How to identify leadership potential in your workforce
Every organisation has people with leadership potential it has never noticed. They are not on the high-potential list. They may not be your top performers. But they learn fast, handle pressure, and already have colleagues who turn to them for direction.
Finding these people has become urgent. Gallup’s State of the Global Workplace 2026 shows manager engagement fell from 31% in 2022 to 22% in 2025, with the steepest drop coming in the last year. Meanwhile, DDI’s HR Insights Report 2025 found that only 20% of HR leaders have successors ready for critical roles.
The instinctive response is to look outside, or to promote whoever delivered the best results last year. Research suggests a better path: learn to recognise potential as something distinct from performance, then measure it systematically across your whole workforce. This article explains how.
Performance vs potential: why your best performer may not be your next leader.
Performance describes how well someone does their current job. Potential describes how well they are likely to do a bigger, different job in future. The two overlap, but far less than most promotion decisions assume.
The strongest evidence comes from economics. In a study published in the Quarterly Journal of Economics, now widely known as the Peter Principle study, Alan Benson, Danielle Li and Kelly Shue analysed sales workers at 131 firms. Companies consistently promoted their top sellers, even though other observable traits, such as how much someone collaborated with colleagues, were better predictors of who would become an effective manager. And the top sellers who were promoted tended to become weaker managers: the sales performance of their teams declined.
Yet most organisations still blur the two. The Talent Strategy Group’s 2024 High Performer and High Potential Development Report, a survey of more than 300 companies, found that only 57% have a formal process for identifying high potentials. And 75% say fewer than half of their designated high potentials have a high-quality development plan. Separating performance from potential, and measuring each on its own terms, is the first step towards finding real leadership potential.
Five research-backed markers of leadership potential.
There is no single test for potential, but research points to a small set of markers that predict leadership success better than past results alone.
Learning agility is the ability and willingness to learn from experience and apply it in new, unfamiliar situations. A meta-analysis by Kenneth De Meuse (2019) of 20 field studies found strong relationships with both leader performance and rated potential. The evidence base is still limited and researchers continue to debate how best to measure the construct, but learning agility is already among the criteria global organisations most often use to identify high-potential talent. Self-efficacy, hope, resilience and optimism together form psychological capital. A meta-analysis of 51 samples and 12,567 employees linked it to higher performance, including objective measures, as well as to commitment and wellbeing. A longitudinal study found that gains in psychological capital preceded gains in performance. Unlike fixed traits, these resources can be developed, which makes them a practical focus for growth plans. The most direct evidence of leadership potential is how people already influence others. The Full Range Leadership Model (Avolio & Bass) captures this. A meta-analysis by Judge and Piccolo (2004) found transformational leadership correlated .44 with leadership outcomes, while passive, laissez-faire behaviour correlated –.37. Structured team feedback reveals these patterns long before formal promotion. In the Peter Principle study, collaboration with colleagues predicted later managerial success better than individual sales results. People who help others succeed are rehearsing leadership in their current role. Gallup’s 2026 report identifies manager-led AI adoption as a key driver of frequent AI use. Yet in a Gallup study in Germany, only 21% of employees said their manager actively supports their team’s use of AI. Curiosity about new tools, comfort with ambiguity and the ability to guide others through change are now core leadership markers, not optional extras.
Learning agility
Psychological capital
Leadership behaviour as the team experiences it
Collaboration
Readiness to lead through AI and change
Why identifying high-potential employees must go beyond the HiPo list.
Traditional high-potential programmes rely on nominations. A manager names a few people, and everyone else is assessed, if at all, on impression. This creates two problems.
First, impressions are unreliable. The most recent large re-analysis of selection research, by Sackett and colleagues in the Journal of Applied Psychology (2022), found structured interviews to be the strongest predictor studied, with a validity of .42. Unstructured interviews scored .19, less than half as strong.
Informal judgements also carry bias. A 2024 study in Organization Science, “Passion Penalizes Women and Advantages Men in High-Potential Designations”, found that the same signal, visible passion for the work, increased men’s chances of being labelled high potential while decreasing women’s. When potential is judged on impression, the talent pool shrinks before anyone is assessed.
Second, people who see no future for themselves leave. WorldatWork’s 2026 State of Rewards Report found that employees dissatisfied with their career development were almost twice as likely to say they were extremely unlikely to stay. The same report cites the World Economic Forum’s Future of Jobs Report 2025, which estimated that internal reskilling costs about 30% less than external hiring.
The pattern is hard to ignore. In many organisations, the talent problem is less a shortage of potential than a shortage of visibility.
Not everyone should lead, and that is a strength.
Identifying leadership potential also means recognising where it is absent. Some of your most valuable people will create far more impact as deep experts than as people managers. Pushing them into leadership because it is the only route to recognition hurts them, their future team and the organisation.
The Peter Principle researchers drew the same conclusion: firms reduce their costs when they decouple rewards for current performance from promotion into management. In practice, that means two credible career paths:
- A leadership track for people whose markers point to leading others: learning agility, team-rated leadership behaviour, collaboration and readiness to guide change.
- An expert track with equal status, pay progression and influence for people whose strengths lie in mastery, innovation or specialist judgement.
Mapping the work roles people naturally adopt within a team makes this choice visible early, before anyone is promoted into the wrong role. At Zortify, this is the purpose of ZortifyTeam, which maps six work roles across a team to show who suits which track.
Using AI to identify leadership potential responsibly.
AI makes it possible to assess potential across an entire workforce, not just a nominated few. It can analyse thousands of open-text team comments, identify patterns in validated questionnaires, and highlight people a manager would never have named. Used well, it widens the talent pool and reduces the influence of individual bias.
Used badly, it can automate the very bias it is meant to remove. That is why European regulators treat it seriously. Under the EU AI Act, AI used for recruitment, promotion, task allocation or performance evaluation is classified as high risk. In May 2026, EU institutions agreed through the Digital Omnibus on AI to move these high-risk obligations from 2 August 2026 to 2 December 2027. As employment lawyers note, this is a delay, not a change of direction: high-risk workplace AI remains regulated.
HR leaders can use the extra time to choose tools that meet four standards now:
- Validated science. Models built on established constructs, such as Full Range Leadership or psychological capital, rather than opaque correlations.
- Explainability. Every insight should be traceable: what was measured, how, and why it matters.
- Human decisions. AI informs the decision. People make it.
- European data standards. Clear data residency, consent and privacy safeguards.
This is the approach behind Zortify’s diagnostics. ZortifyLeader combines structured team feedback based on the Full Range Leadership Model with AI analysis of open comments. ZortifyGrow builds development plans on measured traits, including self-efficacy, resilience, optimism and an agility mindset.
How to start: five steps to find the future leaders already in your workforce.
Agree which markers matter for your next leadership roles, such as learning agility, team-rated leadership behaviour and readiness to lead change. Assess everyone in relevant roles, not just nominated high potentials. Visibility is the first fairness test. Replace informal impressions with validated questionnaires, structured team feedback and consistent criteria. Create expert and leadership paths with equal status, so promotion is never the only form of recognition. Use the results to start targeted development now. When a role opens, choose from people who are already prepared.
Define potential in your context.
Widen the pool.
Measure with structure.
Build two tracks.
Develop before the vacancy.
The result is a succession process that is faster, fairer and grounded in evidence, rather than one that begins only when someone hands in their notice.
Frequently asked questions about leadership potential
Leadership potential is the likelihood that someone will succeed in a larger or more complex leadership role in future. It differs from performance, which measures success in the current role. Key indicators include learning agility, psychological capital, collaboration and how others already experience the person’s leadership. Performance looks backwards at results in today’s job. Potential looks forwards at someone’s capacity to grow into a different, bigger job. Research shows the two often diverge, which is why promoting only top performers frequently results in struggling managers. Use structured, validated assessments across a broad group of employees rather than relying on manager nominations. Combine measures of learning agility and psychological traits with structured team feedback on leadership behaviour, and apply the same criteria to everyone. Yes, when it is built on validated science, explains its results and supports rather than replaces human decisions. In the EU, AI used for promotion and evaluation is classified as high-risk under the AI Act, with obligations due to apply from 2 December 2027. Many markers can. Psychological capital, including self-efficacy, resilience and optimism, has been shown to change over time and to precede improvements in performance. Learning agility can also be strengthened through stretch assignments and reflective practice.What is leadership potential?
What is the difference between performance and potential?
How do you identify high-potential employees?
Can AI help identify leadership potential?
Can leadership potential be developed?
Prof. Dr. Florian Feltes
Prof. Dr. Florian Feltes is co-founder and co-CEO of zortify and a forerunner in AI-supported HR innovation. Together with his team, he develops intelligent personality diagnostics and helps companies identify the perfect candidates—without expensive assessments and without bias. His vision: a world in which every company can effortlessly form high-performance teams and create work environments that allow human potential to flourish.
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