Union Budget 2025: How corporate India is nurturing future leaders

Harnessing Potential: High-Potential Management Strategies for FY26

High-potential management refers to the systematic process of identifying, developing and nurturing individuals within an organisation who demonstrate exceptional capabilities, skills and potential for future leadership or critical roles. This serves as a critical strategy in organizational development aimed at nurturing and leveraging top talent for sustained growth. As the corporate landscape evolves, organisations are redefining their approaches to high-potential management to align with changing workforce dynamics and competitive demands.

In this article, we bring insights from our Deloitte India Talent Readiness Study 2024 to share trends, challenges and innovative strategies that organizations are adopting for high potential management and analyzing its implications for the coming financial year, FY26.

With the Union Budget 2025 around the corner, the government is expected to significantly impact the strategies of Corporate India specifically in the area of skill development and innovation. With a projected emphasis in emerging fields like AI, sustainability and renewable energy, we expect investments (and relaxations) in areas to equip the workforce for future challenges. Investments in digital infrastructure and green technologies will also foster the for culture of innovation.

Understanding high-potential management landscape

Our study shows that a substantial 62 per cent of organisations have formal processes for high-potential management, underscoring its significance in talent development. However, only a mere 6% formally tell employees that they are high potential, indicating a gap in recognition and communication.

Nearly 56 per cent of organizations annually review and update their high-potential talent management plans, with 72 per cent measuring the effectiveness of the process. This proactive approach indicates a commitment to adapt strategies to align with evolving organizational needs and pursue continuous improvement.

Many organizations commonly utilize retention rates of high-potentials and the frequency of promotions for individuals identified as high potentials as key metrics to assess the effectiveness of their programs. These metrics serve as critical indicators, highlighting the program’s success in retaining top talent and facilitating the career progression of individuals identified as having significant potential within the organization.

Despite efforts to update and measure effectiveness, only 18 per cent organisations benchmark their high-potential talent management process against industry best practices. There is a relatively low adoption of benchmarking practices, suggesting that a significant portion of organizations may not be fully leveraging external standards or insights to optimize their high-potential talent management strategies.

Within organisations, a select 15 per cent of the overall workforce is identified as high-potentials with a notable skew towards men, comprising 66 per cent, while women constitute only 34 per cent.

Defining high potentials

Broadly, 90 per cent of organisations define high potentials as individuals who consistently deliver high performance and demonstrate the capability to excel at the next level. This definition emphasizes not only current achievements but also future potential and aspirations. The top five personas attributed to high potential at India Inc are defined as below.

79 per cent, value individuals with Next Level Capability, emphasizing the ability to step into a role one level above their current position.

Ambitious individuals, demonstrating the capacity, engagement, and aspiration to ascend to more senior critical roles, also constitute a significant 79 per cent.

Similarly, 79 per cent look at high potentials as high performers, consistently achieving top ratings in consecutive 2 to 3 years.

Organisations recognise the importance of Drive, with 66% highlighting high personal drive and a proactive approach in getting things done.

This shows that organisations today prioritize observable behaviors and performance achievements over innate capabilities when identifying and defining high-potential individuals.

Assessing, developing and rewarding high potentials

Identification / Assessment: In pursuit of a comprehensive strategy for identifying high-potentials, 64 per cent of organizations adopt a holistic approach, integrating performance ratings, multi-rater assessments and behavioral competency evaluations. Despite this forward-looking trend, 69 per cent still exclusively depend on manager recommendations for identification.

Additionally, 62 per cent emphasize technical skills assessment as a key factor. To enhance the effectiveness of high-potential identification, organizations are encouraged to embrace more comprehensive measures beyond traditional data points of performance ratings and manager recommendations.

Development: 86 per cent of organisations prioritize leadership training, workshops, and executive education primary developmental interventions for high-potential employees. Following closely, 76 per cent of organizations actively engage in mentoring and coaching programs to foster the growth of their high-potential talent. Additionally, 55 per cent of organizations leverage cross-functional and stretch assignments, recognizing the value of diverse experiences in honing the skills and capabilities of their high-potential individuals.

This diverse array of developmental initiatives underscores the commitment of organizations to provide multifaceted growth opportunities, ensuring that high potentials are equipped with a well-rounded skill set and prepared for leadership roles in the dynamic landscape of the future.

Rewarding: Majority of organisations who participated in Deloitte’s Talent Readiness Study offer leadership visibility to both high-potentials and high-performers, but there is a distinct emphasis on high-potentials who exhibit capabilities for the next level, as opposed to high-performers whose capabilities align with their current roles. While 18 per cent of high performers experience accelerated career growth, recognizing their current contributions, a more substantial 31% of high potentials enjoy accelerated career growth. Similarly, when it comes to tailored learning and development opportunities, 36% high potentials receive customized programs and only 18% high performers benefit from such personalized development initiatives.

A deeper look at what organisations are doing differently

The study also sheds light on how organizations are adopting innovative practices to enhance their high potential management process.

Higher education support: Organisations are increasingly providing funding or support for further education, exclusive events, and double promotions to incentivize and retain high-pot/entials.

Fast tracking careers: Metrics such as the number of high-potentials in succession for top leadership roles and the promotion rate of high-potentials to higher positions are used to assess program impact.

Longitudinal potential: Organisations are shifting from “in-time” potential measurement to an ongoing approach anchored on measuring “consistent potential” over time.

Exposure: Innovative initiatives such as study missions, shadowing of senior management and the creation of high-potential clubs foster experiential learning and peer collaboration.

Way forward for FY26

In anticipation of significant impetus on skilling, talent management and employability improvement through the Union Budget, organizations should adapt their high-potential management strategies to align with the anticipated changes in skill development and innovation. Here are key areas for organizations to focus on:

Capability Building in Emerging Technologies: Organizations should prioritize assessment and development in emerging fields such as artificial intelligence (AI), machine learning, and data analytics. This will ensure that high-potential employees are equipped with the skills necessary to thrive in a technology-driven environment.

Sustainability and Green Technologies: With an increasing emphasis on sustainability, organisations should develop capabilities related to renewable energy, sustainable practices, and environmental stewardship. High-potential talent should be trained to lead initiatives that align with corporate social responsibility goals.

Digital Infrastructure Proficiency: As investments in digital infrastructure grow, organizations must ensure that their high-potential employees are proficient in digital tools and platforms. This includes fostering skills in digital marketing, cybersecurity, and cloud computing.

Innovation and Creativity: Organizations should foster a culture of innovation by providing high-potential employees with opportunities to engage in creative problem-solving and entrepreneurial thinking. This can be achieved through workshops, hackathons, and collaborative projects that encourage out-of-the-box thinking.

Conclusion

In conclusion, high-potential management remains a strategic imperative for organizations seeking to build a robust leadership pipeline and drive sustainable growth.

By adopting innovative strategies and leveraging best practices in identification, development, and evaluation, organizations can effectively nurture and harness the potential of their top talent. To fortify this strategic approach, organizations should pivot towards measuring flexibility, agility, and adaptability quotient when defining the persona for high potentials. Recognizing the evolving landscape, a comprehensive assessment approach is paramount, extending beyond traditional data points like performance ratings and manager recommendations. Moreover, it is crucial to address the prevailing gender disparity within the high-potential pool, acknowledging that it is skewed towards men.

As an imperative in the coming year, organizations should align their high-potential management strategies with the budget’s focus on skill development and innovation. This includes investing in training related to emerging fields such as AI and sustainability, fostering a culture of continuous learning, and promoting diversity and inclusion initiatives.

As the business landscape continues to evolve, high-potential management remains a cornerstone in driving organizational excellence and long-term success. Organizations should promote a continuous learning culture where high-potentials are encouraged to pursue lifelong learning opportunities, emphasizing adaptability, inclusivity, and even have comprehensive assessment approach positioning organizations to navigate the dynamic challenges of the future, creating a resilient and forward-thinking leadership culture.

Sankalp Mohanty and Neelesh Gupta are Partners, Deloitte India and Timcy Thomas is Associate Director, Deloitte India. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.