Potential analysis

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Potential analysis describes the structural examination of specific characteristics and competencies. Potential analyses provide information about abilities of employees, future events, methods or organizations. Due to that the analysis of the branch of production, the financial sphere, the research & development and the human resources is differentiated.

Contents

A company might analyze its own potential (productivity, market position) by comparing it to those of the competitors (benchmarking). A market can be analyzed to estimate its potential for a certain product. Processes can be structurally analyzed due to their optimization. [1]

Quality criteria of a potential analysis

The bases of a qualitative potential analysis are the following quality criteria that need to be fulfilled for any kind of potential analysis.

Potential Analysis in the Talent Management

Importance of the potential analysis

The Potential Analysis in human resources is pioneering as a part of a goal- and future-oriented talent management. Talent Management characterizes the acquisition, development and long-term retention of qualified employees. Due to the future demographic change the "war for talents", which is searching and retaining future talents/executives will be intensified. Furthermore, employers have to offer certain attractivity. Nowadays transparent career paths and conveying processes are more important than solely high wages. Talents or "high potentials" need to have a professional perspective, otherwise they will leave the company they are working for or even the country. Every year a high number of well-educated persons leave their home country. This knowledge-migration needs to be avoided and thus the potential analysis becomes even more important. Talents need to be acquired, their skills must be developed and in the end talents should be retained in companies. [3] [4]

Objectives of potential analysis

The objectives of potential analysis are mainly based on the punctual identification, development and retention of talents or future high potentials. Potential analysis' are used to identify talents, who cannot be identified by school or college grades but for example in terms of social competence, flexibility or emotional behavior. Using potential analysis, companies intend to achieve the optimal fit of individual – job and organization. This means, an employee has to fit his job and purpose, and the company and its corporate culture. Concerning costs, miscasts should furthermore be avoided. For professionals, costs due to miscast amount to 50% of the annual salary plus wage labor costs whereas for executives costs are a total of 75%-100% of the annual salary plus wage labor costs. In addition, the company's future competitiveness and efficiency should be improved as well as the attractivity as employer in the mentioned “war for talents”. [5] [6] [7]

Employee selection criteria

Subsequent selection criteria of potential analysis are going to be explained. The selection criteria of employees are based on characteristics such as methodological expertise, social competence, professional competence as well as critical thinking and competence in modification. All these characteristics are regarded as a part of an employee's potential. Because these characteristics are difficult to measure, subordinate criteria are assigned. Due to a multitude of criteria, the division into cognitive, motivational and social interaction criteria is used to make this multitude comprehensible. Cognitive criteria describe criteria that can be observed like organization, problem-solving and flexibility. Leadership motivation, stress-coping and self-confidence characterize motivational criteria whereas communication, teamwork and empathy belong to social-interactive criteria. The choice of the selection criteria is substantial to what extent potential analysis is accomplished carefully. The professional differentiation of criteria out of future strategic requirements should be done by Human resource management. Conclusively, the careful selection of criteria is founded on the knowledge about the target group. In cases of a university graduate other criteria should be examined in comparison to a professional who wants to become an executive. [5]

Quality features of potential analysis

In the preceding part quality criteria of potential analysis were described. In the following features which have to be fulfilled to ensure a qualitative and professional implementation of potential analysis in Human Resources are pronounced. First of all Human Resource managers should combine various methods to identify more specific characteristics and skills of a candidate. To achieve the already mentioned optimal fit of individual – job and organization, an orientation of the candidates target profile and the competencies are needed for a job. Therefore, it is significant that a precise definition of the examined competencies is given. A qualitatively good potential analysis is based on a solid preparation, requiring a certain period of time. Potential analyses of single candidates require one day whereas the analysis of a group needs up to three days. According to the mentioned time and preparation aspect, it becomes obvious that both the Human resources and the candidates need to be prepared and introduced to the topic of potential analysis. Furthermore, it is important that candidates have the possibility to get feedback and an explanation where their strengths and weaknesses are situated. [6]

Risks

Companies, which ignore the demographic and social changes and do not recognize that their future economic competitiveness and efficiency is based on talented and highly qualified employees, are risk-prone. Not identifying “High potentials” and developing their skills, leads to an insufficient and unsatisfying succession planning and in the end to failed employee retention. Employees, who are aware of their competencies and who do not have the possibility to develop those by taking the next step on career paths, will leave a company immediately. In association with a failed retention and high fluctuation companies are facing enormous costs due to the already mentioned miscast of employees. Potential analysis and transparent career paths can avoid this problem. Companies with a good reputation have fewer problems with obtaining young and skilled employees, while companies with a negative image are confronted with the problem of requiring but not getting talented, highly qualified employees. A problem that might cause risks, considering the future “war for talents”

Potential Analysis Tools

Potential Analysis in Human resources uses numerous tools to examine a person's potential. On this occasion it is important to know that potential analysis' are always target-group specific and business-specific. Banks use other tools and selection criteria than an advertising agency.

Tests

Tests are the simplest and most standardized procedures for potential evaluation. They are considered to be observer-neutral and objective. For this reason test is the most commonly used potential analysis tool. Tests can be distinguished into intelligence tests, performance tests and personality tests.

Interviews

In potential analysis interviews are largely distributed and are highly accepted by all persons who are involved. The validity of interviews varies substantially in dependence of the used method. Interviews can be divided into biographical and multimodal interviews.

Assessment Center

Assessment-Center are highly structured procedures which are characterized by independent exercises. By using this tool, a realistic simulation of important professional tasks is given. Assessment-Center are usually group-processes with high validity and acceptance of the involved people.

360° Feedback

The 360° Feedback is a feedback method in which colleagues, superiors, customers and suppliers and other employees participate. The comparison of the own valuation and the valuation of others is essential. Due to this procedure deviations between the own valuation and the valuation of the others can arise and been used for improvements. Therefore, 360° Feedback method is supposed to be repeated after a certain period of time. [11] [12]

Management Audit

A Management Audit is an evaluation process which estimates the leadership qualities/management skills of the existing manpower. External consultants examine employee's skills and potential with different tests. After that an interview is used to present the employees experience, competencies and leadership-qualities. The result of management audits is communicated by a recommendation. [13]

Related Research Articles

Industrial and organizational psychology "focuses the lens of psychological science on a key aspect of human life, namely, their work lives. In general, the goals of I-O psychology are to better understand and optimize the effectiveness, health, and well-being of both individuals and organizations." It is an applied discipline within psychology and is an international profession. I-O psychology is also known as occupational psychology in the United Kingdom, organisational psychology in Australia and New Zealand, and work and organizational (WO) psychology throughout Europe and Brazil. Industrial, work, and organizational (IWO) psychology is the broader, more global term for the science and profession.

In common usage, evaluation is a systematic determination and assessment of a subject's merit, worth and significance, using criteria governed by a set of standards. It can assist an organization, program, design, project or any other intervention or initiative to assess any aim, realisable concept/proposal, or any alternative, to help in decision-making; or to generate the degree of achievement or value in regard to the aim and objectives and results of any such action that has been completed.

Succession planning is a process and strategy for replacement planning or passing on leadership roles. It is used to identify and develop new, potential leaders who can move into leadership roles when they become vacant. Succession planning in dictatorships, monarchies, politics, and international relations is used to ensure continuity and prevention of power struggle. Within monarchies succession is settled by the order of succession. In business, succession planning entails developing internal people with managing or leadership potential to fill key hierarchical positions in the company. It is a process of identifying critical roles in a company and the core skills associated with those roles, and then identifying possible internal candidates to assume those roles when they become vacant. Succession planning also applies to small and family businesses where it is the process used to transition the ownership and management of a business to the next generation.

A performance appraisal, also referred to as a performance review, performance evaluation, (career) development discussion, or employee appraisal, sometimes shortened to "PA", is a periodic and systematic process whereby the job performance of an employee is documented and evaluated. This is done after employees are trained about work and settle into their jobs. Performance appraisals are a part of career development and consist of regular reviews of employee performance within organizations.

Staffing is the process of finding the right worker with appropriate qualifications or experience and recruiting them to fill a job position or role. Through this process, organizations acquire, deploy, and retain a workforce of sufficient quantity and quality to create positive impacts on the organization's effectiveness. In management, staffing is an operation of recruiting the employees by evaluating their skills and knowledge before offering them specific job roles accordingly.

<span class="mw-page-title-main">Recruitment</span> Process of attracting, selecting and appointing candidates to a job or other organization

Recruitment is the overall process of identifying, sourcing, screening, shortlisting, and interviewing candidates for jobs within an organization. Recruitment also is the process involved in choosing people for unpaid roles. Managers, human resource generalists, and recruitment specialists may be tasked with carrying out recruitment, but in some cases, public-sector employment, commercial recruitment agencies, or specialist search consultancies such as Executive search in the case of more senior roles, are used to undertake parts of the process. Internet-based recruitment is now widespread, including the use of artificial intelligence (AI).

Human resource management is the strategic and coherent approach to the effective and efficient management of people in a company or organization such that they help their business gain a competitive advantage. It is designed to maximize employee performance in service of an employer's strategic objectives. Human resource management is primarily concerned with the management of people within organizations, focusing on policies and systems. HR departments are responsible for overseeing employee-benefits design, employee recruitment, training and development, performance appraisal, and reward management, such as managing pay and employee benefits systems. HR also concerns itself with organizational change and industrial relations, or the balancing of organizational practices with requirements arising from collective bargaining and governmental laws.

Job analysis is a family of procedures to identify the content of a job in terms of the activities it involves in addition to the attributes or requirements necessary to perform those activities. Job analysis provides information to organizations that helps them determine which employees are best fit for specific jobs.

Personnel selection is the methodical process used to hire individuals. Although the term can apply to all aspects of the process the most common meaning focuses on the selection of workers. In this respect, selected prospects are separated from rejected applicants with the intention of choosing the person who will be the most successful and make the most valuable contributions to the organization. Its effect on the group is discerned when the selected accomplish their desired impact to the group, through achievement or tenure. The procedure of selection takes after strategy to gather data around a person so as to figure out whether that individual ought to be utilized. The strategies used must be in compliance with the various laws in respect to work force selection.

Competence is the set of demonstrable characteristics and skills that enable and improve the efficiency or performance of a job. Competency is a series of knowledge, abilities, skills, experiences and behaviors, which leads to effective performance in an individual's activities. Competency is measurable and can be developed through training.

Employment testing is the practice of administering written, oral, or other tests as a means of determining the suitability or desirability of a job applicant. The premise is that if scores on a test correlate with job performance, then it is economically useful for the employer to select employees based on scores from that test.

Talent management (TM) is the anticipation of required human capital for an organization and the planning to meet those needs. The field has been growing in significance and gaining interest among practitioners as well as in the scholarly debate over the past 10 years, particularly after McKinsey's 1997 research and the 2001 book on The War for Talent. Michaels, Ed; Handfield-Jones, Helen; Axelrod, Beth (2001). The War for Talent. Harvard Business Press. ISBN 9781578514595. Talent management in this context does not refer to the management of entertainers. Talent management is the science of using strategic human resource planning to improve business value and to make it possible for companies and organizations to reach their goals. Everything done to recruit, retain, develop, reward and make people perform forms a part of talent management as well as strategic workforce planning. A talent-management strategy should link to business strategy and to local context to function more appropriately

A training package is a set of nationally endorsed training standards, qualifications and guidelines in Australia.

A competency architecture is a framework or model of predetermined skills or "competencies" used in an educational setting. Competency architectures are a core component of competency-based learning.

Competency-based recruitment is a process of recruitment based on the ability of candidates to produce anecdotes about their professional experience which can be used as evidence that the candidate has a given competency. Candidates demonstrate competencies on the application form, and then in the interview, which in this case is known as a competency-based interview.

<span class="mw-page-title-main">Assessment day</span>

An assessment day is usually used in the context of recruitment. On this day, a group of applicants who have applied for a particular role are invited to an assessment centre, where a combination of selection techniques are used by the employers to measure the suitability of an individual for the job role. These selection technique usually include exercises such as presentation, group exercise, one to one Interview, role play, psychometric test etc. Most large organisations like banks, audit and IT firms use assessment days to recruit the fresh talent in their graduate programmes. With an increase of popularity of assessment days, several training institutes have been formed that prepare candidates for assessment days, for example, Green Turn is a famous institute that prepares candidates for assessment days of big 4 accountancy firms.

<span class="mw-page-title-main">Kenexa</span> American employment services company

Kenexa, an IBM Company, provides employment and retention services. This includes recruitment process outsourcing onboarding tools, employee assessment, abilities assessment for employment candidates ; and Kenexa Interview Builder, a structured interview archive with example questions.

<span class="mw-page-title-main">Timo Meynhardt</span> German psychologist and business economist

Timo Meynhardt is a German psychologist and business economist. Since October 2015, he has been holding the Dr. Arend Oetker Chair of Business Psychology and Leadership at HHL Leipzig Graduate School of Management. Furthermore, he is the managing director of the Center for Leadership and Values in Society at the University of St. Gallen. From 2013 to 2015, he held the Chair of Management at the Leuphana University in Lüneburg.

<span class="mw-page-title-main">Full range leadership model</span> Theory of leadership

The full range of leadership model (FRLM) is a general leadership theory focusing on the behavior of leaders towards the workforce in different work situations. The FRLM relates transactional and transformational leadership styles with laissez-faire leadership style.

<span class="mw-page-title-main">Norbert Thom</span>

Norbert Thom is a German-Swiss economist and emeritus professor at the University of Bern where he taught business administration, organization design and human resource management until he retired in summer 2012.

References

  1. ↑ Resch, Martin, Personalentwicklung (PDF) (in German)
  2. ↑ Kunz, Gunnar (2004). Nachwuchs fürs Management – High Potentials erkennen und gezielt fördern (in German). Wiesbaden: Gabler. pp. 52–54. ISBN   978-3-409-12484-3.
  3. ↑ Becker, Manfred (2005). Systematische Personalentwicklung – Planung, Steuerung und Kontrolle im Funktionszyklus (in German). Stuttgart: Schäffer-Pöschel. p. 378. ISBN   3-7910-2252-0.
  4. ↑ Ritz, Adrian (2010). Talent Management – Talente identifizieren, Kompetenzen entwickeln, Leistungsträger erhalten (in German). Wiesbaden: Gablier. p. 15f. ISBN   978-3-8349-1811-6.
  5. 1 2 Steindl, Roland (2003). Potenzialanalyse als Basis strategischer Personalentwicklung – Instrumente – Implementierung – Trends (in German). Wien: Vogelauer,W., Risak, M. p. 2.
  6. 1 2 Hahn, Dr. Manfred, Potenzialanalyse - über die Kunst, Begabungen zu entdecken (PDF) (in German)
  7. ↑ Hutter, Sabine (14 January 2010), Mit der Potentialanalyse Spezialisten im Unternehmen identifizieren (in German)
  8. ↑ Steindl, Roland (2003). Potenzialanalyse als Basis strategischer Personalentwicklung – Instrumente – Implementierung – Trends (in German). Wien: Vogelauer, W., Risak, M. p. 3f.
  9. ↑ Thom, Norbert; Zaugg, Robert J. (2008). Moderne Personalentwicklung - Mitarbeiterpotenziale erkennen, entwickeln und fördern (in German). Wiesbaden: Gabler. p. 89f. ISBN   978-3-8349-1060-8.
  10. ↑ Thom, Norbert; Zaugg, Robert J. (2008). Moderne Personalentwicklung - Mitarbeiterpotenziale erkennen, entwickeln und fördern (in German). Wiesbaden: Gabler. p. 86f. ISBN   978-3-8349-1060-8.
  11. ↑ Thom, Norbert; Zaugg, Robert J. (2008). Moderne Personalentwicklung - Mitarbeiterpotenziale erkennen, entwickeln und fördern (in German). Wiesbaden: Gabler. p. 72f. ISBN   978-3-8349-1060-8.
  12. ↑ Steindl, Roland (2003). Potenzialanalyse als Basis strategischer Personalentwicklung – Instrumente – Implementierung – Trends (in German). Wien: Vogelauer,W., Risak, M. p. 9.
  13. ↑ Rohrschneider U, Friedrichs S, Lorenz M (2010). Erfolgsfaktor Potenzialanalyse - Aktuelles Praxiswissen zu Methoden und Umsetzung in der modernen Personalentwicklung (in German). Wiesbaden: Gabler. pp. 129–141. ISBN   978-3-8349-1060-8.
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