Authors: Roger R. Pearman and Robert W. Eichinger – Managing Partners
Most organizations conduct an annual talent review of some sort. Many use the so-called Performance/Potential Matrix, referred to as the 9-box, 9-grid, or 9-box matrix for short. However, is Performance the same as Potential? To answer this question, let’s uncover the mystery of the 9-box.
The talent placement process happens in two steps.
First, array your people or team on the vertical performance scale, placing 1/3 of your people in each row–1/3 of the highest performers on top, 1/3 of the lowest performers in the lower box, and the remaining 1/3 in the middle.
Second, estimate each person’s long-term potential to be a top 1/3 performer in the future by placing them in the most appropriate of three columns–1/3 with the greatest potential, 1/3 with the least potential and the remaining 1/3 in the middle.
Where the name on the left matches with the name on the top, place that name in the nine-cell matrix. So, if Manager Dan is a middle-level performer and you believe he is a high potential employee, he’ll sit in the 8 box.
The Performance vs. Potential Estimates
There are two variants for the performance estimate, current performance and performance averaged over the past up until now. The second variant is the one the 9-box was explicitly designed to address: potential.
The 9-box was designed in the 70’s because of two research findings. The first finding was that many managers and leaders believed (and may still believe) that performance and potential are the same. They are not. Performance is performance. Let’s say one team member picked 24 boxes of raspberries on the morning shift, another picked 18 and another 15. If this was a three-person team being assessed, 24 is the top, 15 is the bottom and 18 is in the middle.
Potential is “potential for top-third performance” in the future.
You might think, well the person who picked 24 would have the best potential to do that over and over again. What if the person who picked 18 worked very hard, asked others for the tricks of picking, and picked 31? And the person who was picking at the 15 level did the same and started to pick 28? What if the picker of 24 was comfortable with that and continued to pick 24?
How to Differentiate High Potential Employees
Potential is having the core characteristics that lead to learning the lessons of experience and the ability to apply those lessons, in multiple combinations, to issues and challenges in the future. High potential employees (true top 1/3 Potentials) are more curious and have a greater thirst for knowledge than the remaining two-thirds. They have more intellectual horsepower, especially the skill of looking at problems in terms of underlying essence and patterns. They are the best at leveraging people to join them to get great things done. They are more motivated to get to the top, and they aspire to lead. They have more learning agility–the ability to wrest meaning from exposures and experiences of life and work. And, when developed properly, they will end up having more skills to lead than others.
A well-utilized 9-box captures the potential to perform at a higher and more complex level in the future. Some practitioners add the “ready when” feature: When will they be ready for the next significant increase in responsibility?
Consider this analogy
A rookie in the minor league of a sports organization is not likely to be the best performer on day one or in season one. There are athletes who have been there many years and have not yet progressed to the majors, yet are good players. On the other hand, the talent scouts and the minor league manager says this rookie is their best prospect. They have validated that the skills and intelligence are there–the potential–that, with the right development work in the minor leagues, this individual will both to advance to the major league AND be a top 1/3 performer.
Much research says that most managers overrate their people. A natural human thing to do. It’s family! I hire only the best! I have no low performers.
That is the reason the talent assessment process requires rank ordering on both performance and potential, in thirds, to spread out and clearly differentiate the placement on the 9-box. The 9-box has little value if the process is rife with absolute placement–putting all of your talent in cell 9 (at the extreme high end).
The 9-box is meant to represent a 9-point value to the organization’s long-term scale. That’s why the numbering in the cells look peculiar. Many re-number the cells in what they consider to be a more logical order. When that is done, they lose the 9-point value scale, especially because Potential carries more weight than performance for the purposes of succession planning.
The Circuitous Path of High Potential Employees
The other reason performance isn’t the same as potential is that true high potential employees move around more. They have zig-zag career paths. They stay in jobs for shorter durations. They cross product and service lines and move geographies more often. Until the end of their career when they enter top management, it is unlikely they will ever be a top 1/3 performer. There are others who were in that job before they joined the team and are still there when they are three jobs down the road. While it is true they learn faster and get productive in a shorter period of time, they generally do not stay long enough to be in the top performance group, and they typically don’t have an interest in being there.
When high potential employees get to top management they stay longer and they perform better. They will be in the top 1/3 at the end, even though they may have been only a middle 1/3 performer along the path. It is highly unlikely they will have been a bottom 1/3 performer at any one point in their career.