Where have organisations got it wrong?

Organisations often rely on past performance to determine who will advance to fill leadership positions. If the performance of an individual has been stellar in the past, the argument goes, then it is only logical to expect that they will perform equally well in a new more senior role. The flaw in this argument is that past efforts in one role, typically less complex, do not mean that an individual has the potential to fill more complex, more senior roles. Historically referred to as the Peter Principle, our research, together with others like Benson, Li and Shue (2017) show time and time again, that simply because an employee has performed well in one role, say as an engineer, does not mean that they have the potential, i.e. well suited, to perform well as a leader of engineers.

As individuals move up the leadership hierarchy, roles become increasingly strategic and ambiguous; with wider decision-making latitude, and an enhanced need for scenario planning and systems thinking, which requires novel ways of operating. In more complex, more senior roles, past performance is only a single, less predictive method of assessing future performance and potential. This raises the question: to get a better ROI and avoid the often catastrophic, unforeseen consequences of performance-based promotions, how should employers assess those who seek to progress into more complex leadership roles?

Where do we go from here?

If past performance alone does not reliably predict future potential and future performance, then it’s time to reimagine leadership assessment.

As individuals move up the leadership hierarchy, roles require leaders to be increasingly agile and complex thinkers, who can draw on their own internal resources to adapt and lead. Peoplewise believe that it is these internal resources that are the key to understanding potential, and it is these that need to define potential, not past performance.

Assessing an individual’s internal resources, also known as psychological capabilities, enables organisations to select, promote and develop individuals based on resources that can be built and developed over a relatively short period.

The theoretical underpinnings of psychological capabilities move away from trait-based theory and personality assessments, which suggest that personality is largely fixed and extremely challenging to develop. Instead, internal resources, which have been developed by Peoplewise, are underpinned by positive psychology and state-based views of personality which imply that leaders and their psychological capabilities, can change and be developed.

Working with internal state-based capabilities is a huge win for organisations as they offer a much greater return on investment than assessing traits. Great talent can be nurtured and grown.

Our Model

PsyCap Potential™ developed by Peoplewise is unique as it focuses on measuring future potential, rather than current performance. Our model assesses internal psychological capabilities of Mental Agility, Emotional Agility, Confidence, Resilience and Drive, which have been proven to be consistently associated with effective performance, future potential and marginal risk in the workplace.

PsyCap Potential was developed by analysing academic literature on the psychology of performance, motivation and positive psychology, leadership and interpersonal effectiveness, as well as Dr Board’s work on psychopathology in the workplace. The tool has been extensively validated; been assessed over several years and with numerous organisations, several thousand employees and is registered with the British Psychological Society. PsyCap Potential is unique in its assessment methodology and a way forward for leadership assessment in a changing world.

The Future

Leaders must learn to navigate the external environment where the once-in-a-generation (Ukraine war), once-in-a-lifetime (Covid-19), and once-in-a-career (Brexit) have proven to be great challenges. On the other hand, leaders must also learn to be adaptive and agile, as their roles change, which may include increased complexity, greater decision-making latitude and different competency requirements.

Peoplewise’s PsyCap Potential assessment offers an innovative solution for organisations that no longer want to rely on past performance and trait-based personality. By assessing key internal resources that predict future leadership potential, organisations create the opportunity to understand and leverage their talent and afford individuals the opportunity to grow more reliably. This approach to predicting leadership potential is not about focusing on past performance and personality traits.

For further details or to explore how we can support your organisation, please reach out to us at letushelp@peoplewise.co.uk.