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Dec 22, 2015
This article is part of a series called Editor's Pick.

Most HR professionals say that finding and developing high potential employees (HIPOs) is a top priority, but for employees it can seem like joining an elite secret service  — one so secret you may not even know you’re a member.

Having spent a good deal of time and trouble identifying their rising stars, 63 percent of companies don’t tell them they’re HIPOs.

Many HR teams, and those in charge of “HIPO programs” worry understandably that they won’t be able to engage their most promising employees or develop them properly if they don’t even know they’ve been singled out.

Especially as those who know they’re high potentials may well be less inclined to jump ship. Going somewhere else could easily mean they lose their favored status, or lose advocates in the company whose endorsement could be a big help to them later. It’s a strong incentive to stay where they are.

Shy about selection

But, although most HR teams know this already, they still don’t tell HIPOs that they’re in the club.

As Chief Executive magazine observed, many HR teams worry about demotivating those who aren’t selected – which is why organizations need talent development programs that address all their employees, not just HIPOs. And there are also concerns that telling HIPOs they’ve made it could create a class of entitled employees who simply rest on their laurels.

Lifting the veil on who is a HIPO may throw unwelcome light on the selection criteria: Is the method consistent? Is the company sure it doesn’t discriminate by gender, age or race? Is it based purely on the subjective views – even bias – of line managers?

If firms get any of that wrong they could open themselves up to reputation-damaging and costly legal challenges.

Almost half of companies don’t have a systematic process for identifying HIPOs and rely on subjective measures, often based on an employee’s past performance. Yet only 15 percent of high performers are also high-potential. Objective assessments of employees’ ability, aspiration and engagement will tell HR teams whether their nominated HIPOs really do have the qualities they need to reach a senior position, succeed in it, and stick around long enough to repay all the investment.

Nervous about expectations

A fast-changing work environment can mean that opportunities for promotion are delayed, never materialize, or are less than hoped for. If HIPOs see selection as a guarantee of promotion that’s not fulfilled, then they could leave, or even pursue compensation.

To avoid setting unrealistic expectations and reduce risk, organizations should formalize the HIPO commitment from both the employer and the employee. This should be clearly understood on both sides. Only one-in-nine organizations ask their high-potentials for such a reciprocal commitment.

Many companies have started to write “HIPO contracts” and put plans in place that they change as circumstances change. It means they only make promises that they know they can deliver. Each year, HIPOs and managers review the plan together and make sure that the HIPO’s wish list and development are aligned to realistic opportunities. They can then reset expectations as necessary.

Be open with your HIPOs

Organizations that have a robust selection process, that are able to manage HIPO expectations, and can ensure that the development needs of other employees are also properly managed, can and should be open about who has been designated a HIPO and why.

In the context of 73 percent of HIPO programs failing to show a return on their investment or deliver the intended outcomes, such employers are more likely to reap the rewards of more successful leaders and better HIPO retention.

Like most of us, high potential employees value recognition. No matter what you call them, just make sure they know they’re special.

This was originally published on the CEB HR blog.

This article is part of a series called Editor's Pick.