At least once every year, managers huddle over the 9-box grid categorizing employee names based on performance and potential. Although it may look like a strategic exercise, it’s far from it and here is why:

The 9-box is hardly ever directly tied to the company’s strategy or business objectives.
The definition of potential is too vague.
Managers are generally bad at identifying potential. On average, only 1 out of six HR professionals feel satisfied with their organization’s identification of high potential employees (Burke, Schmidt, & Griffin, 2014).
An example will help. Imagine you are about to buy a new car. The 9-box exercise would then go something like this: I think I’ve seen a Prius perform well on the highway (high performance), plus it also gets good MPG so it should save me money in the long run (high potential). Ford Explorer is definitely the least reliable car – my coworker had to take it to the mechanic twice last year (low performance) and it’s too big to drive around the city (low potential).

Step 1: Identify the company’s strategic initiatives
My example is a gross exaggeration, but it highlights the fact that I failed to ask what I actually need the car for. Am I going to drive it in the mountains? In the city? In the snow? Will I haul my extended family or use it to transport my two Great Danes?

Similarly, before starting any categorization into the 9 boxes, I need to specify what the most critical strategic objectives are for my talent to achieve in the next 12 months. Based on Pinsight’s™ research, most organizations’ strategy is a combination of the following:

Launch a startup or build new products/services
Refocus the organization on new markets or core business
Better differentiate products/services from competitors
Strengthen the brand/reputation and increase customer loyalty
Increase performance, retention and engagement of employees
Increase profitability through enhanced efficiency
Build strategic alliances with suppliers, vendors or business partners
To identify the strategy of your organization, interview your executives. Ask them: “What are the future strategic business objectives that the employees will need to support in the next 12 months? What external conditions (e.g., customer demand, industry, market, competitors) are driving these business objectives? What challenges inside the organization will need to be solved?”

Step 2: Translate the strategy into performance and potential criteria
To translate the strategy into performance criteria, I ask “What are the most important leadership skills necessary to accomplish this strategy? What does the leader need to excel in to meet those business goals?” For example, to build a new organization or new product/service line from ground up, the leader must analyze and seize entrepreneurial opportunities, set strategic priorities, and build a sense of cohesion in the new team. My performance criteria then consist of the following leadership skills: (1) Set Strategic Priorities, (2) Understand Business, (3) Show Entrepreneurial Spirit, (4) Seize Entrepreneurial Opportunities, (5) Manage Risk and (6) Build Team Spirit.

My goal is to find individuals who can quickly grow in the areas necessary to execute the company’s strategy.
When setting potential criteria, my goal is to find individuals who can quickly grow in the areas necessary to execute the company’s strategy. Here I should consider (1) how easy or difficult it is to develop the skills, (2) how open the person is to learning and (3) how naturally the skills will come to the person. For example, Building Team Spirit is easy to develop but Seizing Entrepreneurial Opportunities is very difficult to develop (Lombardo and Eichinger, 2009). Generally, people who love to learn will acquire these skills faster than people who are closed to learning (Connor, 2012). Additionally, Building Team Spirit will come most naturally to people who are perceptive, supportive, empathetic and cooperative; and so they will be able to develop this skill quickly. Similarly, Seizing Entrepreneurial Opportunities will come most naturally to people who are confident, decisive, energetic, taking initiative, persuasive, influential, visionary, creative, innovative and inventive.

Step 3: Assess talent against the criteria
I bet every manager sitting in that talent review would not buy a car (average investment of $31,252;, 2013) without a test drive. Yet, they are asked to make $500,000+ decisions (salary + benefits + recruiting and training costs + cost of failure) based solely on opinion. Why not just flip a coin?

There are many assessment options on the market, including 360 degree feedback tools, assessment center simulations, and personality and learning agility tests. The key is to select flexible tools that easily map onto the company’s strategic objectives and quickly populate the 9-box grid.

With Pinsight™ assessments, the data automatically populates the online 9-box grid 24 hours after candidates complete the virtual simulation. The 9-box shows candidates’ performance on the leadership skills most relevant for executing the organization’s strategy and growth potential based on proprietary big data algorithms. The algorithms consider candidates’ personality, openness to learning, and ease of development of the critical skills.

Running talent reviews based on opinion is like driving a lemon.
Populating the 9-box grid with accurate assessment data allows managers to laser-focus their retention and development efforts to the most talented employees. Elevating the 9-box grid into a data-driven, strategic talent management tool will result in better promotion, succession planning, and development decisions. Running talent reviews based on opinion is like driving a lemon.