October 14, 2016
Spotting High-Potentials to Navigate Complexity
Among the many challenges organizations face, the selection of executives is not a minor one. VUCA, short for volatility, uncertainty, complexity, and ambiguity emerges in the strategic leadership field as a guide to spot high-potentials, those with the ability to handle complex, incomplete information.
Note from the Editor: an extended version of this article was originally published in the magazine IT经理世界 (IT Managers in the World) in September 2015. It can be accessed here (in Chinese).
The higher the position in an organization the higher is the requirement to deal with abstract business issues, to adopt a bird’s eye perspective and a long term vision. Tasks of high complexity usually involve uncertainty, multiple stake holders, are operated in an abstract rather than concrete environment, and may substantially extend into the future. Leadership able to cope with this high complexity tasks needs to be wired in a particular manner.
The concept VUCA, coined in the 90’s by the American military, aims to offer a methodological frame to support human resource professionals to identify high potentials for an organization based in their ability to deal with these complex tasks.
High Performance vs. High Potential
High performing talent does not mean necessarily high potential talent. A 2005 research by the Corporate Leadership Council showed that only 3 out of 10 high performing employees were indeed high potentials. The research highlighted the importance of reviewing talent evaluation concepts: performance versus potential-based evaluations.
A performance evaluation system focuses on the current requirements for a specific position and actual performance, and checks to see how both are aligned. On the other side, a potential-based talent view centers at the candidate’s potential to grow into the future job requirements. When changes in a specific role occur, responsibilities are modified or added. The ability to tackle new challenges would depend on a talent’s potential rather than current performance.
How to spot, among high-performers, those high-potentials that will be able to pilot the organization in the future? These individuals will be required to handle, organize and process information at different levels, to have the ability to deal with new problems as well as strong learning abilities. In a nutshell, they will be individuals with high levels of cognitive complexity.
“High cognitive complexity individuals will be able to see things at a broader level and lay out a strategy for the company in the long run. How to transition from the current state of things towards the future they envisage”
A practical way to assess the level of cognitive complexity consists of designing a task where participants have to adopt the role of executive directors and come out with strategic business development proposals. The process can be structured as follows:
- Introducing the case (1.5h), using reading and/or graphic materials. Enough time should be given to the individuals so they understand the case, analyze the situation and establish a course of action.
- Presentation (15-20 min): each individual presents her/his analysis. The main focus at this stage is on the results they come up with using their analytical processes. It is important here not to interrupt their presentation and observe the individuals different rationales.
- Q&A (30-40 min): the goal for the human resource professional, or team of HR professionals who designed the case, should be to understand 1) how did individuals process the information and came about with the conclusions presented in the previous step, 2) at what level did they process the information – were they able to work with abstracts or did they focus on operational aspects of the case, and 3) inquiry about what were their decisions based on and try to spot.
- Evaluation (10 min): finally the human resource professional/s will evaluate/ discuss the mental processes and rationales individuals have used for their performance. The aim is to determine here to which level of cognitive complexity the individual should be assigned, as a key indicator of her/his potential.
Though generalizations are always risky, experience shows the type of results the different individuals may come up with according their level of cognitive complexity:
Individuals with low cognitive complexity will pick up pieces of the information provided, the ones they deem most relevant and lay out their conclusions in the form of specific facts and figures (list form). They won’t be able to cope with all the information provided, or to establish relationships between a high number of variables since they lack the ability to process them. They will apply clear rules to their thinking and stick to their knowledge and experience to solve the case. Following the VUCA approach, these individuals cannot deal with complexity (not able to establish relationships between a large numbers of variables) and ambiguity (only focus on casual relationships, where precedents exist)
Individuals with middle cognitive complexity levels will also chose certain variables and will establish relationships between them with the goal of maximizing the effectiveness of the entire organization. Their main concern will evolve around the systems and practices that need to be put in place to ensure that goal. They are also able to focus on each individual variable and come up with actions/plans to change them in order to support the entire operation. Basically they will come up with a tree-like solution (trunk and main branches) as opposed to a list form.
Finally, individuals with high cognitive complexity will be able to see things at a broader level, and lay out a strategy for the company in the long run. They will be able to see how to transition from the current state of things – as per the facts indicated in the case, towards the future they envisage. They will try to answer the following questions: how to do the transition, what elements/ products/ services/ departments of the organization will bring most value to the company in the future. When drawing their conclusions the key focus will be ‘transition’ and they will present what they consider the necessary organizational changes, product/service developments, risk and quality assessments, and a calendar to achieve their goals. The way they present their results shows their ability to handle complexity (many interconnected parts and variables), uncertainty (despite the lack of complete information they are able to establish mechanisms to monitor performance along the way and reduce ongoing uncertainty) or ambiguity (not fearing the unknown, taking the organization to the next level).
Key Take Away #1:
Do not take high performance for high potential. The former indicates the ability to successfully handle situations in the current state of things. However, since the environment is changing at breakneck speed, managers are required to have the potential to constantly adapt.
Key Take Away #2:
VUCA and the level of cognitive complexity displayed by individuals provide the benchmark to discriminate high-potentials. Efforts from an organization to systematically establish assessments centered on talent potential will reflect on the ability of this organization to emerge successfully from changes in the market environment. Using a computer metaphor, if the internal CPU of an organization cannot be updated the more difficult will be to succeed.
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