Which comes first, performance or potential?
In the corporate world, employees get rated on two dimensions – performance and potential. The ratings come through two different, but related, processes.
Managers often confuse difference between performance and potential. Many managers assume that if an employee is a superstar at her job then she will be great for bigger roles and promotions.
Sometimes that is true, but just as often it is not true. Performance and potential measure related, but different, behaviors and traits.
How is performance measured?
Performance ratings look at the quality and quantity of what was done in the past. They measure behaviors, actions and accomplishment of goals.
During annual performance reviews, managers rate each employee on their completion of goals and contributions. Employees often complete self-ratings on annual performance and learn their final rating.
How is potential measured?
Potential ratings consider what an associate is capable of doing in the future. Since these ratings focus on future possibilities, managers must rate based on employee traits instead of specific past goals and behaviors.
Managers provide potential ratings during the succession planning process (check out this article for more information about succession planning). Employees do not rate their own potential and generally do not learn their own rating.
Employees with high potential are also generally good performers. They are good at their current job, but they also have the ability and drive and skills to take on bigger roles and to be successful at higher levels. Therefore, succession planning includes performance ratings as input. For more detail on research-back traits related to high potential, click here.
How do these two ratings go together?
Almost every combination of performance rating and potential rating is possible. High, solid and low ratings of performance can mix with high, medium and low ratings of potential.
One exception – a high potential rating requires strong performance. If an employee cannot perform the current job effectively, that employee should not be rated as high potential.
Confusing strong performance for high potential
Many leaders confuse strong performance for high potential. For example, they want to promote their strongest sales person to the sales manager role. But the skills and traits needed to be a strong sales manager differ from the ones needed to be a great sales person.
This difference highlights the value of having two different ratings.
Great performers provide incredible value to the company. Managers should reward and support them. But they are not always the same employees who should be rated high potential and prepared for bigger roles.
Some employees do outstanding work in their current jobs, but are best suited for staying in that role. They are high performers in performance reviews but correctly placed for succession planning.
Scenarios for strong performance with different potential ratings
Let’s look at some examples of how strong performers. Each of these strong performers receives good performance ratings and rewards, but they get different ratings on potential. Behind the scenes, the senior leaders use this information to give different opportunities to each employee.
Scenario 1: Strong performance with limited potential
Mike does well in his current job, and the company values his work and contributions.
His skill set perfectly fits his current role. But he does not exhibit any of the skills or competencies needed for bigger roles. He likes his current role, because it fits his lifestyle and interests. Mike could be considered a “Professional in Position”.
He earns a good performance review rating and gets a bonus and a merit increase. Everyone expects him to continue contributing at a high level.
In succession planning, his manager does not rate Mike as high potential – he receives the average rating. His current role suits him well for now.
Scenario 2: Strong performance and high potential
Maria also performs well in her current job.
As she does her job, she shows some of the skills and traits needed to work at a higher level. For example, Maria learns quickly, stays calm in stressful situations and helps mentor new employees. She enjoys a challenge and desires to grow her career.
Maria earns a good performance review rating and gets a bonus and a merit increase.
In succession planning, her manager rates her as high potential. This positions her for leadership development programs and puts her on the bench for promotions.
Scenario 3: Promotion and now correctly placed
Last year, Rahul’s manager rated him as high potential in succession planning. Having strong potential and strong performance, he just got an exciting promotion into a challenging new role.
Rahul earns a great performance review rating and gets a bonus and a merit increase.
Since he is still learning his new role, his new manager does not rate him as high potential in succession planning. He receives the average rating.
The company sees more potential in Rahul and will continue to evaluate him in succession planning. When he proves himself in his new role, he will be rated again as high potential and considered for even bigger roles.
In all of these scenarios, the employees were strong performers and they were rewarded during performance reviews. However, they were rated differently in succession planning.
What is the career takeaway for you?
To continue to build your career, excel in your current role. You must prove your value in your current role to be considered for bigger one.
Doing good work provides the foundation for future success.
Other career growth strategies such as networking, development plans, and visibility only work if you are seen as a capable strong performer.
