By Rachel Feintzeig
Companies are searching for future stars and they're
stumped.
At a time when firms have more data than ever on employees'
habits and productivity, predicting which employees will excel in
bigger jobs remains more art than science. So-called "high
potentials" can help companies ensure they have leaders for the
long-term, but managers say their picks don't always work out.
"People are horrible at predicting the future," says Tom Rauzi,
director of global talent at Dell Inc.
For the moment, algorithms aren't much better. Some makers of
human-resources software say they're working on developing new ways
to predict potential but aren't quite there yet. And companies like
Nokia Corp., American Express Co. and SAP SE are rethinking how to
gauge employee potential focusing on new metrics, using games to
identify traits like perseverance or classifying workers' abilities
differently--but have not yet developed a quantitative approach
that cracks the code.
Most employers currently rely on managers' judgment or
performance reviews to determine who gets on the high-potential
track. Managers said they accurately predicted employee potential
just over half of the time, according to a survey of 134 companies
by consultancy Talent Strategy Group LLC. That suggests a good
chunk of the estimated $70 billion to $75 billion U.S. companies
outlay on training is misspent.
At Dell, some managers rate employees' potential, sending chosen
workers to network with leaders or tapping them for special
assignments. The approach results in some "false positives and
false negatives," says Mr. Rauzi, partly because Dell has no
companywide criteria for high potentials.
"Everybody bats the term around but we're not really sure what
the other person's talking about," he says.
This summer he will kick off a research project to analyze data
like employees' education, trajectories and performance feedback in
hopes of unearthing telltale markers for people suited to ascend
Dell's ranks.
When managers are in charge of high-potential rosters, they tend
to pick protégés who are like them. In a survey of more than 9,500
managers by CEB Inc., nearly a quarter said they rely on gut
instinct when picking future stars, a finding that may explain why
some companies say they're struggling to find fresh thinkers and
diverse hires.
Employees who feel they're being tracked for bigger things tend
to stay on longer and put in more effort at work, according to
research from Christopher Collins, an associate professor at
Cornell University's School of Industrial and Labor Relations and
director of its Center for Advanced Human Resource Studies.
Yet those who aren't tapped for the high-potential, or hi-po,
track may grow embittered. At business-software maker SAP, about 8%
to 10% of employees were designated hi-pos, but some 70% were
thought of as po-pos, "pissed off and passed over," according to
Jewell Parkinson, head of HR for SAP North America. As a result,
the company did away with its official high-potential
distinction.
At Coca-Cola Co., Carie Davis observed that the soda maker's
high-potential program was filled with Type A employees with
similar profiles. Ms. Davis, who until March was the company's
global director of innovation and entrepreneurship, advised some of
the group during a session on innovation, but found they spent more
time talking and "jostling for power" than executing new ideas.
"It rubbed me the wrong way," recalls Ms. Davis, who left Coke
after about 13 years to start her own consulting firm. She says she
worries that employees capable of coming up with new, creative
ideas are "squashed."
A Coke spokeswoman declined to comment.
Companies are bringing in assessments, similar to those used to
vet executive-level talent, to evaluate thousands of employees at
many levels of the organization, according to Matt Paese, a vice
president at assessment company Development Dimensions
International Inc.
Later this summer, DDI will begin marketing a new line of tools
designed as a cheaper, lighter version of assessments traditionally
given to executives.
Some human-resources leaders say the tests currently on offer
from assessment companies cost too much to offer them widely,
though DDI says its prices have come down in recent years. Others
say the assessments stoke employees' anxieties.
Lori Bradley, a talent management executive who has expanded the
use of assessments at PVH Corp., the owner of brands like Calvin
Klein, says workers often worry about who sees their answers, and
whether those results affect pay or performance ratings.
"We have to do a lot of reassuring," she says.
Makers of HR software are beginning to develop their own
solutions, claiming that algorithms built using an array of
metrics--from an individual's 401(k) contribution to promotions to
connections on the corporate social network--can yield information
about high potentials.
Ultimate Software Group Inc., for example, says its UltiPro High
Performer Predictor tool scores workers on the likelihood that they
will excel in the months to come. Steve VanWieren, the company's
principal data scientist, notes that future performance isn't the
same as potential, which he defines as the ability to move up a
couple layers in an organization.
The company is currently at work modeling possible predictors of
potential. But even that won't be fail-safe, he says. "There's
always going to be something the data misses."
Write to Rachel Feintzeig at rachel.feintzeig@wsj.com
Access Investor Kit for Nokia Oyj
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=FI0009000681
Access Investor Kit for Nokia Oyj
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US6549022043
Subscribe to WSJ: http://online.wsj.com?mod=djnwires