Simplifying the Big Hiring Debate: Competence v/s Potential?
Hiring the right talent is one of any organization’s most crucial yet challenging tasks. With the constant pressure to innovate and maintain a competitive edge, companies need a strategic approach to identify candidates who not only fit the job requirements but also align with the organization’s long-term goals.
The dilemma often lies in balancing competence with potential — hiring experienced individuals who can execute tasks immediately versus investing in candidates with high growth potential who can drive the company forward.
Introducing the Competence v/s Potential Matrix
To address this challenge, LakshHR introduces the Competence v/s Potential Matrix, which categorizes candidates into four quadrants based on their current competence and future potential: Specialists, Rockstars, Future Leaders, and Beginners.
This framework helps hiring managers decide which type of candidate to hire depending on the organization’s current needs and strategic goals.
The Four Quadrants
- Specialists: High competence, low potential – Highly skilled and experienced, making them ideal for roles requiring immediate execution and expertise.
- Rockstars: High competence, high potential – These candidates possess both the skills needed for immediate impact and the right potential, which can steer the organization towards a growth path.
- Future Leaders: Low competence, high potential – Early-career professionals who may lack experience but have a high potential.
- Beginners: Low competence, low potential – These need to fit the job market’s requirements and require training.
Pros and Cons of Each Quadrant
| Quadrant | Pros | Cons |
| Rockstars | High impact, future leadership potential, innovative | Higher salary demands, risk of job hopping |
| Specialists | Immediate impact, reliability, extensive experience | Limited growth potential, may not fit in the company’s culture |
| Future Leaders | Fresh perspectives, lower initial salary, trainable | Investment in training, slower initial impact |
| Beginners | Can be molded per the organization’s culture | High initial training cost, longer time to productivity |
How to Assess Competency and Potential
Accurately assessing candidates’ competence and potential is crucial for placing them in the right quadrant. The attached images provide a detailed breakdown of assessing both competence and potential.
Competence is easier to judge as it comprises knowledge, experience, and skills. There are tests and assessments to judge these parameters. In addition, going through the candidate’s CV and asking the right questions pertaining to their academics, job experience, projects, etc., gives you a fairly good insight into their competence.
Judging potential is trickier. Identifying and developing high-potential individuals is crucial. Look for traits such as:
- Growth Mindset: Ambition and drive to learn and grow themselves and the organization. Open to new things
- Passion: Intense enthusiasm for their interests and goals, with energy, dedication, and persistence.
- Ownership: Seeing things through, finding solutions on the way, rather than shifting blame
- Emotional Intelligence: Knack for using emotion and logic to communicate a persuasive vision and connect with people
- Adaptability: Key to figuring out solutions and moving on from problems
- Agreeableness: Kindness and empathy to others
- Integrity: Ethical in business, realistic about their abilities, has the humility to admit mistakes, and has the intelligence to learn from them.
While factors like intelligence, experience, performance, and leadership competencies remain important, start prioritizing the hiring, retaining, and developing high-potential individuals at all organizational levels.
When Should Companies Hire Which Type of Candidate
Different types of companies at various stages of growth should hire candidates from different quadrants:
- Rockstars: Ideal for startups in growth phases and established companies looking to innovate. Hire during periods of expansion and after securing significant funding.
- Future Leaders: Suitable for startups building a young, dynamic team and companies with strong training programs. Hire when fresh perspectives are needed.
- Specialists: Best for traditional firms with defined roles needing immediate expertise. Hire during critical projects or when facing talent shortages.
- Beginners: Avoid hiring for permanent roles, but provide development opportunities through an internship to help them move up or right in the matrix.
How To Retain Rockstars
One of the biggest challenges in hiring and retaining rockstars can be budgetary constraints. In such a case, focus on providing autonomy (in 4 T dimensions – Task, time, technique, and team), mastery, and purpose.
This is what rockstars want most from you. They are energized by three fundamental things:
- autonomy—the freedom to direct their lives;
- mastery—their craving to excel; and
- purpose—the yearning for their work to serve something larger than self.
Provide them with autonomy in four “T” dimensions: task (what they do), time (when they do it), team (who they do it with), and technique (how they do it). Assist them in achieving mastery by establishing challenging yet accomplishable objectives and eliminating distractions. Additionally, include them in a more extensive team, organizational, or societal objective, providing a purpose. Bezos and other Amazon executives are proficient in this area.
To maximize the potential of your top performers, provide them with challenging development opportunities that stretch their abilities.
Consider the case of Japan, where professionals typically show higher potential but lower competence compared to global averages. This discrepancy stems from a flawed development process. Despite strong educational foundations and work ethic, career growth often stagnates due to traditional, linear progression within a single company or division.
To accelerate growth, move beyond simply promoting high-potentials to larger roles with bigger budgets and teams. Instead, expose them to diverse, complex, and uncomfortable challenges. A survey of 823 international executives revealed that stretch assignments were the most effective in unlocking potential, followed by job rotations and personal mentoring.
Evolution of Hiring Criteria – Hiring for Potential is More Important Than Ever
The first era of talent selection, lasting millennia, focused on physical attributes. People were chosen for tasks like building pyramids or fighting wars based on their fitness, health, and strength. These easily observable traits still subconsciously influence us today, as evidenced by the above-average height of Fortune 500 CEOs and political leaders.
The second era, prevalent in the 20th century, emphasized intelligence, experience, and past performance. IQ and educational background became crucial in hiring, especially for white-collar jobs. As work became standardized and professionalized, past performance in similar roles was considered a reliable indicator of future success.
The third era, beginning in the 1980s, was marked by the competency movement. This approach, inspired by David McClelland’s 1973 paper, evaluated candidates based on specific characteristics and skills predictive of outstanding performance in a given role. This shift was necessitated by increasing job complexity due to technological advancements and industry convergence. Emotional intelligence also gained recognition as a critical factor, especially for leadership roles.
We are now entering the fourth era, which focuses on potential. In today’s VUCA (volatile, uncertain, complex, and ambiguous) environment, competency-based assessments are becoming less effective. The key question now is not whether employees have the right skills today but whether they can learn and adapt to meet future challenges.
In today’s rapidly evolving business landscape, hiring for potential has become more crucial than ever. The pace of technological change, shifting market dynamics, and global uncertainties mean that the skills and competencies needed for success are constantly in flux. Organizations need employees who can adapt quickly, learn new skills, and thrive in unfamiliar situations.
Potential indicates an individual’s capacity to grow, evolve, and meet future challenges that may not even be foreseeable today. By prioritizing potential, companies invest in their long-term success, building a workforce that can pivot with changing demands, innovate in the face of disruption, and lead through ambiguity. This approach also fosters a culture of continuous learning and adaptability, which is essential for staying competitive in the modern business world. Ultimately, hiring for potential allows organizations to build resilient, future-ready teams capable of navigating the complexities of tomorrow’s business landscape.
Conclusion
The Competence v/s Potential Matrix provides a structured approach to making strategic hiring decisions. By understanding and evaluating the distinct traits of candidates, companies can align their hiring practices with their long-term goals, ensuring they bring in the right talent at the right time. Implementing this matrix can lead to a more balanced, dynamic, and forward-thinking workforce, ready to tackle both current challenges and future opportunities.
