The President's 'Eye for Talent' Put to the Test: Discovering Potential Hidden Behind Numbers and the Essence of Evaluation to Maximize Organizational Strength
When considering the sustainable growth of a company, the foundation is undoubtedly the power of its 'people.' In order to maximize that power and transform it into the driving force of the entire organization, a personnel evaluation system holds a highly strategic significance that goes beyond being a mere tool for measuring performance.
In particular, it is no exaggeration to say that the function of deriving an answer to the question of 'who should be placed as the next leader' determines the very future of the organization. Through this evaluation system, the president must clearly demonstrate their vision and strategy regarding the direction in which they wish to cultivate next-generation leader candidates. In other words, the evaluation system itself becomes a living message that embodies the organization's future image and the direction it should aim for.
In this article, I would like to delve into why an evaluation system is important for the development of next-generation leaders and the future of the organization, and how the president should incorporate their philosophy into it to discover and nurture talent with future potential from multiple perspectives. We will approach the essence of what kind of insight is needed to identify true leaders who can overcome an era of intense change and lead the organization of the future, rather than simply focusing on immediate results and numbers.
The Arrival of the VUCA Era and the New Role of Evaluation Systems
In the past, the mainstream evaluation system in many Japanese companies was 'seniority-based,' where positions and salaries increased according to the number of years of service. In an era when the economy was growing steadily and business models were relatively stable, this had a rationality that gave employees a sense of security and belonging, contributing to the stable operation of the organization.
However, after the 'lost decades' following the collapse of the bubble economy, and amidst the waves of globalization and digitalization, 'performance-based' systems that emphasize individual results have gained attention. The purpose of this was to increase employee motivation and improve the productivity of the entire organization by measuring individual performance with objective indicators and determining compensation accordingly.
However, it has been pointed out that this performance-based system also tends to focus employee consciousness solely on achieving short-term goals, leading to harmful effects such as the hindrance of teamwork and the neglect of long-term human resource development. Today, we live in an era called 'VUCA,' which is characterized by extremely high Volatility, Uncertainty, Complexity, and Ambiguity. It is an unpredictable era where past success does not necessarily guarantee future success. What is required in such an environment is not an evaluation system that merely measures past achievements accurately. Rather, it is a mechanism for discovering and nurturing talent with future-oriented potential who can boldly take on unknown challenges, continue to learn, and pave the way while involving those around them.
In other words, the role of the evaluation system in the modern era has shifted its center of gravity significantly from creating a 'past report card' to selecting 'future investment targets.' While the ability to efficiently perform assigned tasks remains important, it is even more crucial to discover, evaluate, and develop abilities that are difficult to quantify—such as the ability to adapt to change, create new value, maintain a steady core even in difficult situations, and provide leadership that guides a team. This is the key that determines the future of a company. It is precisely this paradigm shift that managers themselves need to deeply understand and reflect in their company's evaluation system.
The Evaluation System as a Mirror Reflecting the President's Vision
As the saying 'a company is its people' suggests, the type of talent a company evaluates and promotes speaks most eloquently about what that company values and where it is headed. No matter how wonderful a vision the president may express in morning assemblies or New Year's greetings, if the evaluation system that employees face in their daily work contradicts that vision, the words will ring hollow and will not permeate the organization. An evaluation system is the most powerful communication tool for embodying the president's vision and management philosophy and permeating them into every corner of the organization.
For example, suppose the president wants to 'create a culture that values innovation and encourages challenges.' In that case, it is not enough for the evaluation system to simply measure the degree of achievement of sales targets for existing businesses. Even if an attempt ends in failure, it is necessary to include items that highly evaluate the process of challenging oneself to create new businesses or services, the learning gained from it, and the sharing of knowledge with the entire organization. Conversely, if the evaluation system remains deeply rooted in a 'deduction-based' approach where a single failure significantly impacts a career, employees will fear taking risks, no one will take on new challenges, and the organization will slowly decline.
Similarly, if a company upholds 'customer-first,' indicators such as customer satisfaction, repeat rates, and words of gratitude from customers should be placed as important axes of evaluation, not just short-term sales figures. Also, if there is a vision to 'respect diversity and maximize teamwork,' a mechanism that evaluates not only individual results but also cooperation with other departments, contributions to the development of subordinates, and contributions to achieving team-wide goals is essential. In this way, by adjusting evaluation items and their weights, the president can send a clear message about 'what kind of behavior the company expects from its employees.' By being conscious of evaluation criteria, employees adjust their daily actions toward the direction the company is aiming for. Therefore, the design of an evaluation system is not just a task for the HR department, but a strategic decision-making process involving the very foundation of management that the president should be deeply committed to.
The Eye for Talent to See 'Potential' Beyond Achievements
Since the purpose of an evaluation system is to find next-generation leader candidates, there is a limit to evaluating only current performance and skills. Of course, achieving high results at the present time is an important factor, but it does not necessarily guarantee success as a future leader. A great player does not always make a great manager. What becomes important here is to identify 'potential'—that is, the latent ability of a person to grow and take on greater responsibilities in the future. So, how should one identify that potential?
One is 'learning ability' and 'intellectual curiosity.' The attitude of viewing unknown areas or difficult tasks as opportunities for growth and actively trying to learn and absorb knowledge and skills is a major indicator of potential. A person who does not cling to past success, always listens to new information and different opinions, and can flexibly update their own thinking is extremely valuable in an era of rapid environmental change. It is important to carefully observe how much desire they have for learning and whether they continue to ask questions without being satisfied with the status quo through daily work reports, remarks in meetings, and 1-on-1 meetings.
The second is 'resilience to adversity' and 'grit.' The path of a leader is by no means flat. One faces numerous difficulties, such as unexpected troubles, harsh criticism, and projects that do not go as planned. In such adversity, the ability to analyze the situation calmly without becoming mentally depressed, persistently search for solutions, and see things through to the end without giving up is an essential quality for a leader. Stories about how one tackled difficult projects in the past and how one recovered from failure and what one learned are valuable sources of information for measuring a person's potential.
The third is 'influence on others' and 'empathy.' A leader does not work alone. The ability to share a vision, draw out the motivation of team members, and lead the entire organization in the same direction is required. A person who naturally attracts people around them through their human charm, sincerity, and enthusiasm, rather than relying on position or authority, is promising as a future leader candidate. The sight of someone building cooperative relationships across departmental boundaries, listening to subordinates' concerns with empathy, or rejoicing in the team's success as if it were their own is a manifestation of potential that can only be observed in daily work. Presidents and management teams are strongly required to cultivate the 'insight' to see through the human qualities hidden behind such visible achievements.
Operating an Evaluation System that Encourages Challenges and Accelerates Growth
No matter how sophisticated an evaluation system is designed, it is meaningless if it is not operated appropriately. In fact, a system that has become a mere shell can even lead to employee distrust and decreased motivation, having a negative impact on the organization. Especially from the perspective of drawing out and nurturing the potential of next-generation leaders, it is no exaggeration to say that the 'operation' of the evaluation system determines its success or failure.
One of the important points of operation is the quality and quantity of 'dialogue' between the evaluator and the evaluatee. It is essential to provide continuous feedback not only through formal evaluation interviews once a year or once every six months, but also through daily communication, especially 1-on-1 meetings. Feedback here should not be mere criticism or notification of results.
A 'coaching' approach is required, where one acknowledges the evaluatee's strengths and future growth potential, conveys expectations, and then thinks together about current issues and specific actions to overcome them. Through such high-quality dialogue, employees can think about their own career paths proactively and increase their motivation for growth.
Also, to encourage challenges, it is effective to link 'stretch assignments' with the evaluation system. This means intentionally giving work or roles that are slightly more difficult than the person's current ability, which they cannot reach without stretching themselves. Based on evaluation results, talent judged to have high potential is provided with opportunities to gain tough experience, such as becoming a leader of a new project, working in an inexperienced field, or working at an overseas base.
Of course, this is based on the premise that a system is in place where supervisors and mentors accompany them and provide necessary support, rather than just leaving it to them. Through such experiences, leader candidates acquire practical skills that cannot be obtained in classroom learning and the confidence to overcome difficulties. And by appropriately feeding back the process and results of that challenge in the next evaluation, the cycle of growth can be accelerated.
Furthermore, fostering a culture that allows for failure is indispensable. If you challenge yourself with new things, failure is inevitable. If the operation evaluates failure resulting from a challenge lower than doing nothing, the organization will shrink. It is necessary to adopt the idea of 'Fail Fast, Learn Fast,' share the lessons and knowledge gained from failure as an asset for the entire organization, and have a mechanism to evaluate the fact that it led to the next success. For the president to talk about their own failures and continue to preach the importance of challenges also has great significance in rooting such a culture. The operation of an evaluation system is not just an administrative procedure, but the very stance of the organization to seriously support the growth and challenges of each and every employee.
A Healthy Organizational Culture Fostered by Transparency and Fairness
Because evaluation systems are directly linked to employee treatment (salary increases, promotions, bonuses, etc.), 'transparency' and 'fairness' in the process are extremely important for maintaining employee engagement and trust in the organization. When it is a black box as to who is being evaluated, by what criteria, and how, employees are prone to feeling dissatisfied and suspicious. In particular, regarding the sensitive issue of selecting next-generation leaders, if the selection process is perceived as being decided by a small group of management in a closed room, it invites speculation that 'it all comes down to whether you are liked by your boss,' which significantly demoralizes employees who are working hard.
To ensure transparency, the first step is to clearly disclose evaluation criteria to all employees. It is necessary to provide concrete information such as what kind of leader the company is looking for, what competencies (behavioral characteristics) are emphasized, and what the ratio of performance evaluation to potential evaluation is. This allows employees to understand specifically what goals they should set in their daily work and what skills they should develop. It is also effective for increasing a sense of conviction for supervisors and subordinates to have repeated dialogues from the goal-setting stage to align evaluation criteria with the individual's career plan.
To guarantee fairness, it is essential to build a mechanism that eliminates the subjectivity and bias of evaluators. A '360-degree evaluation (multi-faceted evaluation),' which incorporates multiple perspectives rather than relying on the evaluation of a single boss, is one example. By obtaining feedback from bosses, colleagues, subordinates, and in some cases, relevant staff from other departments, a more objective and multi-faceted evaluation of a person becomes possible.
It is also effective to set up a place called a 'calibration meeting' where evaluators gather to bring their respective evaluation results and discuss them. Through this meeting, the goal is to adjust the variations in evaluation criteria among evaluators (e.g., being too lenient or too strict) and to ensure that fair evaluations are being made across the entire organization. Such a process takes time and effort, but carrying it out carefully will ultimately lead to increased trust in the system.
The president is required to have a strong will to build and maintain a system that guarantees such transparency and fairness. At times, there may be employees who are dissatisfied with their evaluation results and ask for a direct explanation. At that time, the question is whether the basis for the evaluation can be explained logically and sincerely. Under fair rules, everyone can aim for a path to leadership based on their efforts, achievements, and potential. Fostering such a healthy competitive environment and a convincing organizational culture is the important role that an evaluation system should play.
Summary
In this article, I have discussed that an evaluation system is not merely a performance measurement tool, but a strategic device for creating the future of an organization, and that it plays a central role, especially in the development of next-generation leaders. An evaluation system is the most powerful message a president sends to the organization and a mirror that reflects its vision. You must show, in the concrete form of evaluation criteria, what kind of talent you are looking for as a leader and where you are trying to lead the organization.
In the rapidly changing VUCA era, evaluating past performance alone is insufficient. It is essential for management to have the insight to identify talent with the 'potential' to face unknown challenges, continue learning, and pave the way while involving those around them. And to draw out that potential and accelerate growth, the 'operation' of the system, such as encouraging challenges and allowing for learning from failure, is key. High-quality dialogue between evaluators and those being evaluated, linkage with stretch assignments, and above all, the assurance of transparency and fairness that support the foundation of the system are required.
Designing and operating an evaluation system is a process of creating the organization's culture itself. It is not something that is completed overnight, and it needs to be constantly reviewed and improved in line with changes in the business environment and the growth phase of the organization. The president must be deeply committed to this process and show a stance of seriously facing the growth of each employee and the future of the entire organization through the evaluation system. Is this not the true leadership required to build an organization that can overcome the era of change and continue to grow sustainably?
