Most High-Potential Lists Are Wrong

Five signs organizations confuse visibility with capability and how validated assessment improves high-potential identification

Many organizations avoid one uncomfortable question: How confident is leadership that the people on the high-potential list truly belong there?

Not whether the list exists. Not whether someone reviewed it at the last talent review. The real issue is whether the list reflects the people most capable of leading at the next level — or simply the people who are most visible, most vocal, or most favored by a manager.

In practice, high-potential processes often rely on some version of “manager nominations” and “performance ratings.” That combination is common, but it is also where misidentification starts. Research illustrates the risk. Management consultancy Zenger Folkman examined nearly 2,000 employees across three organizations that had been designated as high potentials and evaluated leadership capability using 360-degree feedback. More than 40% scored below average on leadership effectiveness, and 12% fell in the bottom quartile.¹ Many were strong individual contributors, but they lacked the leadership capabilities the designation was meant to represent.

Performance vs. Potential: A Costly Misunderstanding

The gap between performance and potential is wider than many organizations assume. Research commonly attributed to CEB (now Gartner) has been summarized as finding that only one in six high-performing employees also shows attributes associated with leadership potential.² In other words, strong individual results do not automatically translate into readiness for broader scope, complexity and accountability.

This matters because the stakes are high. DDI’s Global Leadership Forecast 2025, drawing on responses from nearly 11,000 leaders and 2,000 HR professionals, found that 77% of CHROs lack confidence in their bench strength for critical roles.³ At the same time, retention risk rises when development does not match capability and aspiration: DDI reports higher intent to leave among high-potential individual contributors over time.⁴

Across these findings, one pattern appears repeatedly: high-potential identification breaks down when it depends too heavily on opinions, impressions and past results. The missing ingredient is objective, validated measurement. A validated leadership assessment that measures competencies associated with leadership effectiveness can reduce bias, improve consistency and surface capability that nominations often miss.

So, what does “getting it wrong” actually look like? Here are five signs a high-potential list may be off — and what to do instead:

1. The process rewards visibility, not capability.

The symptom: The list repeatedly features the people everyone already knows, rather than the people with the strongest leadership capability.

Manager nominations can be valuable, but nominations are shaped by what managers personally observe and by implicit beliefs about what leadership “looks like.” Employees who speak up in meetings, volunteer for high-profile work, and build strong upward relationships tend to be noticed. Employees who lead quietly, deliver through others or operate in less visible roles are easier to overlook.

Zenger Folkman found that underperforming individuals in high-potential programs often shared a few characteristics: deep technical expertise that got them noticed, a track record of delivering results as individual contributors, and a tendency to fit in well with the organizational culture.⁵ None of these are negative qualities, but they are not the same as demonstrated leadership effectiveness.

The fix: Treat nominations as input — not a decision. Pair manager perspective with a validated leadership competency assessment that evaluates capabilities required at the next level, whether or not an individual is already visible to senior leadership

2. The organization is confusing performance with potential.

The symptom: The high-potential list closely mirrors the top-performer list.

High performance means someone excels in the current role. High potential means someone has the capability, motivation and adaptability to succeed in a future role that is typically broader, more ambiguous and more complex.

Research has long warned against assuming that past performance will carry forward into substantially different roles. Business researchers Martin and Schmidt reported that past performance may predict success in lateral moves with similar requirements, but it does not reliably predict success in promotions into roles with significantly different demands.⁶ Organizational development experts Allan Church and Jane Waclawski called this the performance-potential paradox: some excellent performers may already be operating at their ceiling, while some people with extraordinary potential may be underperforming because they are not sufficiently challenged in their current role.⁷

The Talent Strategy Group’s 2024 High Performer and High Potential Development Report found that only 57% of organizations have a formal standard and discussion process to identify high potentials.⁸ The rest rely on informal standards or have no standard at all. Without a clear distinction between performance and potential, organizations end up promoting their best doers into roles that require an entirely different skill set.

The fix: Define potential separately from performance, and measure it with tools designed for the purpose. A scientifically validated assessment like SIGMA’s Leadership Skills Profile – Revised® (LSP-R®) measures 50 leadership competencies that are essential to leadership effectiveness across levels. These include capabilities like strategic thinking, coaching, influence, adaptability, and decision-making that do not show up on performance reviews. The LSP-R delivers an objective profile of leadership readiness that can be used in tandem with performance data, so both dimensions can be clearly evaluated.

3. The process is inconsistent across the organization.

The symptom: “High potential” means something different depending on who runs the talent review.

Even with an official HiPo process, application often varies by unit: one leader uses a rigorous nine-box calibration, another relies on intuition, and another nominates whoever seems “due” for recognition. The result is a list shaped more by local process quality than by leadership capability.

DDI’s 2025 research found that only 20% of HR leaders have successors ready for critical roles, and just 49% of key positions could be filled internally today.⁹ Part of the reason is that the identification process is too uneven to build a reliable pipeline. When the criteria shift from team to team, organizations cannot compare candidates fairly or make defensible development decisions.

The fix: Standardize criteria using a shared assessment framework. When candidates complete the same validated instrument, the organization gains more consistent, comparable data across teams, regions and business units.

4. High potentials do not receive operational development plans.

The symptom: People make the list, but nothing changes about their development.

Being designated as high potential should unlock targeted development: stretch assignments, coaching and a clear growth path. In many organizations, the designation is recorded, and development remains informal or inconsistent.

The Talent Strategy Group reported that in most organizations, 30% or fewer high performers have a high-quality written development plan. For high potentials specifically, 75% of organizations said fewer than half have a high-quality plan.¹⁰ When development is not operationalized, the designation becomes symbolic rather than strategic.

Operationalized development connects directly to retention. DDI’s 2025 data showed that high-potential individual contributors’ intention to leave rose from 13% in 2020 to 21% in 2024.¹¹ People who see potential in themselves but do not see the organization investing in that potential will find someone who will.

The fix: Make the designation operational by pairing it with assessment data that drives targeted development. This is where validated assessment earns its real value — not just in identification, but in what comes next. The LSP-R Focus Report does not just illustrate where a leader stands on 50 competencies, it provides personalized feedback and a structured development planning process that helps the leader identify their highest-impact development priorities and build a concrete action plan. Every person on the high-potential list should have a plan that is specific to their gaps, revisited quarterly, and tied to a clear next role or set of experiences. Assessment makes this possible because it clearly identifies what to develop, not just who to develop.

5. Hidden talent is being missed.

The symptom: The list overrepresents a narrow profile, and leadership suspects there is talent that is not being seen.

The most damaging consequence of a flawed process is not only who is included incorrectly — it is who is excluded entirely. Visibility-based identification can disadvantage employees in support functions, remote roles, quieter contributors and others whose impact is less immediately observable.

A Korn Ferry survey of HR professionals reported that 66% believed their programs were “too top heavy” and were not looking deep enough in the organization to identify potential.¹²

The fix: Broaden the lens with objective data. Adding validated assessment, such as the LSP-R, to identification creates a mechanism for surfacing capability that nominations alone often miss — without removing human judgment from the process.

What this adds up to

The high-potential list is one of the highest-leverage talent decisions an organization makes. It shapes who receives investment, who is developed for leadership and, ultimately, who leads the business.

Calibration discussions can help, but they rarely solve the core issue on their own. What closes the gap is a measurement layer that provides:

• a clearer view of the leadership capability the organization needs
• a more accurate view of the leadership capability it has
• more specific guidance on how to develop the pipeline deliberately

Validated leadership assessment helps shift high-potential identification from a collection of opinions to a more evidence-informed talent strategy.

Next Step: Add a Measurement Layer to the High-Potential Process

For HR and executive teams that are reassessing high-potential identification, a practical starting point is a short diagnostic of the current approach:

• How are nominations generated and reviewed?
• What definition of potential is being applied, and how consistently?
• What evidence is used to separate current performance from next-level capability?
• What changes in development once someone is designated high potential?

From there, the goal is straightforward: combine manager input and performance outcomes with validated leadership measurement that enables more consistent decisions and clearer development priorities.

SIGMA’s Leadership Skills Profile – Revised (LSP-R) is one option for building that measurement layer. It measures 50 leadership competencies associated with effectiveness across leadership levels and supports development planning through structured feedback and practical tools.

Take a free trial of the LSP-R to experience it firsthand. Get a clear snapshot of leadership strengths and development priorities in one sitting. Take the free trial and review results you can apply to development, coaching, and succession conversations. No credit card required..