High Potential practices: The transparency dilemma

Transparency and GDPR

If you are working towards developing a pool of high-potential employees (a.k.a. those we think are highly likely to do well in the future), or if you are thinking of doing so, then you may be asking yourself: ‘Should we tell the individuals?’ ‘Should we tell their managers/colleagues?’ ‘How public should this information be for transparency?’

Tricky questions, mainly because there are plenty of implications to consider. The purpose of this article is to summarise just a few of them and offer some reflections.

What happens if we do tell people in the organisation? 

Telling people labelled as high-potentials about their status is supposed to increase their motivation, performance, engagement and loyalty (1,2,3). Of course, this does not always work as expected, mainly because in some cases it can massively increase their expectations (e.g. quick promotions and pay rises), and if these are not rapidly met, it may affect their motivation and intention to stay in the organisation (4,5).

Telling high-potentials about their status can also generate self-fulfilling prophesies, such as the ‘Crown prince syndrome’, where people who believe they are assured a higher position, lose their motivation to work for it and become arrogant(6); the ‘Pygmalion effect’ (7), where just labelling individuals as ‘high-potentials’ causes them to perform better (8); or the ‘Matthew effect’, when employees labelled as high-potentials receive more career opportunities and advantages (9). The ‘Pygmalion’ and ‘Matthew’ effects, besides causing negative reactions and perceptions of injustice for those not selected (10), make it difficult for us to determine to what extent our high-potentials have grown because they are exemplary individuals or because we have given them special attention.

If we are open and transparent with the whole organisation, then we are basically telling the rest that they are not high-potentials. We might actually make it worse and somehow tell them that they do not have potential, or that they have low potential or slow growth potential. Alternatively, we can just move away from the idea of putting people in boxes (i.e. using 9-box grid models), even if the low boxes are labelled with nice euphemisms. In any case, this (direct or indirect) message can increase demotivation and turnover (10,11) in most of the rest of the organisation (i.e. up to 80-90% of the staff if we keep the high-potential pool relatively small), although, according to Malik & Singh 2014 (12), it may actually motivate some of them to work harder in order to be selected for future high-potential pools.

What happens if we do not tell people in the organisation?

It sounds quite logical to expect that this may help us avoid some of the negative implications mentioned above. However, even if we do not share this information with employees, or if we only tell those labelled as high-potentials, it is highly likely that people will find out anyway. Actually, researchers agree that information about high-potential programmes ‘leaks’ to employees in 90% of cases (13). Results from a study conducted by Church, Rotolo, Ginther and Lavine 2015 (14) show that of the 80 organisations in their sample, 34% of them share the status of high-potential employees, 15% do not share it and people do not know, and 51% do not share it but people find it out or their managers share it informally anyway. 

This suggests that rather than avoiding the negative implications mentioned above, we may be adding some others and making it worse. Specifically, intentional lack of openness and transparency in high-potential practices is associated with low perceived organisational justice (13). Indeed, employees’ fairness evaluations have been linked to low commitment and low job satisfaction; turnover intentions and actual turnover; absenteeism; and decreased work effort, performance, trust and organisational citizenship behaviour (2). Also, if lack of transparency in high-potential practices is associated with arbitrariness, it can be problematic from both ethical and legal perspectives as it can be considered to hide discriminatory behaviours (15). 
 

Intentional lack of openness and transparency in high-potential practices is associated with low perceived organisational justice.

Last but not least: GDPR

For a great overview on GDPR and its implications for HR, I would really recommend you to read What HR needs to know about GDPR.

In our article in Spring 2018, we explained how crucial transparency is: 
“When GDPR comes into force, you will have to document where and how you store and process your data, as well as who has access to which data. It’s important you make it clear to employees that they can access the data you hold on them at any time. You will also need to document your storage and access procedures, as well as having a clear process for deletion.”

So, let’s say you are labelling people as high-potentials, putting them in fast-track programmes and giving them exclusive opportunities and exposure, and let’s say that all your decisions are being based on data you have collected from those you finally selected and from some others you ended up not selecting. Do they need to know about this? Do you need to tell them that their data has been or will be used for these purposes? 

The answer to these questions is yes, if they ask. There are various data subject rights under GDPR including a right for them to see their data, to correct it if inaccurate and to object to their data being used for this purpose.

Ultimately, your organisational culture and existing levels of transparency may influence your decision to be open about your high-potential practices, but it may also be helpful to take into account some of the ethical and legal implications outlined above.

To discover more about Cubiks’ approach to high-potential practices and explore ways in which we can help you with these sorts of dilemmas, send us an email to ukteam@cubiks.com or get in touch with your local team.

Please note that Cubiks does not provide legal advice.

Author’s note: if you like reading academic papers as much as we do, please send me an email at sebastian.teijeiro@cubiks.com and I will send you the list of references