Employee potential analysis

It is often said that “employees are the most important resource of any company“. In this respect, it is important for the long-term success of any company to identify, promote and develop the potential of its employees. Potential analyses for employees provide valuable assistance here.

Don't have much time to read? Here is an overview of the most important points:

  • Recognizing and promoting employee potential is a central task of HRand management work.

  • The potential of employees is often assessed subjectively and on the basis of current and past performance.

  • A professional potential analysis begins with the clarification of the assignment and includes various aptitude diagnostic methods.

  • A partnership-based approach between consultants and participants in the sense of joint reflection and the flexible use of different methods are important principles for success.

  • The result of a potential analysis is an individual development and career plan.

References from over 35 years of experience

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Dr. Olaf Ringelband, Managing Director md

Management Diagnostik

Our consultancy focuses exclusively on management diagnostics and can draw on benchmark data from over 30,000 executive assessments.

Making the right management staffing decisions. Recognize competencies and potentials of managers. Avoid bad investments due to miscasting.

Which of your employees have the greatest potential?

Die Leistungsbeurteilung der Mitarbeiter für den Eindruck der Leistungsfähigkeit

Performance assessment

Employee appraisals take place in every company, because even if there is no formal appraisal system, every manager has an impression of their employees’ performance, strengths and weaknesses.

Difference between performance and potential

It is more difficult for managers to answer the question of employee potential. The assessment of potential is often simply based on performance appraisal – according to the principle “if you work well today, you will continue to do so in the future”.

Unfortunately, employee potential is not only related to current performance – otherwise the best soccer players would also be the best coaches, the most successful sales representative the best sales manager and the most resourceful engineer the best plant manager.

Welcher Mitarbeiter hat das größte Potenzial

Potential ... for what?

If a company asks itself which employees have the greatest potential, which are the talents, who are the candidates for future management positions, then the counter question must be which potential profile the employees should be measured against.

In other words, for which challenges, tasks and activities they should have potential.

Although you can also ask “does an employee have general potential?” (see “Potential indicators” below), but the more precise the management’s and executives’ understanding of what the future challenges are, the more precisely the potential of individual employees can be determined.

Employee potential analysis - definition

The aim of analyzing the potential of employees is to make statements about their future performance. The assessment of potential is based on currently recognizable skills, an analysis of strengths and weaknesses and certain indicators of potential.

Similar to any type of suitability diagnostics the higher the quality of the potential analysis, the better the future challenges can be specifically identified.

The instruments used to analyze potential are diverse:

  • Assessment of the supervisor

  • Self-assessment

  • Test procedures such as personality tests or tests to measure intelligence

  • Interviews

  • Assessment center with simulative exercises (e.g. role plays)

  • 360° feedback

  • Knowledge tests

  • Performance data and results on the job

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Potential analysis for employees

Analyze and define future performance!

Areas of application of the potential analysis for companies

From a personnel development perspective, there are three different questions for employee potential analyses:

  1. Potential for successfully mastering future challenges of the current position in a changing market, process, customer and product environment.
    Example: Task in accounting, the activity will be switched from manual posting to digital posting in the future.

  2. Potential for further tasks in completely new functions.
    Example: Promotion from shift worker to shift manager, from sales employee to sales manager.

  3. Potential for completely new, undefined and in some cases as yet unknown future challenges.
    Example: The Management Board would like to know what potential its Management Board assistant has.

Since the first case (potential for an environment characterized by change) is relevant for almost every company, every company actually needs to continuously assess the potential of its employees. Analyzing the potential of employees is genuinely part of the management responsibility of managers. The HR department’s expertise in change lies in supporting managers with suitable tools for analyzing potential.

Competencies covered

Depending on the three potential employee potential analysis questions described above, different competencies are assessed:

  • When analyzing the potential of employees for the skills they will need in the future, these must be defined. This can be knowledge, skillsor abilities(KSAKnowledge, Skills, Abilities). Examples of this are
    • Foreign language skills (in the case of the upcoming internationalization of a company)

    • Digital competence

    • Communicating specialist topics to laypersons (when working in interdisciplinary teams)

    • Project management

  • The most common reason for a potential analysis is certainly to identify high-potential employees for further tasks. As a rule, the following skills are required for a hierarchical promotion:
    • Leadership potential (dealing with personnel)

    • Strategic competence

    • Communication and engagement with different stakeholders

  • The third question is the trickiest, because you want to assess the potential of employees or applicants for future challenges, although you don’t even know what these challenges are yet. The focus here is then on the so-called “potential indicators” as the most important competencies:
  • General intellectual abilities (intelligence and ability to think in a networked way)

  • Self-confidence and resilience(resilience)

  • Willingness and ability to learn (“learning agility“)

  • Performance orientation

  • Empathy and communication skills (“emotional intelligence”)

  • Ability to self-reflect

Results of the analysis

The result of a potential analysis usually consists of two parts. The first is an assessment of the competencies critical to success.

The illustration shows an example of a potential analysis for a “high potential”, the aim of which was to determine the general potential for future tasks.

The second part of the analysis is an individual development plan – what are the appropriate measures to enable the candidate in a potential analysis to develop their potential? This involves not only the classic instruments of personnel development (training, seminars), but also self-guided learning (books, online courses) and, above all, on-the-job personnel development, accompanied by superiors and personnel development.

Professional potential analysis

md gesellschaft für management-diagnostik mbh has been conducting potential analyses for 35 years. As experts in management diagnostics , we not only carry out management assessments, individual assessments, development centers and management audits(management appraisals) with managers, but also numerous potential analyses with top management, executives, junior staff and technical experts.

Potential analysis for employees

Identify development potential together!

Potential analysis process in detail

graphic Process of a potential analysis for employee‘s
Flowchart of the process of a potential analysis for employees

Step 1: Define goal

A potential analysis always begins with a clarification of the assignment – what exactly are the questions that need to be answered? In the case of top managers, the manager himself is often the client, but as a rule the clients are managers and/or the personnel development department.

Step 2: The briefing

In the briefing discussion (ideally together with the candidate and client), the aim of the potential analysis is defined together, i.e. the question “Potential – for what?” is answered.

Step 3: Positioning

In the potential analysis itself (which we refer to as “individual assessment“), we use a variety of procedures and methods: Tests and questionnaires that the participant completes online in advance, as well as simulative procedures (case studies, role plays) depending on the questions and the needs of the participant. However, the core of the potential analysis is a detailed in-depth interview in which the candidate and consultant go through the candidate’s biography together and explore their motives, skills, needs, strengths and weaknesses.

Step 4: Benchmark comparison

This process of self-reflection, which is supported by the consultants, is supported by repeated feedback sequences. Based on our extensive benchmarks of various managers and sectors, participants receive orientation through feedback on where they stand in comparison to other (junior) managers.

Step 5: Conclusion and development plan

At the end of the potential analysis, a joint summary and an initial, rough development plan are drawn up. This can then be further specified in a follow-up meeting a few weeks later; the line manager is often also involved in the follow-up meeting.

Success factors of the employee potential analysis

Erfolgsfaktoren der Mitarbeiter Potenzialanalyse
  • Intensive clarification of the assignment, what are the objectives of the potential analysis, who is the client?

  • Dealing with the candidate on an equal footing, joint reflection on motives, skills, strengths and development opportunities.

  • Targeted use of aptitude diagnostic procedures (tests, questionnaires, simulations) to objectively determine the position.

  • Joint preparation of a development and career plan.


A professionally conducted potential analysis is an important tool for Identify and promote employee potential. When used in a targeted manner, it supports companies in filling management positions in the best possible way in the long term; potential analyses are also helpful for personnel development, as they help to promote employees in a targeted manner, i.e. based on their strengths and development opportunities.

In addition to feedback on the job (from superiors and colleagues), potential analyses offer employees neutral and objective feedback based on cross-company and cross-industry benchmarks.