CORPORATE LEADERSHIP COUNCIL JANUARY 2004

Fact Brief
The Effectiveness of HIPO Development Programs
at Medium-Sized Companies

Key Questions:
Profiled
Industry Employees Revenues
Institution What types of HIPO development
Media/ programs do companies have in place?
A 10,000 – 50,000 $2 billion – $10 billion
Communications
B Electronics 10,000 – 50,000 $2 billion – $10 billion Do companies maintain other
development intervention programs?
C Hospitality 10,000 – 50,000 Less than $2 billion
D Insurance 10,000 – 50,000 More than $10 billion What is the effectiveness of the HIPO
Computer development programs relative to
E 10,000 – 50,000 $2 billion – $10 billion alternative interventions?
Services

Issue Overview: The Need for Effective Development Programs

Table of Contents
Executive Summary 2 Medium-sized companies aim to fill a talent pipeline to prepare for the future…
Research suggests that companies face a shortage of future leaders. As profiled in 2003
HIPO Programs 3
Council research, less than 24 percent of companies’ leaders maintain strong confidence
Alternative Programs 11 that they will be able to find successors to top leadership in the coming years. With an
Program Effectiveness 15 above average leadership bench, Council research suggests that companies are four
Appendix 18 times as likely to maintain above average industry growth. Companies will need to
compete with each other for top talent and leadership through strong development
Research Methodology 20
programs to foster continued growth and organizational improvement. High potential
1,2
(HIPO) programs help develop the necessary talent to fill the succession pipeline.

…while seeking effective development opportunities for all employees…

Effective Development
Traditionally development efforts focused solely on HIPOs, but recently debate around
Opportunities for All Employees
“B players” suggests that, in order to fill the pipeline, companies need to develop all
Focusing not only on top talent, but employees and raise the bar of performance across the company. Research from a
also on the consistent middle June 2003 Harvard Business Review article suggests an expanded and renewed interest
performers of an organization fosters in managing the “middle-performer” employee segment. The authors suggest that middle
inclusiveness across a company: performers sustain the long-term performance and survival of a business. Managing
tactics may include greater recognition and increased access to development
“Managers who bring out the best 3
in B-players are tapping into a opportunities.
wonderful and often well-hidden
resource. Organizations–and …therefore, companies strive for efficient HIPO and other development programs.
individuals–are much better for it.” To foster effective succession planning and to support all employees, thus improving
current and future business results, many companies focus extensive resources on
Thomas Delong,
Harvard Business School Professor development activities. This brief will discuss methods five profiled companies use to
(June 2003) develop high-potential employees and to deliver development interventions of a broader
scope. In addition, the brief analyzes companies’ stakes in the presumed success of
these opportunities.
Catalog No. This project was researched and written to fulfill the specific research request of a single member of the Corporate Leadership Council and as a
CLC11JZVBM result may not satisfy the information needs of other members. In its short-answer research, the Corporate Leadership Council refrains from
endorsing or recommending a particular product, service or program in any respect. Sources are contacted at random within the parameters set by
 2004 Corporate the requesting member, and the resulting sample is rarely of statistically significant size. That said, it is the goal of the Corporate Leadership
Executive Board Council to provide a balanced review of the study topic within the parameters of this project. The Corporate Leadership Council encourages
members who have additional questions about this topic to assign short-answer research projects of their own design.
THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES
JANUARY 2004
EXECUTIVE SUMMARY
Interviews with HR professionals at five medium-sized companies provide insight into the structure and processes of
development programs, as well as the effectiveness of HIPO development and alternative interventions.
HIPO PROGRAMS
PROGRAM GOALS AND IDENTIFICATION
All profiled companies aim to fill a talent
pipeline and drive individuals up the
management levels of a company through
their HIPO programs.
Identification methods—Methods for
identifying HIPOs include the following:
! Assessing performance and
potential
! Business unit designation
! Executive committee approval
! Recruitment of HIPOs for
specific programs
! Talent management grid
PROGRAM COMPONENTS
Profiled companies either structure
development through on-the-job activities
or through the following development
activities:
! Classroom-based learning
! Individualized development
plans
! Mentoring, coaching, or
sponsoring relationships
! Rotational/stretch assignments
PROGRAM ADMINISTRATION
Most companies centralize the
coordination of their top HIPO program
within HR, but require the business unit to
assume all costs specific to that unit.
! Participants and costs range
widely
! Staff controlling the HIPO
program ranges between one
and five FTEs
PROGRAM COMPLETION
Companies use an annual review or a
stated duration of one to two years to
determine the amount of time employees
remain in HIPO programs. In addition,
companies may choose to dismiss
participants from the program in individual
cases.
FUTURE CHANGES TO HIPO PROGRAMS
Profiled companies envision the following
changes to their HIPO development
programs:
! Increasing/tighter management
of new programs
! Supplementing the programs
with additional components
ALTERNATIVE PROGRAMS
DRIVER FOR BROAD-BASED
INTERVENTIONS
Employing alternate, broad-based
interventions provide profiled companies
with the following positive outcomes:
! Alignment—Aligns the
corporate message and
development to all employees
across the company
! Improving performance—
Raises the bar of performance
through functional competence
! Inclusiveness of all
employees—Supports
inclusiveness of all employees
by offering varied training
opportunities
ALTERNATIVE DEVELOPMENT PROGRAMS
The implementation of alternative,
broad-based development programs
involve the following opportunities:
! Function-specific development
! Individualized development
plans
! Management level training
! Movement across the
company
FUTURE IMPLEMENTATION OF
ALTERNATIVE PROGRAMS
Managers have a significant impact in
employee experiences at all profiled
companies; interviewed individuals at
profiled companies recognize this
relationship and aim to increase
development of all managers, therefore
augmenting the experiences of each
employee.
Future changes—Profiled companies
advocate the following additions to their
broad-based alternative development
programs:
! Increasing management
training
! Offering executive forums
 2004 Corporate Executive Board
PAGE 2
PROGRAM EFFECTIVENESS
MEASURING SUCCESS OF HIPO PROGRAMS
Due to difficulties in measurement, many
companies have limited metrics to
support HIPO program effectiveness.
However, tightly managed processes at
profiled companies allow tracking of the
following results:
! Assessing succession
management
! Monitoring individual
development
! Tracking retention rates of
HIPO employees
MEASURING SUCCESS OF
ALTERNATIVE PROGRAMS
Companies do not manage their
alternative development programs as
tightly as their HIPO programs, making
measurement on a broad scale more
difficult.
Profiled companies aim to measure the
success of alternate programs
corresponding to the impact of the
interventions on the following company
characteristics:
! Company-wide effectiveness
! Impact on business unit
! Individual performance
advancements
EFFECTIVE DEVELOPMENT PROGRAMS
Due to the personalized attention of
HIPO programs, interviewed individuals
at profiled companies suggest that these
provide significant value to the
participants.
That said, other developmental
interventions also deliver effective
results, including the following:
! Challenging/stretch roles
! Management training
! On-the-job training
THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES
JANUARY 2004
HIPO
Programs
HIPO Program Goals and Identification
" Key Finding: HIPO
Program Objectives
Regardless of the specifics of the
HIPO identification and program
details, all profiled companies aim
to fill a talent pipeline and to drive
individuals up the management
levels of a company through these
opportunities.
HIPO Program Objectives
“Our HIPO development programs
aim to provide individualized
hands-on chances for employees to
demonstrate management abilities and
to enforce that they are
high-potentials. They learn by doing
and build competencies as needed.
These programs motivate HIPOs with
opportunities to learn.”
Corporate Recruiter and HR Planner,
Company C
Companies Using Annual
Performance Reviews
Council research surveyed
149 organizations to reveal that
75 percent of respondents require
formal reviews on an annual basis
while 21 percent require formal
reviews on a biannual basis, as shown
below.7
Bi-
Annual
Annual
review review
21% 75%
PAGE 3
Alternative Program
Programs Effectiveness
Many HIPO programs aim to develop candidates classified as high potential in order
to fill the talent pipeline aspect of succession planning efforts. In the 2003
Hewitt Associates study of 125 large U.S. companies entitled “Developing
th
High-Potential Leaders,” all companies performing in or above the 75 percentile in
total shareholder return consistently use a formal approach to identify and develop
high potential leaders.
4
HIPO Program Goals
Literature suggests that the most important aim of a HIPO program is building a
5
company’s leadership talent and strength. The objectives of profiled companies’
HIPO programs directly correspond to this aim as well. The cross-company
objectives and additional aims of profiled companies’ programs are detailed below.
Cross–Company Objectives—Although interviewed individuals cite many
objectives in the HIPO development process, the following four goals are prevalent
across all profiled companies:
! Increase the leadership bench strength of the organization
! Move employee up through the company ranks
! Offer development opportunities (involving job-specific activities, rotational
assignments, or cross-functional work)
! Provide networking opportunities to all HIPO employees
Additional HIPO Program Goals—Other goals of the HIPO programs include the
items in the following list:
! Allow visibility to senior management
! Bring together global participants
! Enforce and motivate HIPOs
! Expose HIPOs to strategic business objectives
! Increase internal marketability
! Prepare for promotion
! Provide action-learning management opportunities
HIPO Criteria and Identification Methods
Research suggests that companies should identify high potential employees utilizing
67
the following tactics:
! Documentation of past performance and current competencies
! Effective management consensus review techniques
! Support by objective data
! Well-designed tools for gaining multiple evaluations
! Well-trained internal and external interviewers and facilitators
The identification of high-potential employees at profiled companies primarily
depends upon individual employees’ business results and leadership potential.
Company C allows business unit autonomy in identifying individuals as HIPO while
Company D recruits outside for these HIPO candidates. Since Company D’s
recruiting department looks for the characteristics of HIPO employees and the
procedure varies at Company C, these tactics will not be profiled on the
following page.
 2004 Corporate Executive Board
THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES PAGE 4
JANUARY 2004
HIPO Alternative Program
Programs Programs Effectiveness

HIPO Program Goals and Identification (continued)

At Company A, Company B, and Company E, companies select candidates based

on specific criteria which then must be approved by an executive committee.
Company A and Company E use structured criteria and selection processes for their
HIPO programs. At Company B, HIPO employees fall into the highest category of a
performance grid. These company examples are detailed in the following figures,
and typically take place during an annual performance review.

" Key Finding: Identifying
Employees as HIPO
Companies’ methods for
designating employees as high
potential include the following:
! Assessing performance and
potential
! Business unit designation
! Executive committee approval
! Recruitment of only HIPO for
specific program
! Talent management grid
FIGURE 1: STRUCTURED HIPO SELECTION AT COMPANY A AND COMPANY E
Industry: A–Media/Communications; E–Computer Services
Company A
Employees: 10,000 – 50,000
Company E
Revenue: $2 billion - $10 billion
HIPO Criteria
HIPO employees at Company A must meet the following criteria:
! Demonstrate exceptional business results
! Have the ability to grow, adapt, and take on stretch assignments
! Leadership ability (has the potential to be promoted two levels to an officer level)
! Maintain skills and abilities required by individual job
All HIPOs at Company E must meet the following criteria:
! Director level or above
! Highest potential and performance in the organization
! Maintain leadership characteristics and job skills and abilities
HIPO Selection
Manager Driven—Employees’ direct managers recommend him/her. (Company A)
Talent Management Nomination—The internal “University,” or Learning and Development
function, recommends employees for the corporate HIPO program while each business and
regional unit owns the process for their corresponding programs. (Company E)
Executive Approval—All recommendations require executive committee approval.

Individualized HIPO process—Company B uses an individualized HIPO process

distinct from the aforementioned, more formal and centralized programs. Company
B’s process conducts HIPO employee identification using the grid method below.

FIGURE 2: HIPO PERFORMANCE GRID AT COMPANY B

Industry: Electronics
Company B Employees: 10,000 – 50,000
Revenue: $2 billion - $10 billion
HIPO Criteria
Talent Management Process at
Upper Employee Levels The annual individual performance management process follows a grid as shown below to
identify the top 10 percent of the population as HIPOs. Individuals receive two ratings, one
The talent management process at based on performance in their current position, and one rating on potential corresponding to
Company B ranks the performance executive competencies and direct manager’s judgment based on employee actions,
eagerness, and desire to assume higher positions.
and potential of employees, and
involves the top 350 people in the
High Potential High Potential, High Potential, Top 10
organization, from the director level Low Performance Medium Performance High Performance percent,
up to the VPs and Senior VPs. Medium Potential, Medium Potential, Medium Potential,
HIPO
Bottom
5 percent,
Low Performance Medium Performance High Performance
exit firm Low Potential, Low Potential, Low Potential,
Low Performance Medium Performance High Performance

HIPO Selection
The yearly dynamic selection process contains a review of the results of the grid rating by the
executive team. As a result, the company manages out the bottom five percent of the
employee population and designates the top ten percent as HIPO.

 2004 Corporate Executive Board

THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES
JANUARY 2004
HIPO
Programs
HIPO Program Components
Schlumberger’s Non-Obvious
Development Moves
Schlumberger systematically
encourages business unit managers to
take calculated risks in placing leaders
in cross-organizational stretch moves
for long-term business benefit. This
development opportunity involves the
following components.9
! HIPO employee promotion into a
non-obvious development
opportunity. (e.g., a cross-
business or cross-geography move
into a higher position)
! Mentoring involving internal
coaching and training, facilitated
for the HIPO by HR
! Risk assessments and feedback
from direct reports
! Delegation of high-risk
responsibilities to qualified
employees beneath the HIPO
Success rate—Non-obvious stretch
moves have a 90 percent success rate at
Schlumberger.
Mentoring Programs for
High-Potential and All Employees
Research suggests that mentoring
relationships may involve both
high potential employees and all
employees at a certain level.10
! Executive-HIPO pairing—Xerox
Corporation pairs all twelve of its
executive committee members
with HIPOs from several layers
below them to accomplish an
established set of developmental
objectives.
! Mentoring—Hewlett-Packard
offers mentoring to new managers
at every level, both new entrants
and promotees. The program
aims to facilitate a mutual need
between the individual and the
company and to groom high
potential managers for future
leadership.
PAGE 5
Alternative Program
Programs Effectiveness
A variety of program methodologies offer participants individual development
opportunities, exposure to senior management, and the opportunity to have an
impact on business results.
In addition to the specific programs offered at profiled companies, which are detailed
in the following section, 2003 Council research identifies a unique HIPO process at
Schlumberger involving “non-obvious” cross-business development move
opportunities for a selected group of rising high performing leaders. This tactic is
8 9 10
detailed to the left.
Management-Defined Program Components
Company B and Company C provide HIPO opportunities through individualized
promotions and on-the-job development. HIPO programs at Company A, Company D
and Company E offer participants the tightly managed opportunities detailed in the
following table:
Table 1: Common HIPO Program Opportunities
Development Opportunity Description
Classroom learning acts as the following
(Company A, Company D, Company E):
Classroom-based learning • An opportunity to provide program overview
• Forum for delivery of orientation information
• Opportunity to participate in action learning
assignments or simulations
Classroom learning may also take place at local universities or
business schools as a part of an individualized development
program (Company C, Company E).
Individualized development ! HIPO participants construct individualized development
plans plans with the assistance of a mentor, executive sponsor,
manager, or coach.
(Company A, Company C, Company E)
! These plans guide their participation in the program.
Mentor or coach assignment—Company A and Company E
pair their HIPO program participants with a mentor or coach to
provide the following assistance to HIPOs:
Mentoring, coaching, and
sponsoring relationships • Discuss their goals and focus areas
• Engage them in development and networking
opportunities
• Guide them through the process
Executive sponsor—Company D assigns each HIPO with an
executive sponsor to oversee experience, identify long-term
career options, act as a networking facilitator, and develop
compensation bonuses.
! Promotion opportunities—HIPOs receive the first
Rotational or stretch opportunity for promotions and international transfers.
(Company B)
assignments
! Cross-training—HIPOs participate in business unit
transitioning and start-up management through new
assignments that vary in length. (Company C)
! Rotations—HIPOs receive four six-month stretch
rotations in various functional areas and specialties to
provide a strategic business focus. (Company D)
! Short-term assignments—HIPOs participate in
short-term assignments, job-swaps, or transfers.
(Company A, Company E)
 2004 Corporate Executive Board
THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES
JANUARY 2004
HIPO
Programs
HIPO Program Components (continued)
" Key Finding: HIPO
Programs Offer Wide Range
of Experiences
Development programs—For those
companies with central control,
HIPO programs offer a variety of
experiences to each participant
through a tight arrangement of
opportunities, and consistent
delivery of certain components.
Identification process—Company
B, with no formal HIPO
development programs, uses HIPO
identification to guide assignments
through promotion, internal
transfers, and compensation.
Individualized participation—
Company C treats each HIPO
differently to provide a large range
of experiences.
HIPO Leader Assessment
During the program, Company A
offers all HIPO individuals the
opportunity to receive a Forté
Communication Style Profile. This
tool assesses their communication
style on a dynamic level, lending
itself to coaching. See Appendix A
for a description of the Forté
Communication Style Profile.
PAGE 6
Alternative Program
Programs Effectiveness
The most detailed and structured HIPO programs occur at Company A,
Company D, and Company E. These programs are detailed in the tactic presented
at the bottom of this page and the tactic on the next page. Company B and
Company C do not offer such structured HIPO development programs, and their
practices are summarized below.
HIPO Identification and Promotion—Company B identifies HIPO employees to
offer them on-the-job development opportunities and promotions. The HIPOs
receive these opportunities as the business need arises, rather than as part of a
structured development program.
Individualized Participation—Company C provides HIPO individuals (six from each
functional unit) with opportunities targeted to provide experiential learning through
individualized opportunities. Examples of these experiential learning opportunities
include starting-up a new business unit, and/or participating in the transitioning or
reorganization of another unit. In addition, Company C facilitates HIPOs participation
in university courses varying by need.
Company A and Company E maintain programs aimed at individual competencies
and development through a mix of coaching, classroom training, and projects, as
11
detailed below.
FIGURE 3: INDIVIDUAL GROWTH AT COMPANY A AND COMPANY E
Industry: A-Media/Communications; E-Computer Services
Company A
Employees: 10,000 – 50,000
Company E Revenue: $2 billion - $10 billion
Program Elements Aimed at Individual Competency Development
Development programs at Company A and Company D have similar components.
Company E’s Corporate Programs require participation in week-long sessions, four to five
times per year.
Coaching Training
! Coaches interact with each ! All participants receive training
participant at both Company A and activities at both companies
Company E ! Leadership education at Company
! Customized development plans, E through a partnership with Wharton
created by coaches overseeing the Business School (see Appendix B for
process at Company A, provide a details)
personalized program delivering ! Leadership insights class at
development in key areas (strategic Company A focuses on emotional
focus, and business perspective) intelligence and how HIPOs can
! Internal coaches at Company A recognize and use emotional
manage 12-16 people and receive intelligence within their current
certification through external positions, as well as on a larger scale
consultants
Executive Interaction Other Opportunities
! Executive committees provide a ! Action learning teams work on
forum for action-learning at projects collaboratively at Company A
Company E; this opportunity allows ! Functional and regional units also
visibility and interaction with maintain HIPO programs at
executives Company E; these programs may
! Proposed future shadow cabinet mirror themselves on the corporate
implementation at Company A, in program, but on a smaller scale
which HIPOs match with executives ! Rotation opportunities are offered
to complete a specific project will at Company E on an individual basis
provide exposure to senior ! Senior HIPO leaders mentor junior
management HIPOs at Company A
 2004 Corporate Executive Board
THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES PAGE 7
JANUARY 2004

HIPO Alternative Program

Programs Programs Effectiveness

HIPO Program Components (continued)

In addition to the aforementioned components of HIPO development programs,

research suggests maintaining regular meetings between HIPO talent and
upper-level company executives. Furthermore, companies that include “developing
high potential talent” as a component to the job description of senior management
12
are more likely to be considered a top employer.

The tactic at Company D highlights its development of individuals recruited

specifically for the HIPO program. The components of this development process are
detailed below.

FIGURE 4: RECRUITING FOR HIPO DEVELOPMENT AT COMPANY D

HIPO Components Aim to
Challenge Participants
“The assignments are meant to be
challenging. We look to push the
participants beyond their limits, not to
weed people out but to challenge them
and demonstrate what they can
do…we want people to deliver the
business results and demonstrate the
desired behaviors [initiative, ability to
learn, leadership, dignity] .”
Practice Leader,
Talent Identification Processes
Company D
Industry: Insurance
Company D Employees: 10,000 – 50,000
Revenue: More than $10 billion
Filling the Talent Pipeline through Outside Recruitment
Company D uses its recruiting department to source participants for its Corporate HIPO
development program. This targeted recruiting also considers internal candidates.
Business school alumni—Most participants arrive from top-tier business schools directly
to the program, while other HIPO employees may apply to the program internally.
Function-specific programs—In addition, finance and IT also maintain function-specific
HIPO programs seeking four-year graduates and MBA participants.
Internal development—Internal candidates may apply to the Corporate Development
Program. Other internal HIPO development programs at Company D follow an
individualized promotion process, guided by employees’ direct managers, without a formal
structure

Corporate Development Program Components

Executive Sponsor Latitude
The role of the executive sponsor at
Company D maintains some latitude.
These executives always oversee the
participation of the employee and
determine specific relevant projects
for that HIPO. However, the
sponsors may choose to participate in
informal mentoring or coaching
as well.
! Challenging assignments—Participants receive assignments that may be project
based (internal consulting) or functional (underwriting in which participants assume all
responsibilities associated with the position).
! Executive sponsor—Overseeing role, determines assignments, development needs,
bonuses, and identifies long-term options. Sponsor may also provide some coaching.
! Insurance certification—During the first rotation, participants must complete one
overview insurance course and exam. If participants complete all eight exams for
certifications, they receive a cash bonus and vacation trip to receive their certification
as a reward for this accomplishment.
! Management positions—After two years, successful participants receive middle
management positions.
! Onboarding orientation—Involves a one-week intensive overview of the business
units, tours, and job shadowing. Includes online programs on the company history.

The following page discusses the HIPO program administration at each profiled
company, highlighting program costs and general trends.

 2004 Corporate Executive Board

THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES PAGE 8
JANUARY 2004
HIPO Alternative Program
Programs Programs Effectiveness

Program Administration

Determining who administers the high potential development programs and which
" Key Finding: Costs Split
Between Business Unit and business unit assumes their costs depends largely on the goals of the program, its
Centralized Functions functional area, and the cohesiveness of the program’s design.

Centralization—Most profiled Development Program Control

companies centralize the
coordination of HIPO development
The centralized function of HR at profiled companies usually manages a portion of
programs, but require business units
to assume all costs specific to that the HIPO development programs. The following figure depicts the centralization of
unit. the program and activities held at the functional or regional level.

Program Size—Participants range Figure 5: HIPO Program Control

from 20 – 350 individuals per year
while costs range widely depending
on allocation and development
activities offered to participants.
Centralized Decentralized
Cross-unit HIPO training Functional HIPO programs
Recruitment for HIPO programs Regional programs
Succession planning efforts On-the-job development

Development Program Cost and Administration

Difficulty Determining Cost of
HIPO Activities Costs of the HIPO programs range dramatically due to varied development
13
Research suggests that it is difficult to processes. The figure below contrasts the average costs of creating and delivering
14
calculate the cost of HIPO leadership development programs associated with the three different approaches.
development activities, such as job
rotation and mentoring. Examples of Figure 6: Average Leadership Development Program Costs
activities that companies rarely $100,000 $89,000
quantify include the following:15 Average
Development Costs
! Cross-functional experiences $61,000 per Company
! Exposure to senior executives
Cost

! Mentoring programs $50,000

$32,880 $33,050 $34,000 Average
$19,000 Development Costs
per Participant

$0
Internal Consulting Firms Academic
Development and Institutions
Delivery Program Development

Company D Uses HIPO The following chart identifies the programs’ relative staff, participants, and
Targeted Recruiting assumption of cost. At all companies, HIPO development lasts one to two years.

Company D’s HIPO program elicits Table 2: Program Administration and Cost
participation of individuals external Company Staff Participants Cost Cost Assumed
to the company. Internal candidates 1 FTE, Less than $100,000 Centrally
A 180
may also apply; however the vast 5 part-time (excluding salaries) (except for travel)
majority of participants are recruited 1 FTE, talent 350 assessed,
B management 10 percent No annual budget Business unit
externally, resulting in extremely
support deemed HIPO
high costs. All other internal HIPO
development occurs on the job. C 2 FTE 200-240 per year Varies Business unit
1 FTE, and $3.2 million Centrally for all costs
D Recruitment 20 per year (includes bonus, (except specific to each
involvement recruiting, relocation) rotational assignment)
1.5 FTE in 25 in corporate Centrally (except for
Less than $70,000
E corporate program, other function- or region-
first year (centrally)
program programs vary specific costs)

 2004 Corporate Executive Board

THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES
JANUARY 2004
HIPO
Programs
HIPO Program Completion
" Key Finding: HIPO
Participation Contains Time
Limits and Methods for Exit
Companies use an annual review or
a stated duration to determine the
amount of time employees remain
in HIPO development programs.
In addition, companies may choose
to dismiss participants from the
program in individual cases.
Relevant HIPO Focus
At Company B, which maintains a
rather low profit margin, HIPO
rankings provide a guide to succession
rather than an expensive development
program focused solely on individual
development.
“When you do not have the luxury of
extra money, you do not make the
mistake of veering down the path of
wasting money because you really
need to focus on the business.
This is the positive side of the
situation.”
Talent Management Manager,
Company B
PAGE 9
Alternative Program
Programs Effectiveness
HIPO participation may end after the program’s defined duration, if a company elects
to dismiss a participant from the program, when an annual review finds the participant
to no longer be “high potential,” or if the participant elects to exit the program.
Research suggests that companies design HIPO programs through project-oriented
action learning experiences or establish specific time limits to maintain a continuous
15,16,17
rotation of employee involvement.
Employees Exiting HIPO Programs
Similarly, profiled companies set parameters of HIPO program participation in which
annual reviews, time limits, or designed exit procedures (see Figure 7) determine the
length of an individual’s program participation, as detailed in the chart below.
Table 3: Program Length and Exit Procedures
Program Duration Summary of Exit
Annual review
Change of status—If employee’s HIPO status changes after an annual
(Company A,
review, these former HIPOs exit the program during the next year. It is
Company B,
unusual for participants to exit the program during the year.
Company C)
Cannot meet expectations—At Company D participants will leave the
program if they cannot achieve the following:
! Deliver business results in each assignment
Two-year duration ! Demonstrate initiative, ability to learn, dignity, leadership, respect
(Company D, New assignments or failure—HIPOs will cease participation in the
Company E) following situations:
! Assigned a new position and can no longer commit to HIPO program
! Not performing regular job up to speed
! Not spending enough time on program itself
FIGURE 7: PROGRAM EXIT PROCEDURE AT COMPANY D
Industry: Insurance
Company D Employees: 10,000 – 50,000
Revenue: More than $10 billion
Exit Procedures at Company D
1. Program administrator meets with HIPO executive sponsor to determine needed change
2. Administrator provides individual feedback to HIPO and a set length of time to improve
3. If HIPO does not improve, one of the following adjustments may occur:
a) HIPO asked to leave company
b) Give HIPO another position within the company and he or she leaves the program
In two years, the company only asked two individuals to leave the program (one left the
company, another assigned new position). One participant elected to leave the program.
HIPO Program Relevance
Interviewed individuals at each profiled company suggest that HIPO programs
continue to be relevant for succession planning efforts by preparing talent to fill
crucial leadership positions. In addition, well-designed programs focus on
deliverables that provide strong business results. Based on profiled companies
experiences, the following activities add the most value to a HIPO program.
! Ensuring commitment from senior ! Requiring deliverables from
management assignments providing business results
! Providing key stretch assignments, ! Using a pragmatic program focusing on
which is possible even with limited experiential learning and HIPO
resources designation as a succession guide
 2004 Corporate Executive Board
THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES
JANUARY 2004
HIPO
Programs
Future Changes to HIPO Programs
" Key Finding: Newly
Developed Programs Require
Close Management
The youth of profiled companies’
programs (all profiled development
programs are less than 5 years old)
require refinement and adjustments
in the coming years. The main goal
remains to use HIPO development
as a tool for effective succession
management.
Continuing to Add Components to
HIPO Programs
Limited resources often determine
how companies structure their
development activities.
The interviewed individuals at
profiled companies look to maintain
an effective program, however, this
may be more difficult when funds are
limited. During these times,
interviewed individuals suggest
focusing on on-the-job development
opportunities.
PAGE 10
Alternative Program
Programs Effectiveness
HIPO programs and their contributions to succession planning efforts have become
increasingly important to company executives in recent years. Since the HIPO
programs at profiled companies are relatively new, companies try to tightly manage
these programs and their outputs, while also also adding future improvements.
The Council polled its members in 2003 to discover the pressing interests of HR
executives. Facing economic pressure, difficult competition, and external scrutiny of
companies’ leadership bench, executives seek effective programs to promote
18
development amongst top talent.
Trend #1: Increasing Management of New Programs
At each profiled company, interviewed individuals report that their companies
implemented the HIPO programs recently (less than five years ago). The programs
require frequent monitoring and management to ensure continued success.
The Practice Leader of Talent Identification Processes at Company D aims to tighten
the criteria and components of HIPO programs, while Company C plans to closely
align its programs to future growth as demonstrated in the figure below.
Figure 8: Company C’s Future HIPO Management
Refine HIPO selection Showcase HIPO Fill leadership positions
criteria, processes, individuals and fast corresponding to growth
and measurement track them to prepare them for strategies
leadership roles
Trend #2: Adding Additional Components to HIPO Programs
Although many interviewed individuals believe that development opportunities do not
require a significant financial investment, many cite interest in adding components to
their HIPO programs to improve their impact on the targeted individuals.
These components include the following changes:
! Increased executive training, using external involvement through coaches and
business schools (Company B and Company E)
! Mentoring component (Company B is currently beginning a pilot program)
! Provide more lateral movement opportunities (Company D)
The following tactic presents the future goals of Company B’s HIPO development.
FIGURE 9: FUTURE GOALS FOR HIPO DEVELOPMENT AT COMPANY B
Industry: Electronics
Company B Employees: 10,000 – 50,000
Revenue: $2 billion - $10 billion
Ideal Development for HIPO Leaders
Currently, 90 percent of HIPO development occurs on-the-job at Company B. The Talent
Management Manager aims to implement the following ratios of activities for HIPO leaders:
! 70 percent on-the-job assignments
! 20 percent interpersonal relationships (including internal mentoring and external
coaching)
! 10 percent academic courses, seminars, and conferences
 2004 Corporate Executive Board
THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES
JANUARY 2004
HIPO
Programs
Driver for Broad-based Interventions
Intervention for Mid-level and All
Performers
Previous 2003 Council research
profiling five firms identifies
companies’ relative focus on all
individuals and the corresponding
interventions for all individuals:20
! Focus attention on the top and
bottom tiers of performance
! Foster optimal performance from
all employees through a culture of
non-differentiation
! Mentoring average performers
and using individual development
plans to provide career assistance
to all employees
! Provide universal access to all
learning and development tools
" Key Finding: The Merits
of Broad-Based Interventions
Profiled companies employ
alternate, broad-based interventions
to achieve the following outcomes:
! Align the corporate message
and development across the
company to all employees
! Raise the bar of performance
through functional competence
! Support inclusiveness of all
employees through offering
varied training opportunities
PAGE 11
Alternative Program
Programs Effectiveness
Although HIPO programs provide many companies with a strong talent pipeline and
serve to attract, develop, and retain employees, some disadvantages arise in the
methods used to identify and develop HIPO employees which serve as the driver for
alternative interventions.
Research identifies the following disadvantages to HIPO identification and
19
development processes. 20
! Employees may have a lack of involvement in the planning process.
! HIPOs may refuse promotions or transfers that are not aligned with personal
preferences.
! Processes may take an overly long time to develop and execute.
! The talent pool may not identify connections between individual employees and
specific positions.
Abandoned HIPO Programs
Due to the relevant disadvantages, some companies choose to abandon traditional
HIPO programs to focus on different employee segments; however, none of the
profiled companies have completely abandoned their programs, due to the novel
development of the HIPO programs.
Company C abandoned a “Career Development Program,” focused on younger, more
junior talent that did not meet objectives of funneling individuals through the company.
Instead, after participation, this talent left the company early, proving ineffective.
Goals of Broad-based Interventions
Profiled companies use alternate interventions to achieve various goals.
Alternate interventions provide functional competence, manager training experiences,
and may foster more immediate business results through company-wide skill
development. In addition, these programs foster a culture of inclusiveness.
The following chart demonstrates the aims of alternate development programs
featured at profiled companies.
Table 4: Drivers of Broad-based Interventions
Driver Goals
! “Deliver knowledge to employees to be as effective as
Functional Competence
possible as quickly as possible,” as suggested by the
Practice Leader, Talent Identification Processes at
Company D
! Raise the bar of performance for all employees
Inclusiveness of Training ! Drive retention efforts and performance enhancement of
Opportunities all employees
! Focus more resources on different employee segments
and leadership roles
! Highlight all employee efforts
! Promote a culture of inclusiveness
Cross-Company Alignment ! Deliver the company culture and message from senior
executives to all employees
! Ensure that all employees receive the same company
information, especially in the cases of new manager or
new supervisor
 2004 Corporate Executive Board
THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES
JANUARY 2004
Alternative Development Programs
Alternative Development
Programs
Research suggests the following
broad-based development programs:22
! Peer learning networks—
At Quantum Corporation, HR
managers meet once a month in
internal application groups to
review each others’ work. This
provides consulting resources for
each manager and the opportunity
to learn collectively from
managers successes and failures.
! On-going course—
Hewlett Packard provides an on-
going five-day course called
“Personnel as a Competitive
Advantage” to personnel
managers and senior HR
generalists to present outside
speakers, and high-level
presentations from professionals
in other functions of the company
to ensure that everyone
understands the role, purpose,
direction, and strategy in the
company.
" Key Finding: Common
Alternative Interventions
Profiled companies employ
alternate, broad-based interventions
that may include the following:
! Function-specific development
! Individualized development
plans
! Management level training
! Movement across the company
PAGE 12
HIPO Alternative Program
Programs Programs Effectiveness
In addition to, and in some cases without including HIPO development programs,
many factors combine to produce a high-performance workforce.
According to 2003 Council research on Building the High-Performance Workforce,
21,22
companies can improve performance with the following interventions.
! Drive individual performance through understanding and fairness of the performance
management system and positive, specific, and job-relevant feedback.
! Increase manager-employee interaction by providing solutions and the required
resources to drive results of manager’s direct reports.
! Provide fair, accurate, and proactive informal performance feedback.
Profiled companies provide a range of alternative development opportunities to all
employees focused on functional development, individualized development plans,
and management-level training.
Offering Function-Specific Development
Company B provides broad-based training programs which include manufacturing
related quality initiatives specific to the functional job responsibilities of each
employee. The following are two examples of these types of programs:
! Lean manufacturing initiatives—Company B implemented training processes to
address the following goals of lean manufacturing:
1. Minimize the resources required for production by eliminating waste (non-value
added activities) that inflate costs, lead times, and inventory requirements
2. Emphasize the use of preventive maintenance, quality improvement programs,
pull systems, and flexible work forces and production facilities
! Six sigma initiatives—Another example of function-specific development at
Company B includes six sigma initiatives, involving the following training aims:
1. Measure and improve the control of a process to the point of ± six sigma
(standard deviations) from a centerline, or 3.4 defects per million items
2. Identify factors critical to quality as determined by the customer
3. Reduce process variation and design systems to support the six sigma goal
At Company E all employees also receive skills training tailored to employees’
individual needs identified through a development skills assessment offered to
everyone. In addition, employees at Company C may sign up for hundreds of
courses online through the Intranet site. Courses may include change management
and project management.
Providing Individual Development Plans and Movement
Research suggests that individual development plans foster greater employee
commitment to a company, although few companies require all employees to
maintain a development plan. Companies requiring these plans, including Texas
Instruments and Hewlett Packard, use the employees’ interpretation of their position
23
to drive future development.
Company D, on the other hand, creates individual development plans, based
on employee needs, while seeking individual move or rotation opportunities.
Company E encourages each employee, regardless of level, to complete an
individual development plan to guide his or her experience within the
company.
 2004 Corporate Executive Board
THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES
JANUARY 2004
HIPO
Programs
Alternative Development Programs (continued)
Impact of the Leaders
Employee Coaching Example
Background—A supervisor had
control of ten individuals directly
under him. Two of these employees
were responsible for the majority of
errors.
Description—The supervisor
discussed the problem at the four-day
training session. Upon return from
training, the supervisor measured
performance, identified the low
performers and implemented values-
based coaching techniques learned
through Impact of the Leaders.
Impact—After three months of
utilizing these values based coaching
techniques, the supervisor measured
performance to find that the
techniques eradicated almost all
errors.
Company D’s Multi-Level
Manager Training
New managers—Newly promoted or
hired managers must participate in
the initial one-week training session
Experienced managers—Managers
in the position for three or more
years may attend an advanced
session
Senior level managers—Vice
presidents and executive
management participate in a
simulation course that is
continuously considered by
participants “the best development
thing they’ve ever done.” The
course offers participants the
opportunity to work in
cross-functional teams on resolving
hypothetical business challenges.
PAGE 13
Alternative Program
Programs Effectiveness
Companies profiled in previous Council research plan to utilize the following
24
intervention tactics to develop their mid-level performers:
! Individual development plans to help maintain and further improvement
! Mentoring programs
! Rewards differentiation system prescribing unique options and action steps
25
Delivering Management-Level Training
Many intervention tactics encouraged in secondary research correspond directly to
the manager-employee relationship. That said, manager training is the most
common form of alternate development programs at profiled companies.
Company A, Company C, and Company D offer their managers specialized training
focusing on business results, as demonstrated in the following development tactics.
FIGURE 10: RESULTS-FOCUSED SUPERVISOR TRAINING AT COMPANY A
Industry: Media/Communications
Company A Employees: 10,000 – 50,000
Revenue: $2 billion - $10 billion
Entry Level New Supervisor Program
Leaders at Company A are individuals “who manage or influence others.” These 2500
individuals maintain a specific level of readiness to advance within the company.
Initially they undergo the “Gateway to Leadership” training program detailed below:
! Goal—To develop basic supervisory skills
! Duration—One-week program
! Program Components—Employee relations, supervisory and management skills
Advanced Supervisor Training
In addition to the Gateway training, high-performing supervisors, a group separate from the
HIPO group, undergo a hands-on training session, Impact of the Leaders, detailed below:
! Goal—To provide an opportunity for participants (five to ten years of supervisory
experience) to receive hands-on training related to employee morale and engagement.
! Duration—Initial four-day classroom training, then a three month project component.
! Program Components—Work projects using a business goal from the year.
These projects include collaboration with others dealing with similar goals. Process
includes a plan review and approval from an executive sponsor, and after three months
of plan enforcement, the sponsor reviews the results of the project through a
conference call with the participant.
! Result—Project completion with positive business results.
FIGURE 11: TRAINING FOR ALL MANAGERS AT COMPANY C AND COMPANY D
Industry: C-Hospitality; D-Insurance
Company C
Employees: 10,000 – 50,000
Company D
Revenue: Less than $1 billion; More than $10 billion
Manager Level Training
“Fundamentals” training—Company C drives manager training through its Fundamentals
Program. It focuses on aspects of finance, customer satisfaction, and colleague
engagement. This 6-12 month program focuses on the following areas:
! 360-review process
! Module-based lessons
! Strengths Forecaster, an individual assessment test revealing manager strengths
Multi-level training—Company D requires anyone in a management role to attend a
one-week program, involving the CEO, focusing on alignment, skill-building, and networking.
! Program continues for managers after three years as an advanced training.
! Senior level individuals participate in a simulation course to discover their strength and
weakness areas.
 2004 Corporate Executive Board
THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES
JANUARY 2004
HIPO
Programs
Future Implementation of Alternative Programs
" Key Finding: Future
Implementation of Alternative
Programs
Company leaders recognize the
crucial impact managers have in the
experiences of each employee.
As a result, delivering more
manager-level training is a key
priority for profiled companies.
Executive Forums vs. Experiential
Learning
Although executive forums aim to
bring cohesiveness to all employees,
the Talent Management Manager at
Company B suggests that these
events may be less effective without
a large interactive component.
Learning is more effective when a
company develops a new assignment
or project oriented task linked to
business objectives.
PAGE 14
Alternative Program
Programs Effectiveness
Although many programs do not target all employees, simpler, more individualized
programs delivered through managers may assist in employees’ development.
Research from the Learning and Development Roundtable detailed in the following
table reveals the activities that managers of average performers rate as the most
effective on a scale of 1 to 7 where 1 indicates “not very effective” and 7 indicates
26
“very effective”:
Table 5: Manager-led Employee Development
Activity Mean
Helping employees learn to solve problems on their own 6.23
Giving employees feedback during their performance reviews about strengths of their 6.19
past performance
Helping employees understand the standards on which they are evaluated during 6.06
performance reviews
Discussing employees’ work-related ideas or concerns with them 6.04
Helping employees find solutions to work-related problems 6.02
Helping employees apply new skills or knowledge in their work 5.98
Helping employees have the kind of experiences at work that will help them develop 5.95
Profiled companies continue to aim for effective development opportunities for all
employees through the use of increased manager-level training and executive-led
forums.
Increasing Management Training
Due to the popularity of the HIPO programs and company aims to involve more
employees in focused training programs, Company A and Company D plan to provide
more management focused training for all manager-level employees. Benefits to
these efforts are listed below:
! Attention—Provide attention and inclusiveness to a group desiring the development
! Broad influence—Managers touch and therefore influence all employees
! Leadership development—Seek new leaders through the manager training
Developing Executive Forums
The buy-in and support of the CEO and other senior level management is key to the
success of any development program. Company B aims to incorporate executive
forums to a broader scale of employees, as demonstrated in the figure below.
Figure 12: Participation in Executive Forums
Executives focus on the business needs and then deliver forums to all employees,
therefore eliciting employee involvement and commitment to business objectives.
 2004 Corporate Executive Board
THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES
JANUARY 2004
HIPO
Programs
Measuring Success of HIPO Programs
Tracking HIPO Success with
Top-Down or Bottom-Up
Approaches
Companies maintain two main
approaches for tracking the success of
their HIPO development programs.
The organizational chart approach
follows the path below:28
Identify key positions.
Identify high performing
employees as replacements.
Develop and retain identified
participants.
The talent pool approach focuses
attention in the way detailed below:
HIPO talent assumes broad
leadership roles.
Development of HIPO pool.
Selection of HIPO talent.
PAGE 15
Alternative Program
Programs Effectiveness
Assessing the success of HIPO identification processes allows companies to
determine their effectiveness in succession planning. Profiled companies and
previous research suggest other methods including retention and individual
performance to determine the effectiveness of HIPO programs.
27
Research reveals the following metrics to assess the HIPO programs’ effectiveness:
2829
! Bench strength
! HIPO diversity
! Length of time HIPOs stay in their current positions
! Number of positions filled by HIPOs
! Promotion rates
! Retention of HIPOs
Assessing Succession Management
The interviewed individuals at profiled companies consistently cite the ability to
manage succession effectively as an indication of the positive outcomes of HIPO
development programs. Specifically, companies use the following information to
guide the process of succession through HIPO development:
! Providing a substantial slate of candidates for open positions at Company A
(“Ready Now”; “Ready Future”; Acceleration Pool”)
! Tracking rate of promotions at all profiled companies:
• Company B currently meets 80 percent of succession needs internally
• Company C uses this information to identify gaps in development
• At the end of the year, most HIPO candidates move into new positions at
Company C
Tracking Retention Characteristics
All profiled companies with detailed HIPO programs consistently track the retention
rates of their participants in the HIPO development programs. Due to the novelty of
programs, companies aim to continue tracking this metric to determine the long-term
success of HIPO programs.
• Company A maintains retention rates in the upper 90th percentile.
• In the past five years, only three participants have dropped the corporate HIPO
program at Company D.
• Other companies did not provide specific numbers but noted that retention as very
high among recent program participants.
Monitoring Individual Development
Companies consistently use anecdotal and manager feedback to monitor the
individualized development of all HIPO participants. In addition, the individual
development of HIPO employees, and the programs themselves, contribute to the
internal culture of a company. This qualitative feedback is more difficult to quantify,
but may be visible through the following activities used by profiled companies:
! Administration of evaluation forms
! CEO buy-in
! Identification of learning gaps
! Monitoring the effectiveness, self-awareness, and leadership ability of participants
! Senior executive reports of satisfaction
 2004 Corporate Executive Board
THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES
JANUARY 2004
HIPO
Programs
Measuring Success of Alternative Programs
" Key Finding: Success
Measurements on Relevant
Levels of Participation
Profiled companies aim to measure
the following aspects of the success
of alternative programs,
corresponding to the impact of the
intervention:
! Assessing company-wide
effectiveness
! Determining impact on
business unit
! Measuring individual
performance
Effectiveness of Interventions on
Individual Employees
Through a variety of development
opportunities, Company A attempts to
match individual learning styles and
needs to be effective at delivering
training.
“Individuals maintain different
learning styles and choose
development options relevant to their
needs…all programs are effective in
some way or another; however, [to
address all employees’ needs and
learning styles] it is not clear which
are most effective.”
Corporate Director, Global Talent and
Diversity,
Company E
PAGE 16
Alternative Program
Programs Effectiveness
Assessing success of alternative development programs mirrors the difficulty
found in measuring success for HIPO programs. Companies attempt to
quantify the results of these alternative interventions, but this may prove
even more challenging due to the broader base of involvement and the
variety of programs.
Profiled companies measure success at the individual level, the business
unit level, and through some company-wide metrics as well.
Assessing Company-Wide Effectiveness
Companies seek to measure overall performance corresponding to training efforts on
a company-wide scale. Longer term assessments will provide information to quantify
the results of alternate training interventions. Furthermore, companies seek to
measure the impact of alternative interventions on employee satisfaction and
retention efforts.
These long-term metrics have not yet been analyzed at the profiled companies and
interviewed individuals suggest the challenges associated with measuring training
prevented these efforts from implementation to date. At this point all companies
incorporate anecdotal feedback through senior-level executives and participant levels
of satisfaction to their analysis of effectiveness.
Determining Impact on Business Unit
Since many alternate interventions exist on a function-specific level, companies
allow business units to measure the success of these interventions according to their
impact on business performance. Profiled companies measure business results in
the following situations:
! Assessments—Course assessments for skills-based training affecting business
units and subsequent measurement of relevant business performance (Company D)
! Business unit autonomy—Company C allows the business units to assess the
effectiveness of development interventions, because the business units design most
of these processes, but their Corporate Recruiter and HR Planner notes that the
“Fundamentals” program receives strong feedback related to effectiveness.
! Clear business results—Impact of the Leader at Company A (strong business
results from the project oriented assignments that require follow through and analysis
to determine their effectiveness)
Measuring Individual Performance
Companies determine the success of alternative interventions on individual
performance through the following measures:
! Anecdotal feedback—All profiled companies consider anecdotal feedback
! Individual participation —(e.g., repeat user rates for training classes) Company B’s
learning function measures participation rates but does not yet link to business
results
! Management-follow up—Company D follows up with managers to determine the
effectiveness of development activities.
 2004 Corporate Executive Board
THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES
JANUARY 2004
HIPO
Programs
Effective Development Programs
" Key Finding: Companies
Identify the Most Effective
Development Interventions
Due to the personalized attention of
HIPO programs, interviewed
individuals agree that they provide
a host of benefits to participants.
That said, other development
interventions providing the most
value include the following:
! Challenging/stretch
assignments
! Management training
! On-the-job development
activities
Focus on Goals of Development
Programs
Through keeping a strong focus on the
goals of development experiences,
companies will succeed.
“[Aiming to succeed through]…
Managing risk, maintaining a
high-performing organization, and
through the goal of an individual’s
development, retention, and
satisfaction… companies will have
programs that follow the necessity of
the organization and will achieve
those goals.”
Talent Management Manager,
Company B
PAGE 17
Alternative Program
Programs Effectiveness
Companies provide effective development opportunities to employees through
individualized, tailored HIPO programs, on-the-job learning experiences, and
challenging stretch assignments fostered through management training.
Research from HRMagazine suggests that two keys to success for HIPO
30
identification and planning processes include the following:
! Periodic re-evaluation of the programs
! Senior management buy-in
! Tracking the progress of individual development plans31
Individualized HIPO Programs
The Manager of Accelerated Leadership Development at Company A suggests that
HIPO programs have a strong ROI given their impact on attracting, developing, and
retaining employees. The ROI is also measurable through the benefits of hiring
internally and subsequently reduced recruiting costs.
In addition to these financial returns, the Corporate Director of Global Talent and
Diversity at Company E cites the HIPO programs as most effective, due to the ability
to target HIPO programs to the participants’ needs, to deliver effective, individualized
training opportunities, and to meet CEO objectives.
Stretch Assignments and On-the-Job Development
Without spending an extensive amount of resources on individualized training
sessions, companies may realize the benefits of individual stretch assignments and
on-the-job development opportunities.
Effective manager training for all managers guides the tools companies use to
construct individual development programs. One example cited by the Corporate
Recruiter and HR Planner at Company C is their “Fundamentals” manager training.
This type of training helps managers to identify opportunities for individualized
development within a company. Development activities may include some or all of
the following options:
! Experiencing an international assignment
! Opening, transitioning, or fixing a site
! Participating on a task force
! Switching types of jobs (i.e., from an operations to a sales position)
Current Limitations
In view of the fact that many companies’ intervention and HIPO programs are newly
developed, the interviewed individuals at the profiled companies suggest that
determining which is most effective currently presents a challenge to the corporate
program administration.
 2004 Corporate Executive Board
THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES PAGE 18
JANUARY 2004

APPENDIX A

Company A uses a Forté tool with coaching to provide feedback on high-potential employees’ primary
interaction and their communication styles and to coach them on how to use the information.

FORTÉ COMMUNICATION STYLE PROFILE

Providers of Forté Communication Style Profile:

The Forté Institute, developed in 1978

Web site: www.theforteinstitute.com
Telephone number: (800) 633-8518
E-mail Address: cdm3@theforteinstitute.com

Description:

Dynamic tool: The Forté Institute has developed an adaptable tool to understand individuals’ primary,
adapting, and perceiving profiles and their changes over time.

Positive strengths—Forté Communication Style Profile identifies and maximizes the positive strengths of
individuals’ and teams’ communication styles and minimizes their chances for misunderstandings and
conflicts. The survey is focused to specific individuals, team, and/or environments, and can track how a
client adapts to a specific environment or a specific individual (or both) over time.

System of tests—The Forté Institute developed a complete array of interpersonal tests designed for
coaching relationships. The description on the Web site of this group of tests may be found below:

“Forté (a French word meaning “one's strengths”) is an interpersonal communications

system (individuals complete a three to five minute survey) that identifies a person's
natural communication style preferences and strengths, how they have been adapting to a
specific individual and/or environment, and how they are most likely coming across to
others they are communicating with. Forté also identifies an individual's current logic
style, current stamina level, and how they are currently feeling about goal attainment.”

 2004 Corporate Executive Board

THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES PAGE 19
JANUARY 2004

APPENDIX B

Company B maintains a relationship with the Wharton School of Business at the University of Pennsylvania.
The Wharton School offers an Executive Education program detailed below.

WHARTON EXECUTIVE EDUCATION

Contact information:

For Open Enrollment Programs:

Contact person: Antoinette Yancy
Telephone number: (215) 898-1776
E-mail address: exceed@wharton.upenn.edu
Web site: http://execued.wharton.upenn.edu

For Customized Programs:

Contact person: Lynn Phillips, EdD, Senior Director, Custom Programs
Telephone number: (215) 573-9443
E-mail address: phillipl@wharton.upenn.edu
Web site: http://execed.wharton.upenn.edu/c_custom.cfm

Sample Open Enrollment Programs:

Advanced Management Program

Directors’ Institute and Directors’ Forum
Wharton Fellows

Custom Programs:

Wharton's customized programs give executives and their companies timely and specific knowledge, by
drawing upon the resources of one of the world's largest and finest business schools to develop focused
solutions. Wharton offers the resources of outstanding faculty in diverse areas and experience in delivering
programs to more than 10,000 executives every year. Programs can be delivered on campus in
Philadelphia, at the Wharton West center in San Francisco, or onsite at business locations worldwide.

 2004 Corporate Executive Board

THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES PAGE 20
JANUARY 2004

THE RESEARCH PROCESS IN BRIEF

Research The Corporate Leadership Council conducted a comprehensive search of published

Methodology materials regarding the subject of HIPO program effectiveness, drawn from previous
Corporate Executive Board research, trade press journals, other research
organisations, and the Internet. Council staff then interviewed five human resources
professionals at different organizations. These individuals discussed their
development interventions for HIPOs and all employees. This report represents the
findings from secondary and primary sources.

Project Aims
Guide to Tables and Figures
1. Who administers HIPO development programs and what business unit assumes
their cost? What is the ratio of program staff to participants and the annual
budget?
2. What type of HIPO development programs do companies have in place and do
participants exit the program for any reason during the process?
3. Do HIPO development programs focus too much on individual competencies
rather than clear business results?
4. Do HIPO programs continue to be relevant in light of dramatic downsizings and
raised bar performance, and is there another philosophy that would suggest
developing talent more broadly, especially in smaller companies?
5. What changes do companies foresee to their HIPO development in the near
future?
6. Do companies use any different interventions for development, and what types of
broad-based development programs do companies have in place?
7. Why do companies use alternative development programs, and have companies
abandoned HIPO programs for strategic reasons?
8. Would companies consider implementing other HIPO alternative programs?
9. Do HIPO programs meet their objectives? If so, how do companies measure this?
10. What aspects of HIPO development programs are most successful?
11. What is the effectiveness of other interventions?
12. Overall, what are the most effective development programs? Are these directed
at high potential employees or are they more broad-based?
Table 1: Common HIPO Program Opportunities Page 5
Table 2: Program Administration and Cost Page 8
Table 3: Program Length and Exit Procedures Page 9
Table 4: Drivers of Broad-Based Interventions Page 11
Table 5: Manager-Led Employee Development Page 14

Figure1: Structured HIPO Selection at Company A and Company E Page 4

Figure 2: HIPO Performance Grid at Company B Page 4
Figure 3: Individualized Growth at Company A and Company E Page 6
Figure 4: Recruiting for HIPO Development at Company D Page 7
Figure 5: HIPO Program Control Page 8
Figure 6: Average Leadership Development Program Costs Page 8
Figure 7: Program Exit Procedure at Company D Page 9
Figure 8: Company C’s Future HIPO Management Page 10
Figure 9: Future Goals for HIPO Development at Company B Page 10
Figure 10: Results-Focused Supervisor Training at Company A Page 13
Figure 11: Training for All Managers at Company C and Company D Page 13
Figure 12: Participation in Executive Forums Page 14

 2004 Corporate Executive Board

THE EFFECTIVENESS OF HIPO DEVELOPMENT PROGRAMS AT MEDIUM-SIZED COMPANIES PAGE 21
JANUARY 2004

Professional Services
The Corporate Leadership Council has worked to ensure the accuracy of the information it provides
to its members. This project relies upon data obtained from many sources, however, and the Council
cannot guarantee the accuracy of the information or its analysis in all cases. Further, the Council is
not engaged in rendering legal, accounting or other professional services. Its projects should not be
construed as professional advice on any particular set of facts or circumstances. Members requiring
such services are advised to consult an appropriate professional. Neither Corporate Executive Board
nor its programmes is responsible for any claims or losses that may arise from any errors or omissions
in their reports, whether caused by Corporate Executive Board or its sources.

1
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(Obtained through Lexis-Nexis).
2
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Washington: Corporate Executive Board (2003).
3
Thomas J. Delong and Vineeta Vijayaraghavan, "Let's Hear It for B Players," Harvard Business Review (June 2003).
(Obtained through Factiva).
4
Author Unknown, "Training Programs: New Research Defines Payback on Leadership Development Programs,"
Managing Training and Developing Programs (July 2003). (Obtained through Factiva).
5
Author Unknown, "Tracking High Potentials Builds Leadership Excellence," Hewitt Associates (March 2003).
(Obtained through http://www.hewittasia.com/hewitt/ap/resource/articleindex/articles/article_03_11_03.htm).
[Accessed 21 January 2004].
6
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Competitive Human Resources Strategies, LLC (2002). (Obtained through www.chrs.net). [Accessed 15 January 2004].
7
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8
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9
Corporate Leadership Council, High Impact Succession Management.
10
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(December 2002).
11
Advisory Board Company, Engaging the Strategic Agenda: Shadow Cabinet, Washington: Corporate Executive Board
(1997).
12
Robert Pollack, "Top Hirers Cultivate the Right Stuff," MIS Asia (October 2003). (Obtained through Factiva).
13
Corporate Leadership Council, Companies’ HIPO Development Budgets, Washington: Corporate Executive Board
(July 2001).
14
Corporate Leadership Council, Companies’ HIPO Development Budgets.
15
Stewart Friedman, "Leadership DNA: The Ford Motor Story," Training & Development (March 2001).
(Obtained through Factiva).
16
Author Unknown, "NASA Agency Sponsored Development Programs," Executive Potential Programs (2003).
(Obtained through http://ohr.gfsc.nasa.gov/devguide/). [Accessed 19 January 2004].
17
Katherine Harding, "Once and Future Kings," The Globe and Mail (9 April 2003). (Obtained through Factiva).
18
Corporate Leadership Council, High-Impact Succession Management.
19
William J. Rothwell, Effective Succession Planning, New York, NY: Amacom, 2001.
20
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Washington: Corporate Executive Board (November 2003).
21
Corporate Leadership Council, Building the High-Performance Workforce,
Washington: Corporate Executive Board (2003).
22
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Washington: Corporate Executive Board (May 2003).
23
Corporate Leadership Council, Individual Development Plans,
Washington: Corporate Executive Board (September 2001).
24
Corporate Leadership Council, Identifying, Developing, and Rewarding Mid-level Performers.
25
Martha Frase-Blunt, "Ready, Set, Rotate!," HRMagazine (October 2001). (Obtained through Factiva).
26
Learning and Development Roundtable, 2003 Manager-Led Development Survey,
Washington: Corporate Executive Board (2003).
27
Corporate Leadership Council, Identification and Development of High Potential Employees at Fortune 500 Companies,
Washington: Corporate Executive Board (2002).
28
Corporate Leadership Council, Identification and Development of High Potential Employees at Fortune 500 Companies.
29
Corporate Leadership Council, Tracking the Success of HIPO Development Programs,
Washington: Corporate Executive Board (March 2002).
30
Author Unknown, "From HR to the Top," HR Magazine (June 2003).
(Obtained through Lexis-Nexis, a division of Reed Elsevier, Incorporated).
31
Corporate Leadership Council, Identification and Development of High Potential Employees at Fortune 500 Companies.

 2004 Corporate Executive Board