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Your Company's Future Leaders May Be Right Under Your Nose—And You Don't Realize It

A woman is sitting at a table in a glass office.

​Maybe she stutters or is nervous speaking in front of others and so doesn't come across as self-confident. Maybe he's quite overweight and so you discount him as lazy or undisciplined. Or perhaps she's very young and new to your company, and you assume she's not ready for more responsibility.

Regardless, these employees may have the potential to be leaders in your organization, and you could be overlooking them.

That happens more often than one might think, says Steve Hrop, vice president of organizational development services at Caliper, a Princeton, N.J.-based company that specializes in employee assessments and talent management. As a result, he says, companies too often look outside their organization to fill top jobs when the perfect hire could be "right under your nose."

"Research clearly shows that promotions from within have a much higher probability of success than hiring from the outside," Hrop said. "The superiority of internal promotions over external hires increases at the highest levels of the organization, even though there is a natural tendency to believe external hires are usually superior."

On average, inside promotions into executive roles have a higher ROI than outside executive hires, Hrop said. The up-front costs—such as executive recruiter fees and signing bonuses—are much higher for external hires, and the much higher turnover rate of external executive hires creates significant costs in terms of lost productivity, lower employee engagement and other indirect costs.

A high-potential employee is someone already working at a company who's been identified as having the potential, ability and aspiration for successive leadership positions.

Yet most organizations don't have a clear definition of what characteristics a "high-potential" employee should have. As a result, many executives consider workers "high-potential," Hrop said, because of visible—but what Hrop calls "over-weighted"—traits such as communicating in a highly confident manner,  excelling at making presentations, and showing a high degree of urgency to get things done, even if that's at the expense of collaboration, active listening and respect for others' opinions. 

"Generally, the louder a person has to talk, the more a person has to brag or self-promote, the less they actually have going on in the results department," said Cord Himelstein, vice president of marketing and communications for HALO Recognition, an employee rewards and incentives company based in Long Island City, N.Y. "Regardless of how well-spoken or articulate they are, this basic ratio always holds true. We all have to engage in some level of self-promotion in our work, but the difference between a poser and a pro is the pro shows up and gives you results. High-performing individuals confident in their skill sets know they can do the walk, so they let their results do the talking."

People with significant potential may fall under the radar, Hrop said, because they're much younger than the typical high-potential worker; may have been with the organization for a relatively short time; are in a job that gives them few opportunities to shine; or don't "look the part" because of factors like appearance, personality, or communication style.

"Many talented people have been passed over … based on nonvalid factors such as physical attributes—for example, being overweight or extremely short, a mild speech impediment like a lisp, or any number of other factors that have nothing to do with talent or capability," Hrop said. "Executives are often unaware of these biases in their evaluations of potential, but research … clearly shows the widespread prevalence of these types of biases."

But there are ways to recognize such preconceptions and to address them, Himelstein said.

 "Not too long ago, things like long hair, piercings and tattoos were considered taboo at work, but we've seen that norm get shattered." He noted that today's workforce includes plenty of employees with long hair, piercings and tattoos who are productive and valuable workers.

[SHRM members-only toolkit: Recruiting Internally and Externally]

Some examples of less visible factors that executives should consider in promotability, he said, include the ability to get others to follow your lead, a commitment to diversity within a team, a knack for coaching others, or being especially resourceful about problem-solving,

"You want employees that are two things: put-together and professional," Himelstein said. "It's usually easy to tell the difference between an employee who is just a bit eccentric and an employee who just isn't professional. Professional employees are polite, diligent and give an honest effort each day. They know how to not bring their personal lives into work and vice versa. Put-together employees are consistent, clear-minded, have established routines and approach their work with admirable curiosity."

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