By Tim Huff
President & CEO, TLG
I’ll never forget that time I got a “D” on my report card. It was 6th grade, and I didn’t put much effort into my solar system model project, so I got sent home with a barely passing grade in science. After getting the ‘what-for’ from my parents, I remember I put that grading period behind me, re-focused, and go an “A” on the next report card. Success!
It was nice being able to start again after each grading period. Whatever pride or disappointment existed at that moment we got our report cards, we all shifted our attention forward. New semesters, new material, and a fresh stretch of road ahead.
That made sense in school. The system was designed around clean breaks and defined chapters.
Organizations often treat annual performance reviews the same way. The forms are completed, conversations happen, ratings are finalized, and then the year gets filed away. The problem is that work doesn’t reset the way my 6th grade science class did. Roles evolve, expectations expand, change compounds… work is much more complicated and connected. What happens after the review matters at least as much as the review itself.
Performance Reviews Do Exactly What They’re Designed to Do
Performance reviews play an important role: they capture outcomes, document behaviors, provide structure for conversations that otherwise might never happen, and often drive compensation changes. They help ensure fairness and consistency.
What they don’t do particularly well is prepare an organization for the future.
Reviews reflect what has already occurred, evaluated through the lens of current roles and expectations. They tell us who delivered, who met commitments, and who struggled. They serve as accurate mirrors. Forward readiness, however, requires a different kind of insight.
That gap has always existed, but today, it carries more weight.
Performance and Potential Tell Different Stories
Strong performance usually reflects mastery of the environment as it exists today. It shows up as efficiency, reliability, and consistency; traits that truly matter. Organizations need people who can execute well inside known systems.
Potential usually reveals itself differently, though. It shows up in learning velocity, comfort with ambiguity, the ability to adjust thinking as conditions shift, and the ability to react to changing priorities. It becomes visible when someone encounters something unfamiliar and figures it out anyway.
In relatively stable environments, these distinctions can blur. Success tends to reward those who optimize what already works. In periods of disruption, though, the differences become harder to ignore.
Stable Conditions and Changing Conditions Reward Different Capabilities
For many years, roles evolved slowly. Deep expertise, consistency, and incremental improvement almost always yielded success. That environment allowed performance and future readiness to align more often than not.
But, the reality of today is that the pace has changed.
Artificial intelligence, automation, and rapidly evolving tools are reshaping roles faster than job descriptions can keep up. Work that once rewarded execution now requires judgment. The most valuable contributors are typically ones who adapt their thinking as the system changes and rarely those who simply know the current system best.
This shift places new pressure on organizations. Performance reviews still matter, but they cannot carry the entire burden of talent strategy. The window immediately following reviews becomes a critical moment to look ahead.
Identifying High Potential After the Review
High potential in people usually emerges through patterns, not through a single score or rating. Several inputs help clarify the picture:
- People who absorb feedback quickly, improve their judgment as complexity increases, and remain effective when circumstances shift often show strong growth capacity.
- Assessment data can add valuable insight when used thoughtfully. Well-designed tools offer perspectives on leadership potential. Their true value comes from interpretation, so a proper assessment debrief from a trained coach is important.
- Multi-rater input adds depth. Feedback from peers, direct reports, and cross-functional partners often reveal leadership traits that may not appear in a manager’s line of sight.
- Responses to stretch matter as much as the stretch itself. How someone navigates challenge and setbacks often says more about future readiness than whether everything went smoothly.
Viewed together, these signals allow organizations to form better hypotheses about who is likely to grow with the work ahead.
Turning Insight into Investment
Identifying high potential creates responsibility. Once leaders see it, action becomes the differentiator. Investment shows up through meaningful challenge paired with support.
It includes things like:
- Exposure to cross-functional work through job shadowing and involvement in large-scale projects
- Enterprise-level thinking through opportunities to listen in to executive strategy meetings
- Individual coaching that accelerates growth rather than corrects deficiencies
- Leadership development workshops and programs that plant new seeds for growing skills
This kind of investment becomes even more important as AI reshapes work. The advantage increasingly belongs to those who learn quickly, apply judgment, and adapt their thinking. These capabilities develop through intentional experiences and guidance.
Invest in What (and Who) is Next
I still have many of the report cards from my grade-school years somewhere in my basement, including the infamous one with the “D” in science.
Those report cards are relics now… snapshots of a moment in time, useful mostly for nostalgia. They tell a story about who I was then, not who I became later.
Annual performance reviews are similar. They capture a moment and document the past, but their real value emerges in what leaders do next. The weeks following performance reviews offer a rare window to step back and decide where to place intentional bets on people.
Don’t let the opportunity pass by to make those key investments in your organization’s future!
Thanks,
