LESSON 26:

POTENTIAL APPRAISAL

Learning Objective
Article on Potential appraisal
Article—2 on potential appraisal is given below for your better understanding:
Theme Article
Potential Appraisal
Potential Appraisal is another powerful tool of employee development. Whether managers
realise it or not, they are accustomed to making potential assessments. Every time a manager
recommends or fails to recommend an employee for a promotion, a potential assessment has,
in fact, been made.The process of assessing the managerial potential of employees deals with
the question of whether or not they have the ability to handle positions in the future which
involve considerably more responsibility than what they have right now. As long as
individuals are viewed as being able to handle increased or different responsibilities, they
would be considered to have potential (either latent or visible).Potential appraisal may thus be
defined as a process of determining an employee’s strengths and weaknesses with a view to
use this as a predictor of his future performance. This would help determine the promotability
of an individual to a higher position and help chalk out his career plan. The fundamental
difference between reviewing performance and assessing potential is in the criteria used. In
reviewing performance, the criteria used is what goals the employee achieved and what skills
he or she currently possesses that could be indicators of his or her ability to assume different
or more advanced responsibilities. Managers cannot rely exclusively on past performance
since a person’s ability to adequately handle one level of responsibility does not necessarily
mean that he or she can perform well in a position with a higher level or different
responsibility. It is this that makes potential appraisal a very crucial & critical area. If an
employee without requisite abilities is promoted to a higher position and does not perform as
per expectations, then it becomes impossible to demote him. Thus, he is unable to perform at
the higher level and becomes a ‘passenger’ in the system.It is rightfully assumed that every
individual has potential, low or high. Many organizations have people whose potential being
low; performance too is not up to the mark. Whilst the question in our minds hovers around
how such people got into the system, the fact remains that they do not contribute to the
organization’s performance. A major problem that companies face is tackling the problem
children. They can and have the ability to perform but do not perform and do not contribute
to the organization’s performance. This is mainly seen as an attitudinal problem. Further,
these problem children bask in the glory of their potential but are unable to contribute to their
own jobs. Dealing with workhorses too could be tricky. They can perform very well on
routine tasks but have limited potential. Hence, their promotability is difficult and this creates
frustrations for the employees. If promoted, they are unable to perform higher level jobs and
this too creates problems both for the individuals and the organisation. We easily conclude
that ‘stars’ are ideal people to have in organisations. But retaining these stars could be
difficult. They have high potential backed by high levels of performance and could be always
on the lookout for greener pastures. Thus, as we see, potential appraisal is more intricate and
complex vis-à-vis performance appraisal. Because of the nature of the potential assessment
activity, its timing and frequently is left to the manager’s discretion. In assessing potential,
managers are asked to make predictions about the future. These predictions concern many
unknown factors, namely whether the individual can handle new responsi-bilities in a
different managerial capacity, In addition, the potential assessment criteria is based mostly on
an employee’s process skills, which may be difficult to measure in a precise way. Thus, the
timing and frequency of conducting potential assessment can be quite different from the more
predictable timing of a performance review. For example, the potential assessment might
occur when an employee has been on the job for one year, when an employee reaches certain
‘mile-stones’ (i.e. every three years), or in preparation for major organizational shifts brought
about by changes in the business such as reorganizations, expansion or rationalization.It is
recom-mended that the potential assessment process take place at least over a six-month
period, with a manager-employee meeting at both the beginning and end of the process. To
begin the process, the manager and employee should meet to identify the process skills and
the technical and administrative skills required for the employee’s future responsibilities. The
manager explains why these skills are necessary and explores with the employee how these
skills might be learned and utilized on the current job. This includes nominating employees
for some specific training programmes, both skill-based and knowledge-based. Some
organisation may also organise such programmes on an inhouse basis. Further on-the-job
training could also be incorporated for the employees.It is recommended that the manager
observe the employee for at least three to six months to assess the extent to which the
employee possesses and demonstrates the acquired skills. During the observation period, the
manager should note specific behavioural examples of these skills and be prepared to discuss
them with the employee at the concluding assessment meeting. The employee should also be
prepared to discuss behavioural examples that demonstrate ability and need.At the assessment
meeting, the manager and employee jointly review their observations. This discussion should
include the identification of the employee’s skill strengths and developmental needs. The
manager then provides a written assessment in the form of ‘summary statement’. Usually
about one paragraph in length, the summary provides the employee with a brief, clear
statement of where he or she stands regarding potential. An important concept to be conveyed
during this meeting is that, while the employee may be assessed as having potential for a
higher level or different position, no promises of a particular job can be made.Before the
conclusion of this meeting, the pair should formulate a development plan (i.e. decide on new
development activities) that the employee can pursue in order to help realise his or her
potential.Let us realise that there are no shortcuts to the successful implementation of
potential appraisal. If potential appraisal is done in a systematic way it would contribute to
having well designed career plan that would indicate the preferred growth path of an
individual in an organisation. For example, a post-graduate diploma or degree holder in
marketing management would aspire for career avenues in market research, sales
management, advertising and such. An individual specialised in HRM could aspire for
avenues in manpower planning, training, welfare, industrial relations and so on. Any
professional organisation would make sincere efforts to match the individual career
aspirations. This would obviously be a mutually beneficial activity for the individual and the
organisation. Further, succession planning is the process where every individual manager is
expected to develop a subordinate who would take over from him over a period of time.
Many managers feel insecure about this process and avoid indulging in this development
activity. What they fail to realise is that, if an individual has the potential and shows good
performance, there is always room at the top. Unless they themselves become unpromotable
and stagnant. Succession planning too would succeed if and only if a good potential appraisal
system exists and is in firm place.To conclude, if potential appraisal is not done in a planned
manner, you may promote an undeserving employee. As a consequence, he does not succeed
but would not accept a demotion back to his old slot. Thus, in a bid to develop a territory
manager out of a super-salesman, and not doing it properly; you lose both in the process. But
if implemented well, professional performance and potential appraisal could take the
organisation on a fast development track and faster productivity through people.