How to Identify High Potential Employees: Meaning & Types

A recent report shows that many organizations label about 10 % of their employees as high potential. In fact, 98 % say they do this on purpose. When resources are limited, they tend to give more attention to these employees because they believe they will help lead the company in the future.

But the question is, how do organizations identify these high potential employees? This guide offers a deep understanding of the high potential person meaning, key characteristics, and different types, so companies can better recognize and develop future leaders.

What is a high potential employee?

A high potential employee (HiPo ) refers to a person who regularly does better than other employees in different situations. They act in ways that reflect their company’s culture and values while learning and growing quickly to succeed in their careers.

For example, a sales associate might not always be the top performer in closing deals, but exhibits high leadership potential. The employee may not always be able to demonstrate leadership qualities, like coaching other team members or taking initiative to improve sales processes, could be considered a high potential employee.

According to a 10-year study , many high potential employees typically possess three important qualities:

• Aspiration to rise to senior roles

• Ability to succeed in roles with greater responsibility

• Engagement and commitment to the organization

Competitive pay and benefits help attract and keep top talent, including high potential employees. Salary.com’s Compensation Software makes it easier for organizations to design and manage competitive pay structures using trusted market data.

Why is identifying high potential (HiPo) employees important?

A high potential (HiPo) employee is a highly valued asset. With their contributions, organizations can expect brighter futures and stronger outcomes. Here are other reasons why identifying them is important:

1. To prepare for future leaders and succession planning

   High potential (HiPo) employees often become important leaders who drive new ideas and lead key projects. However, it is worrying that half of employers say their top teams spend less than 10% of their time developing these high-potential leaders, according to a study.

2. To help organization achieve long-term organizational growth

   Having a group of high potential (HiPo) employees can make a big difference, especially during times of change or growth. This group helps the organization grow steadily and stay competitive over time.

3. To increase productivity and performance

   Research shows that high performers can be up to four times more productive than the average employee. Finding these employees helps organizations use their strengths to improve overall performance.

Paying high potential employees with strong performance fairly helps keep them motivated. Salary.com supports this by helping organizations make quicker pay decisions and better connect market, company, and employee data through improved integration.

High potential employees vs high-performing employees

The difference between high-potential and high-performing employees is that high-potential employees show the ability to grow into leadership roles, even if they are not top performers yet, while high-performance employees consistently deliver excellent results in their current jobs.

In short, high potential means being able to take on a job two or more levels higher than the current one. High performance means consistently delivering high quality work and meeting or beating expectations.

Research  shows high-potential (HiPo) employees bring 91% more value and work harder than others. Use Salary.com's Compensation Software to pay them fairly. It helps set the right pay and create good salary ranges.

Characteristics of high potential employees

Not all employees are high potential simply because they have more skills than regular employees. But what qualities make someone high potential? HiPos possess the following: 

• A drive to excel: HiPos work hard, aim to succeed, and stay true to their values—even when making personal sacrifices. Their strong motivation and clear career goals give the company a competitive advantage.

• Catalytic learning capability: They learn new things quickly and use what they learn to get results and help their team or company.

• An enterprising spirit: They look for new challenges and opportunities, even if it means taking risks like moving to a new role or location.

• Dynamic sensors: They have good judgment and know when to act or wait. They avoid rushing into decisions and think about risks and people involved.

• Self-awareness and high emotional intelligence: They are emotionally intelligent, understanding how others see them, managing positive relationships carefully, and asking for feedback to improve.

• Resilience and adaptability: They handle pressure and setbacks well, keeping their performance steady and fitting in with company culture.

Types of high potential employees

According to experts, there are two types of high potential (HiPo) employees who help a company succeed in different but important ways. Here is how they are different: 

1. Performers

   Performers are great at improving and working well within existing systems. They consistently meet or beat expectations by making processes smoother, working efficiently, and delivering good results. Performers do best in roles with clear goals and structure, bringing stability and reliability to the organization.

2. Producers

   Producers are creative and business-minded people who come up with new ideas and help turn them into successful opportunities. They think ahead, take smart risks, and bring together different resources and skills. Producers often change the usual way of doing things to create new value.

Identifying high potential employees: 5 steps

Now that you know the types of HiPos, let's walk through the steps to identify hipos in your organization.

1. Step 1: Define what high potential means for your company

   Before choosing high potential (HiPo) employees, decide what “high potential” means for your company. List the skills, traits, and soft skills that fit your goals. Some companies value leadership, others look for flexibility or creativity. A clear definition helps everyone judge fairly.

2. Step 2: Use different ways to assess employees

   Use different tools to evaluate employee potential. This can include employee performance reviews, feedback from coworkers, personality tests, skills tests, and manager opinions. Using many methods helps reduce bias and gives a clearer view of each employee’s strengths and areas to improve.

3. Step 3: Watch behaviors and look for real examples

   Watch how employees behave in different situations. Do they take charge, use problem solving skills, and influence others? Notice when they showed leadership, faced challenges, or went beyond their job duties. Real actions often reveal potential better than tests.

4. Step 4: Follow a clear and fair process

   Keep the identification process clear and consistent. Set clear criteria, involve several leaders in evaluations, and record decisions. This helps make the process fair and trustworthy, especially when promotions are involved.

5. Step 5: Communicate and support growth

   Once potential is identified, talk to the employees. Let them know they’ve been recognized and offer support like training, mentorship, or leadership training. This boosts employee engagement and encourages them to stay with the company.

   Supporting employees is not just about professional development. It’s also important to support them with pay. Salary.com gives you the data and tools to make confident pay decisions. You can easily create, change, and share reports that show pay across the company.

When organizations recognize high-potential employees and find ways to retain them, their chances of success improve. Using innovative solutions helps these employees feel valued and fairly compensated. Salary.com's Compensation Software delivers the data and insights needed to make informed pay decisions.