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Distinguishing Between Performance and Potential

© 2017

Many organizations use a talent matrix to assess their employees for succession planning. Accurate assessment is vital to properly investing development dollars and other resources. But leaders sometimes struggle to differentiate performance and potential. Learn the telltale characteristics of each to improve the accuracy of your assessments.


We’ll start with performance because it’s the easier of the two. Performance is not just results – it’s also the ways in which people get them. That is, performance means achieving measurable objectives ethically and according to company values:

Performance = Results + How People Get Them

Because it has already happened, performance is a look back. It is more definitive than potential because there is often a well-documented record of how an employee faired against standards. Any mitigating circumstances are known.

Performance is assessed over time to look for trends, specifically, the latest three to five years. Less than three years isn’t enough time to provide a reliable YOY pattern. More than five years is too much time to be relevant to the current state.

It’s worth a special mention that if you have an employee who brings in impressive results but doesn’t live company values, he is not a high performer. He’s not even a consistent performer. Ethics and values are an inseparable part of performance. Living the values is requisite to staying employed. It affects your brand, reputational risk, engagement of employees, and their trust in you.

To summarize:

  • Look at the employee’s record over the last three to five years.

  • Look at employee performance with respect to measurable objectives. Do you see a trend? Or do you see variability?

  • Look at employee performance with respect to ethics and company values. You may only find evidence of problems, not adherence. Do you see a trend? Or do you see variability?


Potential is actually quite different. It is an informed prediction of how effective an employee will be at the next leadership level. Unlike performance that looks back, potential looks forward. To assess potential, examine specific clues in the most recent three years and project what they would mean upward and in the future. Look at three specific categories:

Potential = Next Level (Ability + Agility + Aspiration)

The potential categories require clear definition:

Ability: is there evidence of next-level business perspective, driving results through others, decision making, and managerial courage?

Agility: is there evidence of next-level self awareness, change leadership, multiple approaches to goals, and resilience?

Aspiration: is there evidence of next-level engagement, learning orentation and capacity, desire for greater accountability, and initiative in career progression?

Note that you are looking for behavioral evidence for the next-level before promoting an employee. Potential does not mean excellence in the current role or even great promise laterally. Each level is a horizontal swatch of roles across the organization that are similar in scope and scale. The series of levels are successive leadership steps. Generally speaking, individual contributors are entry-level employees who are assessed to a frontline leader level. Likewise, frontline leaders are generally assessed to leaders of frontline leaders, and so forth. Assessing employees only to their boss’ job is too parochial and ineffective for planning organizational strength. That’s why we assess to the next level, not the next role.

Of the three categories, aspiration is the most sensitive. You might see all kinds of evidence of ability and agility in an employee, but if she doesn’t aspire to the next level, her overall potential is low. You simply cannot want it for her. However, you can work with her to cultivate potential. On the other hand, some employees voice a strong interest in the next level. The question then is what are they doing to show behavioral evidence of aspiration. Saying they want career advancement is not enough. Are they earning it per the definition?

To summarize:

  • Potential is projected upward and forward, based on behavioral clues. Ensure you and other leaders have a shared understanding, commitment, and discipline to assessing potential.

  • Be clear about the next level that employees are being assessed to.

  • Be rigorous in assessing ability, agility, and aspiration. Cite specific examples from the most recent three years.

  • Do you see trends? Or do you see variability?

When used carefully and methodically, the talent matrix helps organizations thrive. It grants leaders the capacity to sustain organizational health, determine wise development investments, and create insightful succession plans.

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