When the 9 cell performance/potential grid is populated accurately, it can help to predict the demand for leadership talent in a business or specific function.
By looking at the distribution of people across the matrix, and comparing that to the rate of growth (or decline) that the business or function is, or will be, experiencing, you can manage your investment in leadership development to either accelerate or reduce the number of leaders it produces.
The ultimate reason for investing in the development of leaders is illustrated in the image above. If the demand (orange) grows faster than the supply (green) then a leadership vacuum is created and this results in people being promoted before they are ready, which usually results in failure.
But there is an important factor to take into consideration.
Promotability is not Potential
Potential (Learning Agility) is a measure of the speed with which someone can grow and tackle significantly new challenges successfully. Promotability is the readiness of the person to move up 1 or more levels. Potential is a series of attributes that stays relatively consistent over time. Promotability can change every 2 – 4 years.
So if potential has been used for placement in the matrix, then the following distributions can be used to predict the demand for leadership talent and compare that to the actual percentage of leaders that are in the various zones.
The ideal distribution is shown on the matrix, the rate of growth is indicated below.
If the business/function is in a relatively constant and predictable growth environment that is stable, there is no need to have more that 15% of leaders in the top right hand zone. The rate of growth of leaders will match the demand created by the rate of change in the environment.
If the business/function is in a negative growth environment, and this may be for a number of factors, e.g. technology is reducing the need for headcount, the customer base for a particular product or service is declining, then there is no reason to have more than 5% – 10% of leaders in the top right hand zone. Too many leaders in this context will lead to the lose of talent because there will be nowhere for them to go.
Note: These distribution are more relevant to functional areas than to an entire business, but can be used for multi-national businesses that need to manage different rates of growth in different regions or countries.