Potential can be defined as ‘a latent but unrealized ability’. The potential is the one that the appraiser should be able to identify and develop because of the knowledge of the job.
The potential appraisal refers to the appraisal i.e. identification of the hidden talents and skills of a person. The person might or might not be aware of them. Potential appraisal is a future – oriented appraisal whose main objective is to identify and evaluate the potential of the employees to assume higher positions and responsibilities in the organizational hierarchy. Many organizations consider and use potential appraisal as a part of the performance appraisal processes.
The purposes/objectives of a potential review are:
The objective of potential appraisal is to identify the potential of a given employee to occupy higher positions in the organizational hierarchy and undertake higher responsibilities. Potential appraisal is a future – oriented appraisal whose main objective is to identify and evaluate the potential of the employees to assume higher positions and responsibilities in the organizational hierarchy.
Potential appraisal is needed
Potential appraisals are required to:
- inform employees about their future prospects;
- help the organization chalk out of a suitable succession plan;
- update training efforts from time to time;
- Advise employees about what they must do to improve their career prospects.
We may apply the following methods
Role Description: A good potential appraisal system would be based on clarity of roles and functions associated with the different roles in an organisation. This requires extensive job descriptions to be made available for each job. These job descriptions should spell out the various functions involved in performing the job.
Qualities Required: Besides job descriptions, it is necessary to have a detailed list of qualities required to perform each of these functions. These qualities may be broadly divided into four categories –
(1) technical knowledge and skills,
(2) managerial capabilities and qualities,
(3) behavioral capabilities, and
(4) conceptual capabilities.
Indicators of Qualities: A good potential appraisal system besides listing down the functions and qualities would also have various mechanisms for judging these qualities in a given individual. Some of the mechanisms for judging these qualities are –
(a) rating by others,
(b) psychological tests,
(c) simulation games and exercises,
(d) performance appraisal records.
Organizing the System: Once the functions, the qualities required to perform these functions, indicators of these qualities, and mechanisms for generating these indicators are clear, the organisation is in a sound position to establish and operate the potential appraisal system. Such establishment requires clarity in organisational policies and systematization of its efforts.
Feedback: If the organisation believes in the development of human resources it should attempt to generate a climate of openness. Such a climate is required for helping the employees to understand their strengths and weaknesses and to create opportunities for development. A good potential appraisal system should provide an opportunity for every employee to know the results of assessment. He should be helped to understand the qualities actually required for performing the role for which he thinks he has the potential, the mechanisms used by the organisation to appraise his potential, and the results of such an appraisal.
A good potential appraisal system provides opportunities continuously for the employee to know his strengths and weaknesses. These are done through periodic counselling and guidance sessions by either the personnel department or the managers concerned. This should enable the employee to develop realistic self-perceptions and plan his own career and development.