Because managing others well has a direct effect on engagement, and engagement itself has a direct effect on virtually all organizational outcomes.
Between business units in the top quartile and those in the bottom quartile of engagement, the gaps are significant: 10% in customer loyalty, 18% in sales productivity, 23% in profitability, 32% in quality, 63% in safety, 70% in well-being, and 78% in absenteeism.⁶
What managers most want employees to do is deliver results.¹ In other words, they want their teams to be productive.
Productivity and engagement, however, are directly linked. Employees’ relationship with their manager accounts for 70% of how they feel at work.⁶
Leaders of very high-performing teams tend to be highly engaged themselves. These leaders actively seek development opportunities. More than three-quarters of job candidates say they place high value on skills development.⁷
According to Erin Lazarus, leaders who feel personally engaged are inspiring. They bring passion and energy to their work, which motivates others.
Short definition — Employee engagement: Employee engagement refers to the level of energy, involvement, and attachment a person invests in their work, their team, and their organization.
The state of leadership is now one of the greatest challenges in the world.
Global CEO turnover remains high.⁸ Even more concerning, more than half of early-career professionals actively avoid management roles.⁹ Current executives are leaving the executive committee, while their potential successors are not interested in these positions.
Forward-looking organizations are taking action to respond to this looming leadership shortage. Others do not yet see it coming.
Developing a high-potential program that creates a steady pipeline of talented employees ready to lead is essential to organizational survival.
According to Trish Kellett, given all the technological transformations taking place, society must place the emphasis on leaders as team builders rather than as individual personalities.
Validated personality inventories help identify and develop high-potential leaders with the strategic self-awareness needed to engage teams successfully.
Yet many organizations do not recognize the difference between potential and performance, which exposes them to a Talent Management crisis.
According to Erin Lazarus, better leaders are needed to create better leaders. That is precisely Hogan’s purpose.
To build a strong succession pipeline, consult Your Guide to a Comprehensive Succession Planning Strategy.
Trish Kellett, Executive Advisor, Strategic Initiatives at Hogan Assessments
Erin Lazarus, MS, Senior Director, Business Development at Hogan Assessments
Jackie Sahm, MA, Vice President, Integrated Solutions at Hogan Assessments
Potential is not performance. An employee may excel in their current role without being ready to lead in a broader, more ambiguous, or more strategic context. Conversely, some less visible individuals may possess the characteristics required to become effective leaders if they are properly identified and developed.
For executives, HR leaders, and Talent Management professionals, this distinction is fundamental. Succession decisions cannot rely solely on performance evaluations, subjective recommendations, or political visibility. They must be based on objective, contextualized, and predictive criteria.
Hogan Assessments personality inventories make it possible to assess leadership potential through an approach that is fairer, more precise, and less exposed to bias. They help distinguish emergence from effectiveness, develop strategic self-awareness, and prepare leaders capable of building engaged, high-performing, and sustainable teams.
Performance shows what a person succeeds at today. Potential reveals what they may succeed at tomorrow, in a more complex role, with broader impact. This difference determines the quality of future leadership and the strategic resilience of the organization.
