Principles: Thoughts on “Potential to Performance”

I am not an HR guy. I have never aspired to be. However, I did enjoy the HR related courses during my MBA and really liked the Professors who conducted them. I myself had to use different aspects of HR for various training/courses I have conducted.

One of the topic that always interests me is Performance Management – the definition and measurement of performance metrics and transformation from potential to performance. I recently saw an interview of Harsha Bhogle (which I have posted on this blog few days back – it is in Marathi), in which he briefly talked about Talent, and hence I thought of writing this blog.

Potential consists of Talent and Temperament. Talent is innate and also acquired. It can be enhanced, nurtured, shaped up. Temperament may possibly be genetic (we often see examples of that in our families, society, isn’t it?). But it can also be changed, improved, influenced. So that is also an acquired trait. Talent and Temperament together define Potential. There could be other parameters too. But, by and large, these two factors are significant.

Performance is an expression or manifestation of Potential. Not necessarily a subset. Because sometimes Performance happens to be better than the Potential, if it is aided by positive external factors. However this relationship and understanding the interplay between the two is important.

I often use one example – which is developed by myself, not borrowed – during some of the Corporate training to elaborate on this interplay. Since I like mathematics, I have based the example on equation.

A: What is 10% of 100? The answer is 10.

B: What is 100% of 10? The answer is 10.

The answer is 10 in both cases. Let’s call it Output or Performance. What is 100 in first example? Or 10 in the second example? Let’s call it Capacity or Potential. What are 10% and 100% in the above examples? Let’s call it “P2P” conversion factor i.e. “Potential to Performance conversion factor”.

Now let’s assume that A and B are real people. Their performance is the same – 10. However the way they achieve it is different. A has tremendous potential of 100! However his P2P is very low at 10%. While B has low potential (of 10). However his P2P is at 100% i.e. he is not leaving anything behind in converting potential to performance.

Who is better? Is it A or B?

Well, the answer, as always, is “It depends”.

A has potential. So if we work on his P2P and improve it, there is a huge upside. So we have to figure out why he is not doing justice to his potential? And how that can be addressed. There is no effort required to upgrade his potential.

B has limited potential but he is already doing full justice to his potential. Hence there is a need to enhance his potential (without damaging his P2P conversion ratio).

I hope you agree with this assessment. However, the problem is that most performance management systems look only at the output 10 (which is same for A and B) and come up with reward, or improvement plan etc. Which is totally wrong. The way to approach A and B are different, as discussed above. Unless we drill down HOW the performance is delivered we won’t be able to take right steps.

MBA is cursed with theories and 2×2 Matrix. I agree that it is often overdone. However, it’s just a tool. So good or bad aspect lies in how the tool is used – not in the tool itself. In the context of “Potential vs Performance”, I found following grids very interesting and thought provoking.

This topic really fascinates me. So I’ve a lot to write on, think loud. Maybe it should be done slowly…through multiple posts.

So I’ll pause here and write another blog on this theme soon.