The Leadership Quarterly xxx (2021) 101516

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The Leadership Quarterly

journal homepage: www.elsevier.com/locate/leaqua

Full length article

Is there potential in assessing for high-potential? Evaluating the

relationships between performance ratings, leadership assessment data,
designated high-potential status and promotion outcomes in a global
organization ☆
Allan H. Church ⇑, Brett W. Guidry, Jacqueline A. Dickey, James A. Scrivani
PepsiCo, 700 Anderson Hill Road, Purchase, NY 10577, United States

A R T I C L E I N F O A B S T R A C T

Keywords: While leadership is a critical component of organizational success, organizations need to be more effective at
High‐potential classifying talent based on future potential vs current performance. This need raises the question as to whether
Talent management the assessment of leadership potential is truly adding value or enhancing the talent review and classification
Leadership development process. Data from 9,784 participants in PepsiCo’s Leadership Assessment and Development (LeAD) program
Assessment
—a multi‐trait, multi‐method (MTMM) assessment and development process—are used to examine relation-
Performance ratings
ships between individual performance, assessed potential, organizationally designated potential, and promo-
tion rates post assessment. Results from the analyses indicate that assessed potential provides unique variance
above performance alone in determining process outcomes (i.e., designated potential and promotions), and
therefore can be useful for making more informed talent management decisions. The applications of these mea-
sures within the current organization as well as limitations of the study and areas for future research are
discussed.

Leader capability is one of the most important elements in deter-
mining the sustainability and successful performance of an organiza-
tion. Effective senior leadership has been linked to critical outcomes
like firm performance, employee engagement, the creation of a learn-
ing culture, and the ability to quickly adapt to changes in the external
business environment (Amagoh, 2009; Burke & Litwin, 1992; Cascio,
Boudreau, & Church, 2017; Craig, 2018; Day, 2000; Steel & Day,
2018; Waddell & Pio, 2015; Zenger & Folkman, 2016). Therefore, it
is not surprising that upwards of $166 billion is spent annually on
leadership development efforts (Westfall, 2019). In an ideal state,
development efforts would be applied equally to all employees. Orga-
nizations are often limited by time, attention, and resources for devel-
opment, however, making decisions on different segments of talent
necessary (Conger & Church, 2018a; Day & O’Connor, 2017; Silzer &
Church, 2010).
Additionally, not all individuals possess the same characteristics
and skills needed to successfully lead at increasingly higher levels in
an organization nor are all characteristics equally developable
(Church, 2014a; Day, Harrison & Halpin, 2009; Finkelstein, Costanza,
& Goodwin, 2018; Spreitzer, McCall, & Mahoney, 1997; Silzer &
Church, 2009). To enable meaningful leadership development to be
successful within such restrictions, organizations implement talent
management processes to facilitate both differentiation of talent (i.e.,
those individuals who should be a focus for development resources)
and making talent decisions (i.e., those individuals who should be
moved into which role at which time to optimize short‐ and long‐
term business outcomes). Both elements of talent management utilize
the concept that an employee may have the potential to lead effectively
at a higher level in the organization. These employees are often termed
“high‐potentials” in corporate settings. The practice of “flagging” high‐
potentials is one of the primary means of enabling the initial differen-
tiation and segmentation of talent (Conger & Church, 2018a; Day &
O’Connor, 2017; Effron & Ort, 2010; Finkelstein et al., 2018; Ready
et al., 2010; Silzer & Church, 2009; 2010).

☆
The authors would like to thank the reviewers and the guest editor (David Day) for their feedback and suggestions for improving this manuscript. The authors also thank Elizabeth
Grimaldi, Christopher Rotolo, John Scott, Gina Seaton, and Cheyenne Tabb for their helpful inputs.
⇑ Corresponding author.
E-mail addresses: Allan.church@pepsico.com (A.H. Church), brett.guidry@pepsico.com (B.W. Guidry), Jacqueline.Dickey@pepsico.com (J.A. Dickey), James.scrivani@pepsico.
com (J.A. Scrivani).

https://doi.org/10.1016/j.leaqua.2021.101516
Received 24 July 2019; Revised 28 February 2021; Accepted 6 March 2021
Available online xxxx
1048-9843/© 2021 Elsevier Inc. All rights reserved.

Please cite this article in press as: Church, AH et al. Is there potential in assessing for high-potential? Evaluating the relationships between performance ratings,
leadership assessment data, designated high-potential status and promotion outcomes in a global organization. The Leadership Quarterly (2021), https://doi.org/
10.1016/j.leaqua.2021.101516
A.H. Church et al.
Given the criticality of individual leaders within organizations, it is
no surprise that recent benchmark studies indicate over 80% of large
“top development” organizations are focused on the process of identi-
fying and developing their leadership pipelines via indicators of poten-
tial (Church & Rotolo, 2013; Church, Rotolo, Ginther & Levine, 2015).
While many organizations target their efforts at the more senior levels
of talent in order to enable succession planning (e.g., Hollenbeck,
2009; Effron & Ort, 2010; Kotlyar, 2018; Thornton, Johnson, &
Church, 2017), a more holistic and strategic approach is one where
large pools of junior to mid‐level talent are reviewed and segmented
into those deemed to have greater stretch to future positions (i.e.,
high‐potentials) versus others who may be excellent performers but
not necessarily capable of delivering business results in successively
higher roles. Given the importance of this segmentation process, it is
critical that organizations be effective at differentiating talent to
ensure they make the right investment and promotional decisions
(Cappelli & Keller, 2014; Huselid & Becker, 2011; Kotlyar, 2018;
MacRae and Furnham, 2014; Scott, Church & McLellan, 2017; Silzer
& Church, 2010).
Historically, one of the primary data points that organizations use
for identifying and assigning high‐potential status in talent manage-
ment processes is current and past performance (Effron & Ort, 2010;
Finkelstein et al., 2015; McRae & Furnham, 2014; Silzer & Church,
2010; Wolf, 2004). Benchmark data from several studies suggests that
anywhere from 51% to 75% of organizations are using these individ-
ual performance metrics as key inputs into their talent segmentation
processes (Church, Rotolo, Ginther & Levine, 2015; Hagemann &
Mattone, 2011; Silzer & Church, 2010). This situation may be subop-
timal, however, given that past performance may predict future perfor-
mance in the same types of roles, but not necessarily the likelihood of
potential for effectiveness in future leadership roles with different job
demands (Church & Waclawski, 2010; Finkelstein et al., 2018).
As a response to the possible gap between past performance and
future potential, talent management systems have increasingly utilized
formal assessment as a means of identifying potential (Church &
Rotolo, 2013; De Kock, 2020; Paese et al., 2016; Scott & Reynolds,
2010; Silzer & Church, 2009; 2010). It has become evident in some
cases that data‐based approaches may have additional value and/or
lead to more nuanced insights and determinations of future capability
than internal performance ratings alone (Finkelstein et al., 2018; Scott
& Reynolds, 2010; Silzer and Borman, 2017). Yet, there is considerable
debate in the research and practice literature regarding the use of per-
formance in popular 9‐box frameworks at all without the use of addi-
tional instruments that measure latent characteristics for determining
internally designated high‐potential status (Church, 2019; Church &
Waclawski, 2010; Silzer & Church, 2009). Regardless, researchers
can at least agree that the concept of potential is far more complex
than performance alone (e.g., De Kock, 2020; Finkelstein et al., 2018).
The question for many leaders and human resource professionals
remains: what added value can formal assessments bring to the talent
review process? Even organizations that are using these tools for lead-
ership development may not be leveraging them as well as they could
be (Church et al., 2015; Day, 2000; Silzer & Dowell, 2010). For exam-
ple, Church et al., (2015) reported in their benchmark study that 23%
of large companies recognized for their talent development efforts had
inconsistent or reactive processes, and only 37% were using formal
assessment data to inform internal decision‐making efforts (despite
the fact that a vast majority indicated they had active talent assess-
ment programs in place). Similarly in a much broader study across
2,488 organizations conducted by the consulting firm DDI in partner-
ship with The Conference Board, 48% of respondents reported they do
not use the information from assessments and simulations to make
leadership promotion decisions (DDI, The Conference Board & EY,
2018).
Although there are many factors that can influence the use of for-
mal assessment data for high‐potential designations, promotions and
2
The Leadership Quarterly xxx (2021) 101516
succession planning decisions in practice settings (Church, 2014b;
2015), one of the primary reasons driving this uneven utilization
across organizations is a lack of empirical evidence for its success in
these particular areas (De Kock, 2020). Although benchmark studies
citing the value of these tools are available, limited empirical research
exists in large applied organizational settings that demonstrate the
unique contribution formal assessments can have on internal
decision‐making efforts from a high‐potential context (e.g., develop-
mental assignments and promotions). Relatedly, some researchers
(e.g., Day, 2000; Day & Dagoni, 2015) have called for more rigorous
scientific study regarding leadership development particularly in orga-
nizational settings.
The purpose of this research is to contribute to the leadership
development and high‐potential identification literature by examining
the use of formal assessment results in a global organizational setting
to inform the designation of high‐potential status above and beyond
individual performance measures. The paper begins with a short over-
view of the theory and measurement of leadership potential. This is
followed by results from an applied research case study based on the
Leadership Assessment and Development program (or “LeAD”) at Pep-
siCo, a global food and beverage consumer products organization.
Specifically, analyses are presented that examine the relationships
between performance and formal assessment results of future leader-
ship (what we will refer to as assessed) potential with internally
assigned (what we will refer to as designated) high‐potential status
and promotion rates following the talent review process. The paper
concludes with a discussion of implications for the use of assessments
in organizational talent management and leadership development pro-
grams and processes. Limitations and suggestions for future research
are also presented.
Introduction
As organizations strive for business success, one of the key compo-
nents and areas of focus is the state of the current and future leader-
ship population (Amagoh, 2009; Bass, 1990; Burke, 1982; Cappelli,
2008; Church, Del Giudice, & Margulies, 2017; Day & Dragoni,
2015; Eagly & Antonakis, 2015; Schein, 2016; Steele & Day, 2018).
Leaders set the strategic direction of an organization and make daily
decisions as to where, how and when to compete in their chosen mar-
ketplace. While the effectiveness of senior leaders can be measured
directly by the outcomes of the business itself, organizations need to
employ talent management as well as leadership development pro-
cesses and practices for lower level leaders to ensure there is a set of
ready successors and a pipeline of future talent with the potential to
ascend successfully to more senior roles. Focusing on leadership devel-
opment at earlier career stages is important because research has
demonstrated that individuals have different developmental trajecto-
ries as they progress over time (Day, et al., 2009). One core process
used by organizations to support the building of this pipeline is the
“talent review” wherein managers identify and discuss individuals
for enhanced developmental focus and resources, and make promotion
and placement decisions (Church & Waclawski, 2010; Collins, Mellahi,
& Cascio, 2017; Silzer & Dowel, 2010).
Given limited resources, however, not all individuals can be
equally developed, and managers must make decisions regarding
who will receive new development experiences, opportunities, and
promotions. Thus, central to the process of talent reviews is the iden-
tification of those individuals with significant leadership potential to
ascend to higher roles in the corporation. Although some authors have
cautioned against too narrow of a focus on high‐potentials at the exclu-
sion of a broader talent pool (e.g., Dweck, 2006; Groysberg, 2010), the
primary approach in most organizational settings is to identify and
accelerate the development of those individuals who possess the char-
acteristics that distinguish them from others and will enable them to
A.H. Church et al.
lead successfully at higher levels (Church et al., 2014; Day &
O’Connor, 2017; Effron & Ort, 2010; Paese et al., 2016; Silzer &
Church, 2010).
While this process has been a core component of many HR practices
for decades dating back to the 1980s (e.g., Pearson, 1987), as noted
earlier, benchmark research has shown that organizations are increas-
ingly focused on segmenting talent through differentiation into those
who have significant potential (i.e., designated as “high‐potentials”)
and those who may be great performers but lack advancement poten-
tial (e.g., Church & Rotolo, 2013; Church et al., 2015). If we believe
that having strong leaders is critical to the success of the business, then
the effectiveness of the differentiation and leadership development
processes will have a direct impact on the long‐term viability of the
corporation (Day & O’Connor, 2017).
Although most organizations engage in talent review processes
today, the approach taken can vary considerably both in the frame-
works and level of rigor applied (Church et al., 2015; Collins et al.,
2017; Effron & Ort, 2010; Silzer & Dowell, 2010). Further, as De Kock
(2020) has noted, much of the prior research in this area has conflated
certain predictors (or leading indicators) of potential with the out-
comes of having potential. For example, frequent promotions of talent
should not be considered an indicator of potential but rather an out-
come of having potential. Thus, a clear delineation of constructs is
needed for research purposes. One of the first key elements in the tal-
ent identification process is how an organization conceptually defines
and measures leadership potential (predictor). Another key element,
which directly ties to decision‐making, is the method by which poten-
tial is classified internally as part of the talent review (a process out-
come) and what happens to those individuals after (a business
outcome).
Defining leadership potential in organizations
Based on prior reviews of the literature regarding leadership poten-
tial (e.g., Finkelstein et al., 2018; Silzer & Borman, 2017; Silzer &
Church, 2009; Thornton et al., 2017), there are essentially two pri-
mary means for conceptualizing and measuring this construct in an
organizational setting (outside of contextual factors such as culture,
leader–follower dynamics etc.). The first is using individual outcome
metrics reflecting either past or current performance based on internal
measures such as those from an annual performance management pro-
cess (PMP). The second is using a more theoretically grounded frame-
work or compositive models which consider one or more latent
characteristics or abilities as indicators of future potential (e.g., De
Kock, 2020; Finkelstein et al., 2018; McRae & Furnham, 2014; Silzer
& Church, 2009). Each of these two approaches are described briefly
below.
Performance outcomes as a means of defining potential
As noted earlier, one of the primary data points that organizations
use for identifying and assigning high‐potential status in talent man-
agement processes is past performance (De Kock, 2020; Effron &
Ort, 2010; Finkelstein, 2015; McRae & Furnham, 2014; Paese et al.,
2016; Ruddy & Anand, 2010; Silzer & Church, 2010). Almost all com-
prehensive models of leadership potential include performance as
some type of indicator, even if it represents more of a moderator or
gatekeeper variable (i.e., a certain threshold of performance is
required to be considered a high‐potential) rather than a primary iden-
tification factor. Moreover, historically (before the increasing use of
formal assessment tools) performance was one of the sole metrics
available to organizations for making decisions (Church & Rotolo,
2013).
Despite the seemingly obvious relevance and prevalence of using
performance ratings for high‐potential identification, there are inher-
3
The Leadership Quarterly xxx (2021) 101516
ent conceptual issues. Lawler (2017) argues, for example, that past
performance is the best predictor of future performance, specifically
when the environment and work are similar. As Finklestein et al.,
(2015), Silzer and Church (2009), and others have noted, however,
the construct of potential within organizations is specifically focused
on potential to perform at higher levels in an organization with greater
levels of accountability. Clearly, when considering individuals for pro-
motions, the environment, relationships required and the work they
will engage in is likely to be significantly different from their present
job demands (Day & O’Connor, 2017). Thus, by its nature, current per-
formance may not be the best predictor of future performance at
higher levels in more complex roles (i.e., potential) nor should it be
considered as the primary measure (Church, 2015; 2018; De Kock,
2020; Finkelstein et al., 2018).
Independent of the conceptual issues surrounding performance as
an indicator of potential, there is a clear practical issue as well. While
performance management is arguably one of the most important ele-
ments of a comprehensive talent management system, it is also prone
to many measurement challenges (Adler et al., 2016; Borman, 1991;
Buckingham & Goodall, 2015; DeNisi & Murphy, 2017; DeNisi &
Williams, 1988; Dokko & Jiang, 2017; Effron & Ort, 2010; Landy &
Farr, 1980; Lawler, 2017; Pulakos, Hanson, Arad & Moye, 2015;
Smither & London, 2009; Viswesvaran, Schmidt, & Ones, 1996;
Zalesny & Highhouse, 1992). These include questions regarding the
portability of individual performance in general, judgment issues
and biases inherent in the determination of performance outcomes,
and rating effects (e.g., halo, restricted range, misuse of the scale to
influence compensation impact) in organizations that use formal per-
formance ratings (which remain the majority of companies today –
see 2015;; Pulakos et al., 2015). Although there are a number of tactics
that organizations can deploy to improve the performance rating pro-
cess such as using management by objectives or goal attainment frame-
works, more frequent review cycles, inputs from multiple sources and
methodologies (e.g., upward feedback, crowdsourcing), formal rater
training, and post‐performance calibration against peers (e.g.,
Bracken & Church, 2013; Campion, Campion, & Campion, 2015;
Effron & Ort, 2010; Lawler, 2017; Pulakos et al., 2015; Woehr &
Huffcutt, 1994), the final “rating” of performance as captured in
human resource system of record is highly likely to reflect more vari-
ables than just individual business contributions in isolation (Bentz,
1990; Cavazotte, Moreno & Hickmann, 2012; Minbashian, 2017;
Smither & London, 2009). In some organizations, for example, the per-
formance outcome also includes elements of team performance, busi-
ness unit performance and may even be subject to forced
performance curves in order to ensure appropriate merit and bonus
budgets in a given year (Church, Ginther, Levine & Rotolo, 2015).
Given these factors, while past and current performance is still
important to consider when reviewing talent for high‐potential desig-
nation, it should not be the sole determinant. A more holistic approach
using additional measures of skills and capabilities is therefore recom-
mended by researchers, as well as internal practitioners and leadership
consultants when making high‐potential talent designations (e.g.,
Church, 2015; Day & Dragoni, 2015; Day & O’Connor, 2017; De Kock,
2020; Finkelstein, 2015; Effron & Ort, 2010; Paese, et al., 2016; Silzer
& Church, 2009)
Conceptual frameworks measured via formal assessments as a
means of defining potential
Over the past 10–15 years, the concept of future potential has
become a focus area for theory and research (De Kock, 2020;
Finkelstein et al., 2018; Silzer & Church, 2009; 2010). While the con-
cept of “leadership stretch” has been part of talent review processes for
decades (e.g., Pearson, 1987), formal research on the topic has lagged
behind other elements of leadership theory. Although the use of assess-
A.H. Church et al.
ment centers for measuring potential in name date back to the 1960s at
AT&T (Bray & Grant, 1966), the first true studies of the contemporary
construct of future success date back to the 1980s. One of these studies
was the influential research program conducted with the Center for
Creative Leadership (McCall, Lombardo & Morrison, 1988;
Lombardo & Eichinger, 2000; McCauley & McCall, 2014). That
research identified the ability to learn from experiences as a key factor
(and capability) in leadership success and progression. This concept
has since evolved into a construct termed “learning agility” by some
authors (e.g., De Meuse, 2017; Hoff & Burke, 2017), and remains
one of the more popular topics in practice today although often
debated as to its definitional boundaries and the complementary role
of context in organizational settings (e.g., Day & Dragoni, 2015;
Rotolo et al., 2018; Spreitzer, et al., 1997).
More recently, broader frameworks of leadership potential have
been introduced in both the research and applied (often consulting) lit-
erature. These frameworks incorporate a number of different types of
psychological and behavioral constructs that in combination improve
our understanding of leaders’ abilities to progress in their careers. As
noted above, these include the Leadership Potential BluePrint
(Church et al., 2014; McRae & Furnham, 2014; Silzer & Church,
2009), Success Profiles (e.g., Paese, et al., 2016) and other composite
models (e.g., De Kock, 2020; Finkelstein et al., 2018) which consider
one or more latent characteristics or abilities as indicators of future
potential. While the degree of emphasis and naming conventions may
differ1, most of these theoretical frameworks include factors such as:
- cognitive skills (e.g., strategic thinking, pattern recognition)
- personality disposition (e.g., interpersonal skills, conscientious-
ness)
- motivational elements (e.g., stamina, drive, career orientation)
- growth and learning (e.g., learning agility, growth mindset, emo-
tional intelligence)
- specific leadership skills (e.g., collaboration, transformational
styles)
- specific functional skills (e.g., digital, analytics)
In combination, these factors have proven critical to identifying
potential for success at higher levels; unlike approaches that solely
use performance to forecast potential, these composite frameworks
provide additional, more nuanced lenses through which talent can
be viewed. It is important to note that most of these characteristics
have been identified as components of successful leadership in general
(e.g., Day et al., 2009) which supports the need to consider them more
broadly in talent reviews, leadership development efforts, and
decision‐making.
Classifying leadership potential in organizations
When it comes to segmenting talent, the most commonly used pro-
cedure is to include managers in some form of talent review process
where individuals’ strengths and opportunities are discussed at length
(Church & Waclawski, 2010; Conger & Church, 2018a; Effron & Ort,
2010; Hunter, 2004; Ruddy & Anand, 2010; Silzer & Church, 2010).
The outcome of these discussions is often a formal determination of
each individual’s future potential in that organizational context.
Because this approach yields a high‐potential talent designation which
is based on a variety of inputs and reflects solely that organization’s
aligned view, for the purposes of this paper we have termed this as des-
ignated potential. Once identified in a talent management process, indi-
viduals who have designated potential receive a significantly greater
1
We recognize that the skills and abilities listed as examples are not all equally
grounded in theory and research but are provided for illustrative purposes as they are
often used in practice
4
The Leadership Quarterly xxx (2021) 101516
percentage of developmental opportunities. These opportunities often
include individual coaching and mentoring with senior leaders, partic-
ipation in bespoke leadership programs and action learning projects,
and promotions into higher positions with greater leadership strategic
responsibilities in the organization (Conger & Church, 2018a; Day,
2000; Day & O’Connor, 2017; McHenry & Church, 2018; Silzer &
Dowell, 2010).
Designated potential is distinctly different from evaluations of
potential as inferred from individual performance metrics or deter-
mined via formal assessment results, which we will refer to as assessed
potential. Even when these types of data points derived from assess-
ments are considered, designated potential is what is used for subse-
quent decision‐making including the assignment of new
opportunities and promotions to higher levels. Typically, organiza-
tions use specific language to reflect designated potential, which
include terms such as “high‐potential”, “future leader”, “top potential”
or even more elaborate terms such as “shining stars”, “crown jewels”
or “corporate assets” among others (e.g., Effron & Ort, 2010; Naku,
2004; Silzer & Church, 2010; Robinson, 2016; Ruddy & Anand,
2010). In contrast, those not deemed as such by the senior leaders par-
ticipating in talent reviews are given internal classifications such as
“key contributor,” “solid citizen”, “steady performers” or “develop in
place” (e.g., Church & Waclawski, 2010; Conger & Church, 2018a;
Rosen & Wilson, 2004). The focus of this paper is on the former cate-
gory, and the ways in which performance and assessment data are
used to influence the determination as to whether an individual has
designated potential (i.e., a high‐potential in the organization) or not.
Research hypotheses
Given the importance of talent management and succession plan-
ning efforts, and the level of effort and resources that are dedicated
to the differentiation of talent, one fundamental question that is often
asked in organizational settings is whether the effort is really worth
the energy required. That is, does being identified internally as a
high‐potential (designated potential) lead to greater promotional
opportunities? Related to this question is whether performance ratings
and/or assessment results add value to the identification process, and
whether they capture essentially the same underlying constructs or tap
elements that are unique from one another.
In order to examine these relationships, we engaged in the follow-
ing applied case study analyses using data obtained from an internal
talent management process where performance and formal assessment
data (based on the Leadership Potential BluePrint – see Church & Sil-
zer, 2015; Silzer & Church, 2009) are used when discussing talent with
senior leaders on an ongoing basis. Specifically, we propose the
following:
The intent of a talent management or formal talent segmentation
process is to identify those individuals with the highest potential
and to make informed talent decisions (e.g., assignments and promo-
tions) based on an aligned organizational point‐of‐view on future
capability (i.e., designated potential). Therefore, those who have been
officially classified as high‐potentials in an organization should be
more likely to receive promotional opportunities compared with
others. Without this basic link between designated potential and
actual advancement within the organization, regardless of the accu-
racy of the designation, the fundamental process of talent segmenta-
tion has no discernable impact whatsoever. This relationship would
support the use of talent reviews and high‐potential designations in
general and support additional examination into what is used to derive
the aligned talent call.
H1. There will be a significant positive relationship between orga-
nizationally designated potential (i.e., a high‐potential classifica-
tion following a talent review process) and the promotion of
talent into higher levels in an organizational hierarchy.
A.H. Church et al. The Leadership Quarterly xxx (2021) 101516

Next, we turn to the indicators of designated potential. Based on Pipeline (Charan, Drotter & Noel, 2001) which focuses on the impor-
the discussion above we propose that, as organizationally designated tance of considering different requirements at key stages or leadership
potential is a critical input into talent decisions, by implication it is transition points in a person’s career. In the context of LeAD, this
important for researchers and practitioners to understand which reflects a shifting emphasis from the identification of broad‐based
data‐based measures (if any) are most positively related to this process potential in early career stages to the refinement of “potential for
outcome. Given the two types of indicators of potential commonly what” (Church et al., 2014) at the more senior tiers. The third con-
used (i.e., performance and formal assessments of leadership potential struct is PepsiCo’s internally developed Leadership Excellence Frame-
characteristics) in talent review programs we propose that these two work (LEF), which outlines the future focused competencies and
indicators, while correlated, will not reflect overlapping constructs. behaviors needed for success at different job levels in the hierarchy.
We argue that performance will have some significant relationship The LEF was based on a combination of inputs from internal research,
with assessed potential because the typical validation process for employee feedback, senior stakeholder interviews and various external
assessment‐based tools generally uses future performance as a crite- perspectives including strategic insights from the board of directors
rion, therefore some relationship should exist between the two. A find- given their unique perspective and role in selecting future CEOs
ing of this nature would provide support for the argument that these (Charan, Carey, & Useem, 2014) and external thought leaders. The
two types of inputs are not interchangeable but rather complementary LEF is used primarily to ensure that all program feedback is positioned
and should be used in talent reviews together as inputs as some have in a way that is actionable for development (using the language of
suggested (Church, 2018; Silzer & Church, 2010). competencies rather than traits), and reflective of language and focus
of the organization from a capability perspective (Church, 2019b).
H2. Individual performance and theoretical derived assessment‐
By combining these three constructs in a single multi‐tier assess-
based indicators of potential (assessed potential) are distinct mea-
ment and development system, the organization has taken a firm posi-
sures reflecting different constructs and therefore will reflect only
tion on the critical nature of using validated measures to identify and
a small significant relationship to one another.
enhance leadership potential. Moreover, because LeAD was developed
In order to provide additional support for the use of assessments by a group of internal I‐O psychologists, the assessment process is
(and to isolate their unique contribution to the designated potential based on a multi‐trait multi‐method (MTMM) approach and has been
and promotion process) we further hypothesize the following: empirically validated internally to predict success at two or more
Taken together, if the argument is to be made that the assessment levels up from the levels of those taking the appropriate suite of tools.
of leadership potential adds value above and beyond performance The program has been empirically determined to be bias free and
(even if they are correlated to a minor extent), then both measures yields no adverse impact across gender or ethnicity and is continuously
should contribute uniquely to the key outcomes of a talent manage- monitored to ensure this remains true.
ment process: the designated potential classification (a process out- Today, LeAD is employed at four levels in the organization and by
come) and promotion of key talent (a decision outcome). Finally, the the end of 2020, over 11,200 employees have participated in the pro-
relationship between how an organization views its talent and what gram—including the top 200 executives and the senior most executive
happens to those individuals over time should be a key indicator of committee members (i.e., the c‐suite) prior to taking on their current
process effectiveness or impact (Church, 2014b), barring other contex- roles. Table 1 provides brief overview of the components of the assess-
tual factors as described earlier. The next section provides an overview ment process and the primary purpose of the program at each level.
of the organizational case application used to examine these research Given that the research hypotheses identified in this paper reflect
hypotheses. an emphasis on determining the relationship between performance
ratings, assessed potential, designated potential, and promotions, a siz-
H3. Assessed potential will add unique information above and able research pool with a consistent set of data points is required to
beyond performance alone in determining organizationally desig- make any credible inferences. Consequently, the data analyses and
nated potential following a talent review process. results to be presented in this paper focus solely on the early career
H4. Assessed potential will add unique information above and
beyond performance alone in predicting promotion rates following
a talent review process. Table 1
Overview of Leadership Assessment and Development Program (LeAD) at
PepsiCo.
Methodology Program Target Purpose of Multi-Trait Multi-Method
Population Program Assessment Suite Used
Level
The data analyses and results to be presented in this paper were col-
lected as part of a larger ongoing assessment and development pro- Senior Leader Top 200 Shape and One-on-One:
gram at PepsiCo called LeAD (Leadership Assessment and Development (Pres/SVP) Refine Behavioral interview,
Development). PepsiCo is a publicly traded global consumer products Center Executive 360, Hogan
(SLDC) assessment, Custom strategy
organization with over 65 billion dollars in revenue, operations in over simulation
200 countries and approximately 250,000 employees. Advanced VPs / Senior Confirm and Assessment Center:
Given the complexities involved in managing talent and developing Leader Directors Develop In-person simulations,
leaders across such a large and complex organization, the LeAD pro- Development behavioral interview,
Center psychometrics (Hogan,
gram was conceived as way to bring greater rigor and data‐driven
(ALDC) Ravens), and career aspirations
insights to the identification and development of future leaders for Emerging Managers / Verify and Web-Based:
the company globally. Although elements of the program have been Leader Directors Stretch Virtual simulation,
described in detail elsewhere (e.g., Church, 2019b; Church et al., Development psychometric assessments
2017; Church & Rotolo, 2015), at a basic level it is grounded in lead- Center (Hogan, Ravens), and career
(ELDC) aspirations
ership and organizational theory reflecting three distinct constructs. Potential Leader Associate Identify and Web-Based:
The first is the Leadership Potential BluePrint (Church et al., 2014; Development Managers / Differentiate Psychometric assessments
Silzer & Church, 2009) which describes the critical building blocks Center Senior (OPQ, Ravens), biodata, P-O fit,
of potential based a comprehensive review of the academic and (PLDC) Analysts career aspirations, performance
criteria
applied literature spanning 50 years. The second is the Leadership

5
A.H. Church et al.
version of the program where 80% of the assessments have been con-
ducted due to scale of the participant population—the Potential Leader
Development Center (PLDC). This program was selected for this
research for four principal reasons:
(1) it represents by far the largest participant pool thus ensuring
greater variability and power to detect effects,
(2) it is the least prone to social systems (Katz & Kahn, 1978) and
political influences (Pfeffer, 1992) that factor into more senior
level assignments of potential and promotions internally (i.e.,
the higher‐level programs reflect more fluidity given greater
knowledge of each candidate being reviewed),
(3) it is focused primarily on the identification of future leadership
potential using the assessment suite versus the higher‐level pro-
grams where alignment and calibration efforts are used to con-
firm perceptions of potential or identify possible mismatches,
(4) it has not been modified since its original rollout in 2015,
enabling a consistent set of data for analysis purposes.
Additional details regarding the operation of the PLDC program are
provided in Appendix A.
Sample
The sample consisted of 9,784 PepsiCo associates who had partici-
pated in LeAD via the PLDC program at the senior analyst/associate
manager level between the years of 2015 through 2019. This sample
represents a global population across 42 countries2, with 44% male
and 56% female, an average participant age of 37 (SD = 6.56) and an
average organizational tenure of 8.5 years (SD = 7.97).
Measures
For analysis purposes, two predictor variables were used. The first
consisted of a two‐year blended average of annual performance ratings
given by participants’ managers prior to their participation in the LeAD
program. These ratings represent the official measure of individual
performance using the organization’s standard dual ratings perfor-
mance management process (PMP) which is based on a management
by objectives framework (for more information on PepsiCo’s process
see Bracken & Church, 2013; Church, Rotolo, Shull & Tuller, 2014;
Corporate Leadership Council, 2005). The ratings data were obtained
directly from the HR information system and are considered the offi-
cial system of record for performance by the organization.
The second predictor variable represents assessed potential derived
from the integrated suite of PLDC assessments, known as a LIFT score
(also referred to as an assessment index). LIFT reflects an ordinal cat-
egory outcome based on a combination of assessment scores. It is iden-
tified for participants, managers and human resources professionals as
consisting of one of four ranges (some, moderate, great, very great).
These ranges resemble quartiles, but have a more normal distribution
(i.e., approximately 17% in each the highest and lowest range, and
33% in each of the two middle ranges). Each of these ranges represents
a mathematically derived higher level leadership capability (i.e.,
assessed potential) based on the raw‐scored assessment results. The
LIFT score is generated by an empirically validated algorithm with
no adverse impact by gender or ethnicity following the completion
of the full suite of tools (i.e., cognitive, personality, SJT, and Biodata).
This score statistically predicts successful performance at two levels
2
All content associated with the PLDC program has been translated into 11 languages,
allowing associates around the world to participate in their native language. This also
removes any impact a language barrier might have had on the results.
6
The Leadership Quarterly xxx (2021) 101516
higher than the participant being assessed. Assessment results and
the LIFT score itself are fully transparent and shared with the partici-
pant, his/her manager, the local HR business partners, and the talent
management organization (Church & Rotolo, 2015). It is important
to note that because the LIFT score is ordinal and predictive in nature
the placement of an individual participant in each successive category
is treated as significantly stronger than the one below it (e.g., “great” is
a more positive scoring category than “moderate” and treated as such
by the organization; “very great” is significantly more predictive than
“some” etc.).
Talent management outcome variables were measured by two bin-
ary variables: (a) whether a promotion to a higher leveled position
occurred within two years post‐LeAD participation (1 = yes,
0 = no), and (b) whether the participant was officially classified or
designated as a high‐potential in the HR information system of record
after completing the LeAD program (1 = yes, 0 = no). The latter
would reflect the designated potential on that individual’s future lead-
ership potential post a talent discussion and review process (Church &
Waclawski, 2010). Although over 9,000 associates were in the com-
plete dataset, only individuals with relevant data were used in each
of the analysis. For example, when considering promotions within
2 years of LeAD participation, any participant who had not yet had
2 years (from the most recent year in the data set) to receive a promo-
tion was left out of the analysis, regardless of whether they had
received a promotion or not. This screening prevents a possible sup-
pression of the relationship between LIFT and promotion since it is
realistic that a promotion may be decided at one point, but not neces-
sarily enacted until many months afterwards. Similarly, only associates
with a confirmed high‐potential (or not) status post‐PLDC were consid-
ered when examining talent designations. This was to prevent any con-
tamination of those whose talent calls were set prior to being assessed
and simply had not had a talent call adjustment made3. Based on dec-
ades of applied experience with talent management reviews, the prior
designated potential may or may not be consistent with the assessed
potential (i.e., LIFT score) or prior performance records depending on
the context, managers providing ratings, broader business results, etc.
Detailed variable descriptions are presented in Table 2 and summary
information is presented in Table 3.
In addition to basic variable relationships, a predictive model was
developed to test the research hypotheses holistically (see Fig. 1).
Based on the model, it is expected that certain variables collected at
one point in time (i.e., past performance and assessed potential) will
predict outcomes measured at a later point in time (i.e., designated
potential and likelihood of promotion). Because the research outcomes
involve binary grouping variables—either one is or is not identified as
a high‐potential, and either one is or one is not promoted—the statis-
tical approach employed was binary logistic regression. 4
3
PepsiCo typically sets “talent calls” (e.g., high‐potential status) once a year, but this
can vary by person or level (see Church & Waclawski, 2010 for more on the talent
management process). However, it is typical that someone designated as a high‐potential
in year x would receive “confirmation” designations in year x+1, X+2, etc. even if the
high‐potential status has remained unchanged.
4
A multi‐level modeling approach using region was explored but ultimately deemed
inappropriate for this analysis.PepsiCo’s culture is strong across the organization and our
selection programs are standardized, validated, and centrally managed. Arguably, there is
less variance among PepsiCo’s global employees than a random sampling of people from
those same regions. Regardless, a multi‐level model was tested for both promotions and
High Potential confirmation following participation in the LeAD program. Participant
regions (e.g., US/Canada, Europe West, Asia Pacific) were used to test level 2 effects for
both target variables using the SPSS Generalized Linear Mixed Model function, which
allows for multi‐level modeling of binomial logistic regression models with nested data. As
a first step, an intercept‐only model was tested. Random effect intercept variance was non‐
significant for both Promotions (σ2=0.151, p = .063) and HiPo designation (σ2=0.066,
p=.072). ICC for Promotions was 0.043, and 0.020 for HiPo designation, both below the
recommended 0.05 conventional threshold indicating evidence of clustering. Taken
together, a multi‐level model is not appropriate for our analysis, and the single level model
will be retained.
A.H. Church et al. The Leadership Quarterly xxx (2021) 101516

Table 2 ignated potential and promotion rate). These variables were

Variable descriptions. significantly correlated (r = .31, p < .01), confirming the positive
Variable Description relationship between designated potential and promotion, and sup-
porting Hypothesis 1.
Performance Calculated by averaging performance rating scores assigned at
Hypothesis 2 stated that individual performance and assessed
end of calendar year. Scores are on a 5-point scale (1 low, 5 high)
across two different indicators. Therefore, each associate has 2 potential (i.e., LIFT) are distinct constructs are therefore likely to show
performance ratings per year, which we have combined and only a small correlation between them. The observed correlation
averaged across the two years prior to LeAD participation to between assessed potential and performance was statistically signifi-
create a single performance indicator. cant but low relative to other correlations seen in the data (ρ = .18,
Assessed Integrated, overall score across the four LeAD assessments:
Potential cognitive ability, personality, biodata, and a Situational
p < .01). Thus, the limited strength of the observed relationship
Judgment Test. Individual assessment scores are weighted and between these two variables—while lacking the ability to clearly
combined based on our internal validation work, resulting in a disentangle the two measures—does provide basic support for
banded outcome (LIFT score – some, moderate, great or very Hypothesis 2.
great) that is designed to predict performance two levels higher.
Hypothesis 3 and Hypothesis 4 focused on what level of contribu-
Designated Binary variable indicating whether an associate was formally
Potential tagged in our HCM platform as being a high-potential (1) or not tion, if any, assessed potential provides above and beyond perfor-
(0) after completing the LeAD program. To accommodate a mance in predicting the two talent management outcome variables
predictive model, only High-potential Identification occurring (designated potential and promotion respectively). To understand
after LeAD participation is considered (n = 7320) how both performance and assessed potential (i.e., LIFT score) were
Promotion Binary variable indicating whether an associate was promoted
contributing uniquely to the designated potential classification post
(1) or not (0) at any point within 2 years following their LeAD
participation. Any participant who has not yet had 2 years to talent reviews, three binary logistic regression models were compared
receive a promotion was left out of the analysis, regardless of for each hypothesis. Model 3a examines the ability of performance
whether they had received a promotion or not. alone to predict designated potential, Model 3b considers only
assessed potential in predicting high‐potential designation, and Model
3c considers both variables together. Models 4a, 4b, and 4c follow a
Table 3 similar progression using promotions post the assessment process as
Category totals for non-continuous variables. the key outcome. Model 3a, 3b and 3c comparison statistics are pre-
Variable Count Percent sented in Table 5, and full final model statistics are presented in
Table 6.
Assessed Potential (i.e., LIFT score)
Overall, the results indicated that a model including both past per-
Some 1601 16.4%
Moderate 3180 32.5% formance and assessment results for predicting designated potential fit
Great 3282 33.5% the data best (chi‐squared = 1055.05, p < .01), and showed the most
Very Great 1721 17.6% accurate predictive performance by incorporating both variables with
Performance (See Table 4) N/A N/A a 73.4% success rate. Pseudo‐R squared (Nagelkerke, 1991), which is
Promotion
Promotion within 2 years post-LeAD 2716 27.8%
conceptually similar to typical R2 calculated in ordinary least squares
No Promotion within 2 years post-LeAD 5627 57.5% regression, also showed an increase in overall variance accounted for
N/A 1441 14.7% by including both variables (.20) versus performance (.11) or assessed
Designated Potential (i.e., high-potential status) potential (.12) alone. This result indicates each variable is contributing
High-potential 2840 29%
something unique to the model, supporting Hypothesis 3, and adds
Non-High-potential 6944 71%
further evidence that performance and potential are independent con-
structs, supporting Hypothesis 2.
A similar analysis was used to understand the influence of perfor-
Results mance and potential on promotions. Models with only past perfor-
mance (Model 4a) and assessed potential (Model 4b) were compared
Descriptive information for study variables is provided in Table 4. against a model considering both inputs (Model 4c) in predicting
Final estimates for all model statistics are presented in Fig. 1. Note that whether a promotion occurred within two years following LeAD par-
because we are examining four specific datapoints (designated poten- ticipation. Key model comparison statistics are presented in Table 7,
tial, assessed potential, promotion, and performance) rather than using and full final model statistics are presented in Table 8.
latent variables representing these constructs, we are unable to assess Results showed that although assessed potential was significantly
fit of the entire model as it is just‐identified, resulting in an equal num- correlated with promotion, the regression model (Model 4b) was not
ber of observations and parameter estimates (i.e., 0 degrees of free- able to achieve good fit for the data (HL Chi‐Squared = 9.20,
dom) (Ullman & Bentler, 2003). p < .01), with the resulting model sorting all participants into the
Hypothesis 1 stated that there will be a significant positive relation- non‐promotion group. Caution should be used in interpreting any
ship between the two talent management outcome variables (i.e., des- other results of this model (e.g., percent correct, pseudo‐R square).

Fig. 1. Predictive model outlining all expected relationships within our data. For ease of interpretation, Fig. 1 path values are presented as Exp(B), or the odds
ratio obtained from independent logistic regressions. All Exp(B) in the model were significant, with the 95% CI not including zero. Additional path variables can be
found in Table 6 and Table 8.

7
A.H. Church et al. The Leadership Quarterly xxx (2021) 101516

Table 4
Means, SD, and correlations.

Variable Mean SD N Assessed Potential Performance Promotion Designated Potential

Assessed Potential 2.52 .96 9784 1

Performance 3.43 .36 9348 .182** (ρ) 1
Promotion1 .33 .47 8343 .166** (ρ) .188** (r) 1
Designated Potential2 .31 .46 7320 .298** (ρ) .280** (r) .310** (r) 1
1
Coded as 1 = Yes, 0 = No for promotion within 2 years of LeAD.
2
Coded as 1 = Yes, 0 = No for high-potential designation.

Table 5 past performance and assessed potential such as PepsiCo’s LIFT score
Model comparison with Designated Potential as outcome. are unique yet related constructs that can provide complimentary
Model 3a Model 3b Model 3c
information for making talent management decisions. Finally, the
(Performance) (Assessment) (Both) study was focused on demonstrating the impact that a fully integrated
leadership assessment and development program such as LeAD can
Model Chi-Squared 573.146** 642.020** 1055.046**
Nagelkerke (pseudo) R .111 .123 .197
have in a large global organization.
Square Overall, given the debate in practice regarding how potential
Model Testing should be determined and the current use of performance as a primary
Percent Correct (non-High- 93.2% 88.8% 90.9% indicator based on benchmark research, the results from this study
potential)
support the argument that while performance plays a “gatekeeper”
Percent Correct (High- 20.5% 30.8% 34.3%
potential) role (i.e., necessary but not sufficient) in determining talent manage-
Overall Percentage 70.7% 70.9% 73.4% ment related outcomes, the formal assessment of potential via a
Performance (B, Odds 1.893**, 6.638 N/A 1.689**, multi‐trait, multi‐method (MTMM) approach does contribute unique
Ratioa) 5.413 variance to the determination of potential as well as the likelihood
Assessed Potential (B, Odds N/A .728**, 2.072 .659**,
Ratioa) 1.933
of an individual being promoted. In other words, as stated in Hypothe-
ses 1–4, while performance and assessed potential relate to one
N = 7,007. another, both variables together are useful in determining the overall
**p < .01. picture of how individuals are ultimately classified in a talent manage-
a
Within logistic regression, the odds ratio can be interpreted as the increase in ment system, and who actually gets promoted. This is consistent with
likelihood of being included in the outcome group based on a one unit
the underlying theory of the Leadership Potential BluePrint (Church
increase in the predictor; a potential odds ratio of 2 means the odds of High-
et al., 2014; Silzer & Church, 2009) and supports the use of assessment
potential Identification are twice as likely for each 1-unit increase in potential
score. methodology in organizational settings (Church & Rotolo, 2013; Scott
& Reynolds, 2010). It also lends further credibility to the argument
that any 9‐box application (e.g., Effron & Ort, 2010; Silzer & Dowell,
Conversely, although performance alone was a good predictor of not 2010) should rely on potential via an assessment approach rather than
being promoted (Model 4a), including assessed potential (i.e., the LIFT solely using an internally aligned high‐potential designation as one of
score) in the model provided a better fit to the data and increased the the axes. As Church (2018) has suggested the use of both performance
ability to accurately predict whether a promotion occurred at all. and assessed potential will likely yield a superior classification
Therefore, in terms of whether an associate receives a promotion, both approach than more purely judgment‐based frameworks.
past performance and assessed potential provide unique information
and together create the best fitting Model 4c (Chi‐Squared = 442.67
, p < .01), which supports Hypothesis 4 and again provides additional Designated potential is an important outcome in and of itself
support for Hypothesis 2.
While many researchers have approached designated potential as
an input variable into their thinking, the data from this study suggests
Discussion that it might be useful for researchers and practitioners to consider the
high‐potential designation as more of an outcome instead, since the
The purpose of this research was three‐fold. First, the intent was to construct reflects multiple inputs, and an aligned judgment call
contribute to the leadership development and high‐potential identifi- grounded in situational and organizational context (Day & O’Connor,
cation literature by identifying and filling significant knowledge gaps 2017). In well‐structured talent management systems, high‐potential
associated with the measurement and use of leadership potential for designation, or “talent call” in general (Church & Waclawski 2010),
talent management efforts (e.g., reviews, calibrating classification, is an efficient way to integrate multiple data‐points and ultimately dis-
promotions, succession planning, etc.) above and beyond using perfor- cuss, develop and make informed decisions. From this perspective it is
mance measures alone. Next, the paper set out to test the theory that helpful to differentiate between the two approaches to understand

Table 6
Designated potential model test statistics.

95% C.I. for Exp(B)

B S.E. Wald df Sig. Exp(B) Lower Upper

Performance 1.689 .087 377.703 1 .000 5.413 4.565 6.418

Assessed Potential .659 .031 440.759 1 .000 1.933 1.818 2.056
Constant −8.445 .316 715.734 1 .000 .000

N = 7007.

8
A.H. Church et al. The Leadership Quarterly xxx (2021) 101516

Table 7 capabilities that would be critical for success one level up from their
Model comparison with promotion as outcome. current role. In reviewing their annual performance, a manager may
Model 4a Model 4b Model 4c make the promotion decision based on their current contributions
(Performance) (Assessment) (both) rather than their future potential. Thus, despite demonstrating a capa-
bility for advancement on the job such performance would not neces-
Model Chi-Squared 285.819** 231.642** 442.667**
Nagelkerke R Square .049 .040 .076 sarily merit a high‐potential designation despite being indicative of
Model Testing promotability. In effect this becomes the classic “B‐player with stretch”
Percent Correct (No 98.6% 100.00% 94.8% situation (Conger & Church, 2018b; Delong & Vijayaraghavan, 2003)
Promo) or simply someone who is promotable but not a high‐potential for sig-
Percent Correct (Promo) 3.5% 0% 13.2%
Overall Percentage 67.2% 66.9% 67.8%
nificantly more senior roles. In other cases, the individual may have
Performance (B, Odds 1.187**, 3.728 N/A 1.046**, been designated as a high‐potential in the past but perceptions may
Ratioa) 2.846 have changed for a variety of reasons (Robinson, 2016). Taken
Assessed Potential (B, N/A .384, 1.468 .325**, together, it is reasonable to expect some disconnect between desig-
Odds Ratioa) 1.385
nated potential and promotions, though broadly speaking, the rela-
N = 7,927 tionship clearly exists.
**p < .01 It is a possibility that at higher levels within the organization (e.g.,
^
Model failed Hosmer Lemeshow Test (Chi Square = 9.161, p < .01); results directors and vice‐presidents) there is a much stronger correlation
should be interpreted with caution between designated potential and key outcomes such as promotion
a
Within logistic regression, the odds ratio can be interpreted as the increase in rates and future performance at higher levels, although the influence
likelihood of being included in the outcome group based on a one unit of politics, cultural factors and broader sponsorship are also more sig-
increase in the predictor.
nificant factors (Conger & Church, 2018a). This is an area where future
research should be directed.
potential as assessed potential which uses data and is most likely a pre-
cursor (or should be) to designated potential which is a subjective
determination in that organizational context. Performance and assessed potential are unique elements
At PepsiCo, for example, the organization has always maintained
that assessed potential should be used as a data point, not the data Although the natural tendency in practice based on benchmark
point, when it comes to aligning on designated potential (Oliver, data and general management rhetoric is to assume that past perfor-
Church, Lewis, & Desrosiers, 2009). But the fundamental purpose mance drives future potential, based on the results of this study they
behind talent segmentation through high‐potential identification is do appear to represent unique but related constructs as stated in
to focus on individuals who will eventually move into more senior Hypothesis 2. It is important to note that while the performance
roles, with greater responsibility for the continued growth and success requirement for participation in the LeAD PLDC program (i.e., average
of the business. In a sense, being designated a high‐potential is effec- or better performance prior to identification) may have restricted the
tively saying the organization is interested in accelerating that person’s range seen in the performance data that was used in the analysis,
development and moving that person through the ranks. It is synony- which in turn would likely decrease the correlation with the assessed
mous with access to additional attention and resources designed potential, the predicted low correlation observed does support the
specifically to ensure he or she is capable of being successful in the overall position and theoretical basis of what the variables measure
future (Conger & Church, 2018a; Day & O’Connor, 2017). If no rela- indecently. The assessments used in the PLDC program were selected
tionship was found in this study between designated potential and pro- specifically because they measure elements of the BluePrint that are
motional outcomes, then the organization runs the risk of having important for success at the senior manager/junior executive level re-
underdeveloped talent being placed in (and potential blocking) critical gardless of what elements are required for success at a participant’s cur-
roles. To this end, a relatively higher correlation between designated rent level.
potential and promotion was hypothesized (Hypothesis 1), which Conversely, performance scores given by managers are driven by
was supported in the data. meeting or exceeding various objectives that are set earlier in the cal-
One question that could be asked is why is the relationship between endar year. There are several elements that could influence perfor-
designated potential and promotion rates not even higher? For the mance ratings, some of which are beyond the associate’s control. For
LeAD population included in this study (e.g., associate managers and example, many roles within the current organizational setting have
managers via the PLDC process), there are a number of mitigating fac- revenue targets that could be influenced by broader, global economic
tors that can influence promotion rates beyond just potential. First, factors. Missing targets, while not explicitly the fault of the individual,
based on the overall structure of the organization and the types of roles may still be reflected in overall performance ratings assigned. Simi-
that exist for this junior population, it is entirely possible that an asso- larly, because performance ratings are ultimately decided by man-
ciate’s assessed potential could indicate lower potential (e.g., “some” agers, some job‐irrelevant information could inadvertently be
or “moderate” LIFT) and/or the designated potential might be classi- considered (e.g., halo effect, co‐mingled performance goals with sub-
fied as a “key contributor” or “develop in place” (Church & ordinates such that lower scores in their results might reflect poorly
Waclawski, 2010), yet their particular job allows them to demonstrate on the manager as well). Another source of complexity is the level of

Table 8
Full Promotion Model Test Statistics.

95% C.I. for Exp(B)

B S.E. Wald df Sig. Exp(B) Lower Upper

Performance 1.046 .073 203.028 1 .000 2.846 2.465 3.287

Assessed Potential .325 .026 153.422 1 .000 1.385 1.315 1.458
Constant −5.163 .257 403.095 1 .000 .006

N = 7927.

9
A.H. Church et al.
experience and/or ability of the manager to identify and differentiate
good performance when they make their formal ratings.
In comparison, assessed potential is an objective source of informa-
tion on the skills and abilities of the individual. Results from the LeAD
assessment are entirely within the control of the participant being
assessed (there are no 360 feedback results included at this level5),
regardless of external factors, and minimal interpretation is needed at
the PLDC level to understand and use the feedback in talent discussions.
Thus, while performance and assessed potential are related, they are
only minimally consistent, and one (e.g., performance) cannot be
assumed to be a replacement for the other (e.g., formal assessment
results in a predictive framework).
Similarly, and perhaps surprising to some internal leaders and HR
professionals, assessment data of this type cannot be assumed to pre-
dict current performance either. Although at first this latter point
might seem odd, it is in fact not surprising given the assessments were
not validated for this purpose (i.e., current performance in role). This
fact that both types of indicators add incremental value to the out-
comes measured might argue for the need to have both performance
ratings and formal assessments as components of any organizational
talent management system in general.
Formal assessments of potential provide additional information
beyond performance alone
One of the central tenets of this research was to test the theory that
assessed or arguably “real” potential (i.e., based on validated assess-
ments) adds value and is not synonymous with current performance.
If organizations are going to spend millions of dollars assessing talent
each year, it is critical to understand whether assessed potential pro-
vides important and unique information about employees, and that
it is worth considering making talent management decisions. By exam-
ining various predictive models that included performance and assess-
ment results individually as well as together, the results support both
H3 and H4 by showing the best fit and best prediction accuracy in out-
comes when both performance and assessment data were included.
In exploring the results more deeply regarding the way that desig-
nated potential seems to be used within the current organization, there
are a few elements to discuss further. First, based on the data, it does
appear that performance ratings may be carrying somewhat more
weight in terms of determining both designated potential and promo-
tions than the assessed potential independently. For example, a one
unit increase in average performance ratings indicates someone is
roughly two‐and‐a‐half times more likely to be promoted or classified
as a high‐potential post the talent review process, than the increase in
likelihood seen from a one unit increase in assessed potential. This
heavier weighting is likely a reflection of the “performance‐based” cul-
ture for which PepsiCo is well known (e.g., Alziari, 2001; Church &
Waclawski, 2010; Pearson, 1987; Seldman, 2008), and is probably true
in many publicly traded companies where a premium is placed on
business results. In fact, despite the intent of the program to bring
more rigor to the talent process, which the findings suggest it does,
it might concern senior leadership if the alternate outcome were found
(i.e., assessment results yielding significantly stronger relationship
than performance overall). This is perhaps a point of consideration
for any organization focused on using formal assessments and attempt-
ing to measure their impact. While the data obtained should provide a
unique contribution to key outcomes, overshadowing performance
overall might not be the end goal—despite what some practitioners
or line leaders may be hoping to see from an HR metrics and return
on investment lens.
5
Other tiers of the LeAD program also focus on observed behavior and role specific
elements (e.g., 360‐degree ratings), where they have shown to be more critical higher up
in the organization.
10
The Leadership Quarterly xxx (2021) 101516
However, it is also important to note the influence of the distribu-
tion of the predictor variables. The standard deviation of performance
in the current sample was roughly .3, and the standard deviation of
assessed potential was closer to 1. Although performance ratings seem
to be carrying substantial weight, a one unit increase in performance
represents moving up three standard deviations for that variable,
while a one unit increase in assessed potential (the LIFT score) repre-
sents only one standard deviation. To phrase it differently, it is quite
difficult for any given employee to have very high or very low perfor-
mance ratings, so those who do stand out even more so. Constrained
performance ratings are common in large‐scale performance manage-
ment systems as many authors have noted (Adler et al., 2016). This
caveat to measuring individual performance is due in part to how Pep-
siCo’s ratings are calibrated, and the various levers managers have for
compensating performance that are both directly and indirectly
related to job performance ratings (Church et al., 2015). The ultimate
result is a performance rating system that highlights exceptionally
high and exceptionally low performers (in whatever capacity man-
agers define that), and leaves average to high performers mixed
together in a way that makes them difficult to differentiate.
A third point concerns the ability of assessed potential to provide
additional information above and beyond performance ratings. In test-
ing both Hypothesis 3 and Hypothesis 4, adding assessment results to
the models had the largest impact (outside of fit) on accuracy in pre-
dicting designated potential and promotions. This observation aligns
well with how managers and human resource professionals approach
those decisions within PepsiCo. Performance serves as a gatekeeper
(Church & Waclawski, 2010), and the assessed potential provides the
additional source of information above and beyond the basic criteria
for success. As the program continues to evolve, and as the resulting
assessment data are used for calibration and talent planning as part
of continued shift in the use of data for decision‐making (Church,
2019a), it is possible that future examinations will show an increasing
contribution of assessment data on outcomes over time.
Future directions & limitations
The present research was based on a large sample of early career
professionals and individual contributors in a global organization.
The intent of the LeAD (PLDC) program, which served as the source
of the data collected, was to identify “diamonds in the rough” or assist
the organization in differentiating talent lower in the organization
where senior management visibility and perspective is limited. This
is both a strength and a limitation in the current study design. At
higher levels in any organization there are additional factors and
lenses on talent to consider (e.g., mobility, prior relationships, senior
perceptions, long‐term history of performance or success in prior pro-
motions, global experience, etc.) when making designated potential
decisions. In addition, following the theory of the Leadership Potential
BluePrint, other facets of potential become more critical at higher
levels such as learning agility, motivation, leadership capability and
functional excellence (or the acquisition of unique and needed skill
sets to drive future growth such as digital fluency – see Church,
Scrivani & Paynter, 2019). Future research should explore the same
relationships between performance and assessment results using
broader types of multi‐trait multi‐method (MTMM) frameworks that
include interpersonal data (e.g., via 360 degree feedback) and other
behavioral indicators (e.g., simulations, in‐baskets, assessment centers,
structured interviews). The key questions for this research would
remain the same: does assessed potential add value at higher levels
where designated potential and promotion decisions are even more
contextualized (as is performance)?
A second area of future research could examine the possibility that
designated potential is a mediator in the link between performance/
potential and promotion. For this study, these variables were
A.H. Church et al.
intentionally defined as separate (but related) outcomes because of
complications surrounding the specific timing of promotions and
assignment of designated potential. Essentially, a high‐potential desig-
nation can occur at any time—it simply needs to be entered into the
system of record to be captured. While the general talent review pro-
cess (i.e., when adjustments would be made to designated potential)
tends to follow a set schedule, there can be many exceptions, and in
some cases the “real” designation (i.e., senior leaders’ perspective on
talent) may never be recorded anywhere beyond their own cognitive
point‐of‐view (e.g., for very senior leaders where knowledge of that
information might constitute material information for the company
and be subject to SEC requirements). While this makes the data more
fluid and difficult to measure, it is a reality of organizational life and
talent management processes, particularly at higher levels. If a study
were to capture designated potential as an ongoing process (or mea-
sure the changes in designated potential over time based on different
inputs) this might prove even more fruitful for understanding how and
when performance, assessment data and situational variables (such as
senior leadership changes) influence designated high‐potential out-
comes the most.
Relatedly, the intent to promote someone may also be a discrete
outcome variable from the promotion itself (i.e., the execution of the
job change). Although promotions and other lateral talent movement
decisions tend to occur on a set schedule within the current organiza-
tion, the sheer volume of employees virtually guarantees promotions
(or specifically promotion into a new role) could occur at any time.
Without the ability to account for intent to promote vs. circumstance
in the timing of promotion data, it was most appropriate to leave it
as a discrete outcome for this study. Future research might be focused
on determining when someone becomes “promotable” and how orga-
nizations define “readiness.” This can also be problematic, however, as
a leader’s readiness for a promotion is a construct that is perhaps as
complex as potential, and even less well defined. Some researchers
and practitioners are making in‐roads to understanding readiness via
talent pools, risk‐optimization and profile‐based approaches (e.g.,
Cascio et al., 2017; Day & O’Conner, 2017; Paese et al., 2016), but sig-
nificantly more work is needed in this area as readiness is arguably
more of a contextual construct than an individual capability at any
point in time.
Another area for future research involves improvements to the
accuracy of performance and potential ratings as noted earlier. Cur-
rently, performance ratings are how we understand what someone
has done, and in any pay for performance organization, are critical
to ensure an equitable compensation of effort. In no uncertain terms,
the ability to accurately and reliably determine performance remains
one of the holy grails of organizational research (DeNisi & Murphy,
2017). But similarly, so is the ability to accurately predict future perfor-
mance by way of potential. This study has provided and tested a the-
oretical foundation for including assessment data in the designation
of potential as an element of a broader talent management system,
but importantly, the actual practice of identifying potential is in its
infancy. While the field may have reached a point of diminishing
returns in efforts to improve performance rating accuracy (Adler
et al., 2016; DeNisi & Murphy, 2017; Pulakos et al., 2015), there is
ample room for better understanding, defining, measuring, and using
assessed potential.
Another limitation of the present study is the focus on data col-
lected from a single organization, and one with a robust and poten-
tially distinct approach to performance management and talent
management overall. While the benchmark research (e.g., Campbell
& Smith, 2014; Church & Rotolo, 2013; Church et al., 2015;
Hagemann & Mattone, 2011; McHenry & Church, 2018) would indi-
cate that the majority of top development companies are pursuing sim-
ilar agendas, they may not be in the same stages of utilizing talent
assessment data as the current organization (e.g., some may be behind
and others ahead). Future research should look to test these findings in
11
The Leadership Quarterly xxx (2021) 101516
other types of organizations and industries as well. Informal bench-
marking done by the authors with non‐profit and government agen-
cies, for example, has suggested much more limited talent
management processes and high‐potential efforts in general.
Finally, from a change management perspective, no formal mea-
sures of how senior leaders or HR professionals within the organiza-
tion felt about or made use of the assessed potential data derived
from the LeAD program were available. While this study has indicated
that assessed potential does appear to have an influence on talent man-
agement decisions, additional work should focus on better understand-
ing reactions, resistance or even confusion surrounding more formal
types of assessment data and how they should be used. This is partic-
ularly true within any large, global organization, where regional cul-
ture can sometimes dictate attitude toward and use of the assessed
potential provided by the LeAD program. Church et al., (2015) in their
benchmark study of top development companies, for example,
reported that while interest from senior leaders in assessment data
was high in these companies (62%), questions regarding the use and
value of the data remain in at least a fifth of the executives (20%). This
is important as these are companies that are already engaged in the use
of assessment data for talent management. It is our hope that the
results from this study will help reduce these concerns and improve
talent management and leadership development and succession efforts
in the future.
Data statement
The highly confidential and proprietary nature of the data used in
this study related to people and business performance represents a
competitive advantage and therefore will not be shared outside the
organization. Even within the organization there is strict governance
over access to linked information of this nature both to protect individ-
uals and the corporation.
Funding
This research did not receive any specific grant from funding agen-
cies in the public, commercial, or not‐for‐profit sectors.
Appendix
Potential Leader development Center (PLDC) program
As noted earlier, PLDC targets early career professionals such as
associate managers, new hire MBAs, and first line supervisors globally
across the organization. The primary focus of PLDC is to “identify and
differentiate” future leadership potential using a combination of stan-
dard cognitive and personality assessment tools augmented with cus-
tom situational judgment and biodata measures (all based on the
Leadership Potential BluePrint). Participation in PLDC is both criteria
and participant based (i.e., individuals invited must opt into the pro-
cess to continue).
Following the completion of a two‐hour online assessment suite,
participants (and their managers) are automatically provided with a
feedback report containing three elements:
(a) two key strengths based on the LEF model,
(b) two key development opportunities based on the LEF model,
and
(c) their LIFT score, which indicates the degree to which their
results reflect the likelihood of successful performance at two
levels higher in the organization based on the criterion valida-
tion study. The four categories of LIFT correspond to a normally
distributed curve: some, moderate, great, or very great level of
LIFT.
A.H. Church et al. The Leadership Quarterly xxx (2021) 101516

It is important to highlight the fact that program performance on Church, A. H., Ginther, N., M. Levine, R., & Rotolo, C. T. (2015). Going beyond the fix:
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early program research on employee attitudes toward PLDC (Church Church, A. H., & Rotolo, C. T. (2013). How are top companies assessing their high-
potentials and senior executives? A talent management benchmark study. Consulting
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butions toward both the program and the organization regardless of Church, A. H., & Rotolo, C. T. (2016). Lifting the veil: What happens when you are
transparent with people about their future potential? People & Strategy, 39(4),
their overall score. In short, the program is data‐based, transparent 36–40.
to participants and managers, and predictive of future success, making Church, A. H., Rotolo, C. T., Ginther, N. M., & Levine, R. (2015). How are top companies
it an ideal data source to test the stated research hypotheses designing and managing their high-potential programs? A follow-up talent
management benchmark study. Consulting Psychology Journal: Practice and
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