Employee potential is at the center of all people practices as it requires assessing individuals’ skills, capabilities, and growth prospects. HR technology can help organizations make informed decisions about recruitment, development, work allocation, internal mobility, succession planning, and more. It helps organizations consider not only what an employee can do today, but also what they could be capable of in the future, helping to unlock the potential in their workforce.

To understand the future of employee potential, the Growth & Insights team for SAP SuccessFactors hosted interviews with 57 HR leaders from SAP customer organizations and conducted a survey of 1,401 individual contributors from around the globe. The research focused on defining, assessing, and utilizing potential.

Expanding the Definition of Employee Potential

Read the full employee potential research report

Before an organization can assess employee potential, they need to define it. Across the HR leaders we interviewed, definitions of employee potential fell into three different categories: individual attributes, ability to take on a certain role in the future, and current performance. Most HR leaders struggled to find a definition of employee potential that their organizations would accept, understand, or apply universally and consistently. According to the surveyed HR leaders, an expanded definition of potential would give them a more comprehensive understanding of their workforce’s potential; enable managers to better understand, discuss, and realize their team members’ potential; and ensure that employee potential practices are more inclusive of all employees.

Improving the Assessment of Employee Potential

The research uncovered many challenges in the process of assessing employee potential, including what is measured, how it is measured, and who is involved. The top challenge in assessing potential was rater subjectivity, or raters using their gut feelings, opinions, or biases to inform their assessments rather than the organization’s definition or criteria. Survey data from employees suggest that HR leaders should be concerned about this bias: about one-third of employees (30%) feel their organizations’ potential practices are unfair.

One way that organizations can minimize bias in assessment of potential is by leveraging an artificial intelligence (AI)-powered skills foundation like the talent intelligence hub. The talent intelligence hub powers SAP SuccessFactors Human Experience Management (HXM) Suite and can enable organizations to better understand, build, and leverage the skills of their workforces. By understanding individuals’ skills, attributes, strengths, and preferences, organizations can make data-driven talent decisions and minimize biased decision-making.

AI can also assist in creating personalized development opportunities for employees based on their potential. By knowing an employee’s strengths, skills, and aspirations, AI can recommend targeted training and development opportunities that align with their potential growth areas. SAP SuccessFactors Opportunity Marketplace, powered by the talent intelligence hub, can surface AI-powered recommendations, such learning courses, project assignments, mentors, and internal roles, that can help nurture and retain high-potential talent.

Another challenge that was uncovered in the research is that assessments are missing valuable perspectives on employee potential. Our research suggests that managers do not know as much as they want about their direct reports’ potential. This indicates that the manager’s perspective must be supplemented with other sources.

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According to the HR leaders that we interviewed, peers’ opinions of an employee’s potential are rarely included – only two of the 44 organizations we worked with included peers in a 360-degree assessment of employee potential. According to employees, peers are a valuable data source and are as aware of their potential as their managers are. Having a solution like SAP SuccessFactors Performance & Goals can optimize this process significantly by using 360-degree reviews to help capture a more balanced and complete view of employee evaluations, including peer reviews. Using the 360-degree review forms, skills can be accessed and rated to highlight areas of achievement and opportunities for growth. The selected skills, together with their ratings, are then updated in the employee’s growth portfolio.

Using Employee Potential More Effectively

In general, our research suggested that HR leaders currently use potential data to make informed talent decisions in succession planning, career pathing, and performance management. However, HR leaders struggle to use employee potential data consistently across different HR practices. The talent intelligence hub can drive an organization’s entire learning and talent strategy and help use potential data more effectively. Organizations benefit from having a single skills model that covers recruiting, onboarding, learning and development, performance, and succession. With a holistic view of the workforce based on skills data from multiple locations, they can make data-driven talent decisions and can more easily identify and utilize potential.

HR technology can enable organizations to assess potential to make more informed and objective decision-making when it comes to talent management and development. Organizations that can understand and ignite the potential of their workforce will not only realize their business objectives, but also create a positive experience for all employees.

For additional insights on employee potential, read the full report, “Realizing Employee Potential: Igniting the Potential of All Talent to Succeed in the Future of Work.”

Christina Russo is global director of Solution Marketing at SAP SuccessFactors.

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