Assessing a leader’s long-term potential

Leadership potential in the workplace is the ability an individual has to move into increasingly complex, senior roles while sustaining — and even elevating — their level of performance. Understanding and assigning leadership potential can be a bit like holding a melting ice cube: difficult to grasp in its entirety, yet unmistakable when it slips through your fingers.

That difficulty has real consequences. According to DDI's 2023 Global Leadership Forecast, there has been a 17% drop in the number of leaders who say their organization has high-quality leaders — the biggest decline in a decade. Meanwhile, developing the next generation of leaders ranks as CEOs' second-biggest concern, trailing only the challenge of retaining top talent. The two problems, of course, are deeply connected.

And the introduction of AI into the ethos is a double edge sword. For leaders who feel their company is helping them grow into an AI-fluent future, they see a reason to stay, whereas for those who feel left behind may be looking elsewhere. The companies getting ahead of both problems are the ones treating AI fluency as a leadership competency worth developing explicitly - not an afterthought to their existing programs.

Predicting and assessing leadership potential is crucial for talent planning and shapes recruiting and promotion decisions, guiding the right talent to the right roles at the right time. Get it right and the impact is significant: organizations with structured leadership development programs report a 25% drop in turnover and 59% better retention outcomes overall. Get it wrong and you're left with bench plans that look good on paper but fall apart the moment they're tested.

During a talent and performance workshop last year with HR leaders, I was asked to describe how we view leadership potential. The answer came to me immediately: first in my gut, then crystallized through logic. Leadership potential is the combination of:

Aspiration  ×  Capability  ×  Effort

Together, these three components signal a leader's potential to grow their impact throughout the course of their career. If your goal is to drive a culture of high performance, assessing leaders against these three dimensions is a strong foundation. How far will your leaders go and how much should your organization invest in their long-term development? The answer lies within the nuances of this equation.

Some organizations follow a similar model, swapping 'capability' for 'ability' and 'effort' for 'engagement.' The distinction between capability and ability is subtle but important: capability speaks to a person's potential to do something, while ability reflects a proven track record of actually doing it. Engagement, meanwhile, is a vital indicator of an employee's desire to commit enthusiastically to a company's mission and in the equation above, it lives within both aspiration and effort.

Aspiration

While this component may feel obvious, it is one of the most consistently overlooked in corporate talent management. Aspiration, in a professional sense, encompasses a leader's vision and plan for their own future. Where do they see themselves in five to ten years and how do they intend to get there?

The important aspect of aspiration isn't just having it. It's knowing it and making sure your organization knows it too.

Talent planning is the practice of identifying the right people for critical roles, building succession pipelines and developing leaders before the need becomes urgent. Done well, it ensures high-performing talent is aligned with the company's most important priorities. But one piece of information is almost always missing from these conversations: the leader's own voice.

Research supports this gap. High-potential leaders are 2.4 times more likely to stay with their organization when they have career goals paired with a development plan to help achieve them. And yet, many talent planning sessions proceed without ever asking the most obvious question:

Is the role you've placed this leader on the bench for one they actually want?

If you don't know the answer, your bench strength may be weaker than your system suggests. Before any talent planning discussion, aspiration conversations should come first. They are the foundation everything else is built on.

Two Leaders, Two Very Different Stories

Consider these two scenarios, both of which play out in organizations every day.

Amanda is a VP of Corporate Finance at a large technology company. She is a high performer who has made it clear through multiple conversations with her manager and HR partner that she wants a rotation in corporate strategy and intends to move into that function when the opportunity arises. Her leaders have invested in her development, sharpening her strategic consulting skills through stretch assignments and coaching. She has been placed on the bench as 'Ready Now' for three VP Strategy roles. When one opens, her HR partner reaches out within the week. Amanda is prepared, motivated, and ready.

Marcus is a VP who joined the company 14 months ago. He's a father of three young children and has mentioned more than once in one-on-ones that he's content in his current role. He's still learning the ropes of his VP scope and isn't thinking about a move anytime soon. In the next talent review, he's placed 'Ready Now' for the SVP role above him.

The first example reflects a talent organization that is working as intended — one that listens, develops and then delivers on its promises. The second represents a well-intentioned but ultimately flawed process. When the SVP role opens and Marcus is approached, he feels pressured rather than honored. He may decline, step into the role before he's ready, or start quietly looking elsewhere, none of which serves him or the organization.

Strong bench planning isn't just about identifying capability. It's about honoring aspiration. Organizations that do both save time, protect culture and build the kind of leadership pipelines that actually stick.

Capability

Capability is the second pillar of leadership potential and the one most likely to be miscalculated. The most common mistake is conflating current performance with long-term potential.

This matters enormously. Research consistently shows that high performance in one role does not reliably predict success in a more senior or different role. In fact, one of the most frequently cited causes of leadership derailment is promoting a high performer into a leadership role without assessing whether they have the underlying capability to lead at that level. The skills that make someone excellent as an individual contributor are often different from, and occasionally in conflict with, the skills required to lead a team, drive a strategy, or navigate organizational complexity.

As one talent management benchmark study put it plainly: past performance does not equal future leadership potential. Performance is an input, not an answer.

What Capability Actually Looks Like

When assessing capability, look beyond the results someone is delivering today and ask: does this person demonstrate the behaviors, mindset, and judgment required at the next level and beyond?

Korn Ferry's research on leadership talent identifies four dimensions worth examining: the competencies a leader consistently demonstrates, the experiences they've accumulated, the traits they carry (intellectual capacity, emotional resilience, agility), and their drivers — what motivates them and whether those drivers align with the demands of a more senior role.

One useful lens is learning agility: the ability to grow from experience, adapt to new environments and apply lessons from one context to another. Leaders high in learning agility tend to perform well in roles they've never held before, which is precisely what succession planning is asking them to do. Organizations that assess for learning agility, rather than just past performance, make better promotion decisions.

A leader's differentiating behaviors are also worth examining closely. Does this person go beyond what's expected? Do they influence without authority? Do they raise the performance of the people around them? These behavioral signals often separate leaders who plateau at a certain level from those who continue to ascend.

A Cautionary Tale

The story of Theranos founder Elizabeth Holmes offers an extreme and instructive example of the risks of assessing capability incorrectly. Holmes possessed tremendous aspiration and the outward markers of capability: a compelling vision, extraordinary confidence and the ability to attract world-class investors, board members, and media attention. By conventional signals, she looked like a leader of rare potential.

What was missing, ultimately, was the technical and ethical grounding required to deliver on what she promised and the self-awareness to acknowledge those gaps. Her belief in her own potential was not anchored in the capabilities required to make it real. The result was one of the most high-profile corporate failures in modern memory.

The Holmes case is, of course, exceptional in its scale. But the underlying dynamic of overweighting aspiration and underweighting actual capability plays out quietly in organizations every day. A rigorous capability assessment isn't a bureaucratic hurdle. It's a safeguard for both the leader and the company.

Effort

Aspiration tells you where a leader wants to go, capability tells you whether they have the raw material to get there and effort tells you whether they're actually willing to do the work.

Effort, in the context of leadership potential, is not simply about working hard. It's about the deliberate, sustained investment a leader makes in their own growth and the growth of those around them. It shows up in the stretch assignments they take on willingly, the feedback they seek out rather than wait for, the development conversations they initiate and the way they show up when things are difficult.

This matters because leadership development is not a passive process. Research from the 70-20-10 learning model suggests that roughly 70% of meaningful development happens through on-the-job experiences, 20% through relationships and feedback, and just 10% through formal training. In other words, no matter how good your company's leadership programs are, they can only do a fraction of the work. The leader has to bring effort to the other 90%.

Effort is also where burnout becomes a critical consideration. According to DDI's 2025 Global Leadership Forecast, 71% of leaders say that taking on a leadership role has contributed to their stress levels. Leadership exhaustion is not a fringe issue, it's the norm. And a leader who is burned out, no matter how aspirational or capable, cannot sustain the performance required of a more senior role.

When assessing effort, pay attention to sustainability, not just intensity. A leader who works at an unsustainable pace may look like a high performer in the short term while slowly building toward derailment. The organizations best positioned to develop long-term leadership potential are those that invest in both activating effort and protecting the leaders who give it.

Putting It All Together

Aspiration without capability is wishful thinking. Capability without effort is wasted potential. And effort without aspiration lacks direction. It is only when all three are present and aligned that an organization can invest in a leader's long-term trajectory with confidence.

The practical implication is that talent planning conversations need to expand. They cannot be limited to 9-box grids and performance ratings. They need to include real aspiration conversations and distinguish performance from potential. And they need to account for the sustainability of the leader's effort over time, not just the volume of it.

Research from Deloitte and Korn Ferry both point in the same direction: organizations that take this more holistic approach to leadership potential see meaningfully higher internal promotion success rates, lower costs and better long-term business outcomes. External hires, by contrast, fail at nearly double the rate of internal ones in the first 18 months.

The ice cube analogy I started with still holds. Leadership potential is hard to grasp in its entirety. But Aspiration × Capability × Effort gives you something to hold onto — a framework that is both practical and honest about the complexity involved.

A Note for Leaders Assessing Their Own Potential

If you are a leader reading this and wondering where you stand, the equation applies to you directly. Ask yourself, with some honesty: which of the three components is your constraint right now?

If it's aspiration and you're not sure what you want next,  invest in clarity before anything else. Have the career conversation you've been putting off and seek out experiences that help you learn what energizes you.

If it's capability and you're not yet ready for the roles you aspire to, find  the gaps and build a plan. The leaders who advance most consistently are not the ones who pretend gaps don't exist; they're the ones who address them deliberately.

If it's effort, ask whether the issue is capacity, motivation, or sustainability. All three have different solutions.

Wherever you land, the most important thing is that you know. Because the leaders who understand themselves are the ones who build careers, and teams, worth investing in.

Emily Thompson is an HR and talent management leader focused on building high-performance organizations. She writes about leadership, talent strategy, and the human side of organizational design.