Past performance is not a predictor of future performance or potential success down the road. Rather, it’s more of a myth than a reliable measure you can count on when choosing your leaders.
When you select a leader with a rearview mirror focus, you limit your perspective of a leader’s future effectiveness and potential, shortchanging both the leader and the organization. A ‘rearview’ of performance can also lead to problems on the road ahead for the leader and for the organization, including important signals of risk, or opportunity that may go unnoticed. Here’s why.
Leadership is a nuanced concept, and therefore, it transcends a simple linear trajectory of past performance. The long-held belief that past behaviors and achievement are the best predictors of future performance has been pervasive in academic and business environments including executive search. However, a deeper dive into this notion reveals a different picture altogether, marking a compelling paradigm shift in our understanding of leadership effectiveness and potential.
Scrutinizing the Myth
Early in my search career, the mantra, “past performance is a predictor of future performance” rang through the offices of executive search firms and organizations alike. It carried significant weight as a benchmark for assessing the likelihood of a leader’s future performance, and even their “potential.”
When I think back to my corporate experience, that’s not what I observed. Instead, I recall multiple instances of “high performing’ executives who were promoted into elevated roles – and yet, their past performance failed to carry them to success in their new situations. In contrast, there were other executives with less stellar past performance records, who were transitioned into senior roles that tested their mettle in new ways – and yet, they thrived, revealing their unseen potential.
These leadership outcomes, good and bad, tell a different story about past experience and performance. Judging an executive’s capabilities solely through a reflection of past performance and experience is unreliable and risky.
The Evolving Story
So, think about it. Past experience and past performance can’t be separated from their previous context or specific circumstances. Neither reference point can possibly offer a mirror image of a present or future situation. The past performance myth is inherently flawed in its reasoning. And flawed reasoning leads to flawed outcomes.
This myth is riddled with risk for the hiring organization and the leader. The inconsistency revealed by attempting to predict performance or potential through a retrospective, behavior-focused lens raises more questions than answers. For instance, wouldn’t relying on the past performance myth discount the possibility that an executive may have greater capability than they’ve had the opportunity to demonstrate in their past?
Overlooking potential shortchanges the leader and the organization.
There is only one rational choice, and the choice is yours to make.
In this article we’ll explore the past performance myth, and I’ll explain why it’s ineffective as a predictor of future performance and potential. I’ll share perspectives from leading authorities on the topic of leadership potential. We’ll look at its limitations and risks for both hiring executives, as well as for leaders in new roles. Then, I’ll share a strategy you can adopt to ensure your leader due diligence process allows past performance its appropriate due. This strategy will help you and your team to prioritize a forward-looking view of a leader’s performance potential – relative to a specific role and situation on the road ahead.
Because it’s a ‘windshield’ view of potential that provides a clearer line of sight to future performance – not the rearview mirror.
Limitations of Past Performance
A study conducted by Harvard Business Review, found that only 10% of high-performing employees remain high performers in the following year. In contrast, 20% of low-performing employees improved their performance in the following year. The study clearly suggests that past performance does not always accurately predict future performance.
The truth is, neither previous experience (the degree to which an executive has done the work), nor past performance (the quality of the work performed), prove to be reliable indicators of what an executive can, or will do in the future.
Experience and past performance can undoubtedly contribute useful signals as part of a broader assessment process. However, reference points must be relevant to the context of the role for which the executive is being considered.
The past performance myth stems from the temptation to rely on easily quantified data points, instead of more elusive qualities that are harder to measure. Though increasingly, leading researchers in the field of leadership studies continue to challenge the myth. Dr. Robert Hogan and his colleagues argue that past performance only provides a snapshot of past circumstances and behaviors. They emphasize their point saying it’s an incomplete picture, missing an individual’s ability to adapt, innovate, and inspire under diverse future conditions. Although the myth is continually challenged, it continues to have a stronghold in many organizations, despite an abundance of studies and experts who suggest otherwise.
Here are some of the reasons why this myth is messy.
The Impact of External Factors
Economic, market, or industry change can have a significant impact on a leader’s performance and their potential for success. Unforeseen events create disruptions. Whether new challenges or new opportunities, disruptions demand different strategies, operating plans, market approaches, or any number of other adjustments, all of which require a different mindset, and different capabilities.
We’ve experienced the reality of VUCA, living in a volatile, uncertain, complex, and ambiguous environment. More recently, Jamais Cascio, an American anthropologist and futurist suggested the acronym BANI, to describe our evolving reality as brittle, anxious, nonlinear, and incomprehensible. Whether VUCA or BANI, or any other acronym, the idea that past performance can reliably predict a leader’s future performance or potential within a new context is simply absurd.
Look no further than the economic crisis in 2008/2009, or more recently, the pandemic that began its swarm in 2020. In the case of ‘The Great Recession’, many businesses were forced to shift from a focus on ‘value creation’ to a focus on ‘value protection.’ This shift changed the context of roles, demanding different capabilities and different mindsets. Experience, performance, and ‘playbooks’ with a value creation focus became overshadowed and less relevant. As a result, positions were eliminated, and many leaders were replaced. In other cases, executives found themselves in a position of having to reinvent themselves – whether inside or outside of their companies.
The context changed and neither previous experience nor performance guaranteed continuity in the planned leadership paths for many executives.
Past Performance is Contextual
Past performance and leadership effectiveness are independent of one another. Both are linked to context and situation. When context changes, the limitations of past performance are revealed. Its ineffectiveness as a reliable indicator of either future performance or potential becomes clear.
“Directors need to define an explicit scope of priorities for the future CEO, based on desired outcomes and context… Regardless, the defined scope should inform the development of a set of well-defined leadership capabilities and traits that can be measured and assessed.” Claudius A. Hildebrand, Cathy Anterasian, Jordan Brugg, SpencerStuart, Predicting CEO Success: When Potential Outperforms Experience.
The rise of leadership competency models across organizations added a nuanced dimension to the due diligence process for leader selection. These models outline leadership competencies determined to be critical for leadership effectiveness within an organization. Although, these models provide a useful foundation for performance management, and development guidance, “difficulties arise when competencies are used as the basis for forming judgements about leaders’ potential.” – Deloitte
One reason is because competencies represent learned behaviors. And behaviors are a choice. They might show up… or not.
Nevertheless, it’s tempting for organizations to rely on behavioral competencies as a reference for leadership capability and potential. While they hold merit in assessing a leader’s capabilities, they don’t crack the code of predicting performance. And that’s because competencies are reflective of what a leader has done, can do, and might do. On the other hand, “Potential is innate, stable, and reflective of how a person is wired.” – DNA of Leadership Potential, Deloitte Human Capital Consulting
What’s the Hitch With Competencies?
Deloitte and other authorities on competency assessment note valid criticisms of competency models as predictors of future performance including:
- Competency models ignore situational factors. Yes, it’s true. Competencies focus on “effective” leadership, but they dismiss situational factors that may increase or decrease a leader’s effectiveness.
- They’re focused on past behavior rather than future potential. Therefore, competency-based interviewing is designed to draw out explanations about how someone accomplished something in the past, or how they would handle something in the future based on learned behaviors. This is a behavioral, and retrospective view.
- Competencies are also complex. They are descriptions of behaviors, which seems pretty straightforward. However, these descriptions are multi-layered. Basically, the inner workings of any one competency represents a combination of multiple types of skills and behaviors, along with psychological processes running in the background. There’s a lot to unpack in each competency.
The Rearview: It’s Seductive and Deceptive
Until now, we’ve explored the risk associated with relying on past performance as a predictor of future performance from the perspective of hiring executives.
However, past performance can be just as risky for a leader. Over-reliance on previous experience and defaulting to an existing mental model to inform future decisions and actions, can thwart a leader’s future performance in their new role.
Paying undue attention to the rearview mirror can mean a near certain crash ahead for the leader and the organization. Unfortunately, it happens too often. So, let’s take a look at some common roadblocks for leaders.
Past Performance Roadblocks: Cognitive Bias
The rearview mirror can be dangerously seductive for a leader in a new role due to certain cognitive biases, of which the leader is likely unaware.
The truth is, we all have cognitive biases which can kink our thinking and cloud our eyes. Our brain automatically aims to simplify incoming information to make it easier for us to understand and act upon. Cognitive biases are the shortcuts our brain creates to lighten the cognitive load of the serious work of thinking. They can be useful in some situations, though more often, they are troublemakers, leading to flawed judgment, tainting decisions leaders make, and actions they take.
Why? Because our brains process information based on personal filters – which can alter the substance of the information itself. And that’s where the trouble begins. However, when a leader is aware of their biases, they can use strategies to manage them.
A leader’s mental lens matters. It’s fundamental, and it affects nearly every measure of a leader’s performance and potential.
A past performance minded leader, will be prone to certain cognitive biases, urging behaviors and emotions that can work against them, rather than for them. These pesky biases can cause a leader to approach situations and problems with preconceptions, prejudices, or a cloudy mental lens. Latching onto previous experiences, can cause a leader to miss key signals in their current reality. The comfort and familiarity associated with past experiences interferes with thinking clearly, hindering a leader’s ability to solve new problems, and to effectively pursue future opportunities.
More times than not, these cognitive biases represent liabilities for leaders, who in most cases are unaware of them, and therefore lack the insight and strategies to manage them.
Cognitive biases hijack rational leadership.
With this in mind, beware your biases. While cognitive biases live in our subconscious, they leave clues. The good news is, we can learn to recognize them, and to manage them.
Below are three examples of biases that affect how experience and performance is treated, translated, and applied, by a leader in a new role.
Well-Traveled Road Effect
This bias hitches leaders to the comfort of familiarity of roads previously traveled, causing them to be less alert, missing important turns, detours, and signals of risk or opportunity. Whether a leader relies on their domain expertise, or depth within a particular lane, both pose dangers of familiarity because the journey is never exactly the same.
While intuition is largely referred to as a “gut feeling,” there is mounting evidence that it’s more than just a feeling. Nobel Laureate, Daniel Kahneman, world renowned for his work in behavioral economics and finance, and specifically cognitive biases, cautions that intuition bias is the flip side of “good” intuition, and it’s often difficult to distinguish. Kahneman warns, “Sometimes sources look good because they look familiar. You need to decide if it is bias dressed as intuitive insight.” Drawing upon the repository of previous experiences can be useful if paired with perspective, reality, and logic. Yet, intuition left to its own devices, especially in a new situation, can cause a leader to take unreasonable risk, or conversely, to rely on a ‘gut feeling’ that avoids risk, resulting in a default to status quo – another dangerous bias. (which I’ll cover in another article)
This bias, also rearview focused, urges a recall of experiences that are memorable, easily available, and often emotionally charged. The problem is the availability bias leverages easy-to-recall experiences whether or not those experiences are actually suitable to the current situation. Then, the leader may wrongly consider the experience as relevant, using it to guide decisions in a current situation – that may bear little resemblance to the available referenced experience.
As you can see, past experience and performance can wreak havoc for the leader and for the organization if not considered, scrutinized, and valued appropriately.
Putting Performance and Potential in Context and in Focus
My life’s work is helping organizations and leaders to realize their leadership vision and business vision together – by carefully aligning leaders with organizations and missions. Success for everyone relies on the leader’s unique positioning to the uniqueness of the situation – evidenced by the leader’s potential to perform and succeed within the context of the specific role and situation.
With this intention, context is the primary lens through which the ‘potential for performance’ is viewed relative to a specific role.
“Coordinates” is the term I use to describe the context within which the role exists. It refers to organizational context, situation, environment, mission associated with the role, and the specifications of the position. Role-specific coordinates provide the context for assessing a leader’s potential for effectiveness in that role.
Defining coordinates for a specific leadership role is priority number one – and it’s not negotiable. Only then can future performance and potential be determined.
With any transition into a new role, a leader’s potential is in question. And a leader’s ability to adapt, learn, and grow is far more indicative of their potential than their past performance. Leadership effectiveness rests on what the leader is capable of doing in their new context – not necessarily what they did, or whether they succeeded in a previous situation.
The Mission: Destination Potential
Leadership selection for a defined role is a “destination potential” mission. It looks to the future, and appropriately references the past.
The important question is, “Does the executive have the specific capabilities and experiences required for optimal performance in the specific role?”
Dr. Allan H. Church, Co-Founder and Managing Partner, Maestro Consulting, and former SVP Global Talent Assessment and Development, PepsiCo, uses the term “Destination Potential” to reflect a preparedness for a targeted senior leadership role or destination.
Destination potential is a primary focus for executive search professionals, and for the hiring executives they support.
Importantly, Church makes a key distinction between destination potential and leadership potential in this way. Leadership potential, he explains, looks at skills, abilities, and behaviors that are early indicators of leadership effectiveness at higher leadership levels in an organization. We could say leadership potential requires a wide angle lens perspective because it represents the broad and long-view of potential. This is largely the continuous focus of talent planning and management professionals, and leadership development organizations.
Identifying Destination Potential
Once again, identifying destination potential is only possible once the context of the specific role has been defined.
“If you don’t know where you’re going, any road will do.” – Lewis Carroll
Unlike a wide-angle lens used to indicate leadership potential, understanding destination potential requires a position–focused lens. Because a destination potential mission must zoom in on an executive’s positioning and potential relative to a specific role.
And the mission is not accomplished by relying on experience or past performance. Rather, this is a forward-looking mission that relies on potential, with relevant signals drawn from present and past capabilities.
Past Performance, Unique Positioning, and Destination Potential
Every leadership role has a unique set of ‘coordinates’ – context, situation, mission, requirements, and a targeted outcome. And every leader has unique potential. Destination potential relies on understanding the unique positioning of a leader to a specific role. It reflects the degree to which the executive is positioned for success in the targeted destination position.
Determining destination potential requires a structured and judicious assessment approach. Because it’s position-focused, hiring executives are naturally tempted to cling to signals that can be seen, referenced, and measured when they are assessing prospective leaders. Referencing easily accessible metrics leads to a tendency to place disproportionate focus on previous experience, performance, and career skills. This happens at the expense of paying attention to critical and fundamental indicators of potential. Consequently, a focus on the past diverts attention away from the windshield – the important forward-looking view.
Best practice frameworks for identifying a leader’s alignment to a specific role, leverage a multi-trait, multi-method approach. These frameworks incorporate a variety of different tools and methods, though in concept, they all include science, sensing and signals – including relevant signals from previous experiences and performance.
Indeed, past performance can provide useful ‘mile marker’ data that can partly inform a leader’s ‘positioning’ relative to the targeted destination. The rest of the ‘potential’ equation requires a deeper dive.
A multi-method approach will include a variety of methods for capturing signals. Combining the science of objective data (augmented intelligence), with sensing gained from interpersonal interaction, (human intelligence), is important. Why?
Because neither augmented intelligence, nor human intelligence represents a single source of truth.
Signals and a Convergence of Evidence
A convergence of the right evidence makes clear a leader’s positioning, and destination potential.
Chiefly, this requires a network of distinct signals that bear relevance to the context, situation, and specific role. When these signals are combined and cross-referenced, a convergence of evidence indicates destination potential, or not – providing sound guidance for selection decisions. Important signals include:
- Personality type and traits
- Emotional Intelligence: Self and Social awareness
- Cognitive capabilities
- Cognitive liabilities; Cognitive and Emotional biases
- Capacity: Problem solving, Handling complexity and ambiguity; Situational Awareness
- Mental, Learning, and Change agility
- Performance drivers and Motivation
- Leadership skills
- Business skills: acumen, Diverse experiences
- Career Experience, Skills and Knowledge (Industry, Function, Technical)
- Risks; Micromanagement; Fixed mindset; Volatility; Ego… and more
With a convergence of evidence, the answers to our earlier questions become clearer.
- Does the executive have the specific capabilities and experiences required for optimal performance in the specific role.
- Does the executive have the potential to effectively succeed within the context of the specific destination role?
Relevant career-focused insights including experience and track record are important. However, they must be scrutinized and appropriately considered in a destination potential mission. On their own, career related skills, capabilities, and knowledge are not effective deciders of destination potential. Nor are they effective drivers of a leader’s future performance.
The 3P Strategy: Positioning, Potential, and Probability
Positioning, Potential, and Probability are strategic principles that guide my work and focus on destination potential. Getting to the core of these truths provides reasoning and guidance for leadership selection decisions.
These are the big 3P questions that guide a destination potential mission:
- Is the leader uniquely positioned for success relative to the context, situation, and other coordinates of the role?
- Does the leader have the right potential to do more in the future than they’ve done in their past?
- What is the probability of performance and success based on the leader’s potential and unique positioning to the defined role?
The questions are clear.
The answers are far more complex. And the answers are not found in the rearview mirror. Instead, they are discovered through a windshield view that is focused on potential and the road ahead.
Leadership is built on the critical integration of previous learning and experience, and potential, including and the ability to learn, adapt, and to lead effectively in new circumstances. For a hiring organization, identifying destination potential is mission critical for every leadership role. And in the big picture of a leader’s career, leadership involves a series of destinations… along a leader’s journey.
The big takeaway…
Whether you read this from the perspective of a hiring executive or a hired leader, reference the rearview mirror when it makes sense, but keep your eyes on the road and on your destination ahead.
Because potential guides the future for the organization and for the leader.
Finally, remember that leadership choices have a compounding effect – either positive or negative. So, choose wisely. Read about The Leadership Compound Effect
Stay tuned for the launch of my book, Mind Knots: The Cognitive and Emotional Biases That Prevent Rational Leadership. Coming soon!
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Lisa Tromba, Founder, Leadership Intelligence Services
and Co-Founder, Luisi Tromba Advisors / Executive Search
Lisa@luisitromba.com or Lisa@leadershipintell.com
As an executive recruiter and trusted advisor for over 20 years, my passion guides my work which is centered on helping organizations and leaders to advance missions and achieve outcomes together – through clear thinking, reasoning, and evidence-based decision-making – and with a focus on aligning leaders who are uniquely positioned to the uniqueness of a situation.
The advantage is leadership edge.