The HIPO team (High Potential Individuals) consists of highly potential employees who are considered pillars for the organization’s future development. Therefore, identifying and assessing HIPO competencies plays a crucial role in building an effective human resource development strategy, ensuring the enterprise’s succession and sustainable development.
How important is the HIPO team?
HIPO, short for “High-Potential Individuals,” represents a group of employees highly regarded for their competencies, qualities, and development potential, promising to become talented leaders in the future. According to a Harvard Business Review study, the contribution value of HIPO individuals can be up to 21 times that of average employees.
Therefore, businesses place trust in this group of employees, entrusting them with important tasks, and creating conditions for them to learn, train, and develop themselves. These policies foster the development of outstanding HIPO employees to enhance competitive capabilities and achieve ambitious strategic goals.
However, the percentage of high-potential employees in an enterprise accounts for only 3-5%. Identifying and assessing HIPO competencies is by no means a simple task for the leadership team. Only by selecting the right talent and providing proper training can their full potential be maximized for the organization.
What is the significance of HIPO Competency Assessment for an organization?
According to experts, investing in HIPO is investing in the prosperous future of the enterprise. To effectively implement this strategy, businesses need to take two important steps: identifying the HIPO group through competency assessment and building a suitable development roadmap to ensure long-term sustainability and success.
Therefore, HIPO competency assessment is an extremely important activity for any organization, bringing many practical benefits.
1. Optimize Employee Potential
While every employee deserves opportunities for career development and advancement, identifying and nurturing High-Potential (HIPO) employees should be prioritized for businesses to break through in a highly competitive market. Experience has shown that a large technology company in the US implemented a HIPO program and discovered a group of talented engineers. Thanks to this program, the company’s number of patents increased by 30% in just 2 years.
It can be said that the HIPO competency assessment program is an essential tool to help organizations identify and determine high-potential individuals. This allows the organization to understand each individual’s potential, strengths, and weaknesses, thereby guiding and training them effectively. When trained correctly, these individuals can maximize their abilities and contribute better to the organization.
Furthermore, implementing good remuneration policies and demonstrating organizational trust plays a crucial role in encouraging HIPO to strive for development. When the development of HIPO individuals is linked to the organization’s growth, they will have a stronger motivation to contribute. In-depth training policies, systematic career development programs, and attractive benefits packages not only help HIPO enhance their skills but also build loyalty and long-term commitment to the organization.
The organization’s interest and investment in HIPO not only aim at individual development but also contribute to building a strong and dedicated workforce. This brings tremendous benefits to the organization, including achieving immediate business objectives and creating a solid foundation for sustainable development and prosperity in the future.
However, according to a Harvard Business Review survey of 45 global companies, 50% of leaders spend less than 10% of their time assessing HIPO competencies, developing, and offering benefits to retain and leverage their outstanding abilities.
2. Enhance Work Efficiency and Productivity
Employees highly valued for their potential and worth can contribute over 91% more to the business than average individuals. They are the key to helping businesses achieve exceptional performance. Research shows that with just one HIPO joining a team, the productivity and work efficiency of the entire team can increase by 5 to 15%.
This is because HIPO can provide innovative solutions and optimize work processes, saving time and resources thanks to their breakthrough thinking, creativity, excellent organizational, and management skills.
The case of Unilever Group is a clear testament to the strength of its HIPO workforce. After implementing the HIPO competency assessment program, they recorded the HIPO team’s work productivity to be 25% higher than the company average.
3. Enhance Employee Engagement and Loyalty
Employees, especially talented teams like HIPO, are considered valuable assets to every business. When they feel recognized, empowered, and have opportunities for development, they will be more engaged and loyal to the organization. This creates a significant competitive advantage for businesses in today’s harsh and unstable labor market.
Therefore, the HIPO competency assessment program with its career development privileges is a “tool” that brings two-way benefits to the organization: it both promotes growth by leveraging talent and retains them with the organization. According to a Gallup report, companies with HIPO development programs reduced employee turnover by 20%, while employee satisfaction increased by 15%.
4. Ensure Sustainable and Long-Term Organizational Development
According to Dr. Joe Folkman, Co-founder and President of Zenger Folkman, a leading expert in the art of leadership: “The goal of succession planning is to select and train potential leaders, ready to undertake challenging new responsibilities, thereby generating results that drive organizational development.”
Emphasizing the importance of succession leadership, Dr. Folkman shared in the webinar “Succession Planning – Stories from Practice” organized by L&A and SKALE, that most businesses he has collaborated with faced the challenge of a shortage of leadership human resources. They lacked the necessary elements to lead the organization to success and encountered difficulties in planning the long-term future for the business.
>> See also: Tips for Effective Succession Planning for Businesses from Dr. Folkman
This demonstrates the pivotal role of succession leadership in ensuring continuous and stable development for all organizations. Effectively preparing and nurturing a succession leadership team not only helps businesses overcome current challenges but also creates a solid foundation for future prosperity.
A prime example of successful implementation of the HIPO (High Potential) competency assessment program is the case of Johnson & Johnson. Thanks to its systematic leadership succession training program, the corporation has maintained an average revenue growth rate of 10% per year over the past 5 years.
5. Improve HR Decision-Making
Selecting the right employees for each position and providing appropriate development directions will help businesses optimize operational efficiency, increase productivity, and achieve strategic goals. However, the challenge of ‘gut feeling’ in HR decision-making has never been easy. Businesses often face many difficulties in assessing the competencies, potential, and suitability of candidates or employees for specific job positions.
>> See also: Eliminate Subjectivity in Recruitment and Appointment through Competency Assessment
The HIPO competency assessment program is an effective solution that helps businesses improve HR management decisions based on objective and accurate competency assessment data.
According to a Bersin by Deloitte study, companies that utilize HIPO programs are 50% more likely to make correct HR decisions compared to companies that do not.
6. Build a Strong Employer Brand
To achieve success in today’s fiercely competitive era, businesses need to attract and retain outstanding talent. One of the crucial factors helping businesses achieve this goal is possessing a strong employer brand.
This enables businesses to easily access high-quality human resources that align with organizational culture and values, save on recruitment and training costs, and simultaneously build a foundation for sustainable future development.
One of the core elements is having a clear and effective talent development program. This program demonstrates the company’s commitment to investing in its people, creating opportunities for employees to learn, develop, and advance their careers.
A prime example is Google, a company renowned for its systematic and professional talent development program. Thanks to this program, Google consistently ranks among the most desirable companies to work for, attracting millions of applicants annually.
Conclusion
HIPO competency assessment is an essential investment strategy for the organization’s future, helping to develop high-quality human resources, optimize employee potential, and build a solid foundation for sustainable development and increased competitive advantage in the market.
Businesses need to build and implement a systematic assessment strategy, utilizing diverse assessment methods, and ensuring objectivity and fairness to achieve the highest effectiveness.
With over 20 years of experience in human resource consulting and development, SKALE is proud to be a trusted partner for many businesses in providing accurate, data-driven competency assessment solutions, helping businesses correctly identify the potential of their HIPO group, thereby building effective human resource development strategies, ensuring succession and sustainable development for the organization.
About SKALE Talent
SKALE Talent is a technology platform for assessing and developing the right talent based on data, aiming to enhance the quality of human resources for the sustainable growth of businesses.
SKALE Talent is implemented by SKALE Human Capital – formerly the Organizational Consulting and Development (COD) division of L&A, which was merged into SKALE in January 2023. SKALE Human Capital is a combination of L&A’s over 20 years of management knowledge and SKALE’s advanced HR technology.
With the motto ‘Right Talent – Strong Future,’ SKALE is always ready to provide solutions such as: Organizational Structure, Human Resources Management and Development Consulting, Competency Assessment, Building Compensation and Benefits Systems, HR Technology Application Implementation, etc.
