The Correlation of High Employee Performance and Leadership Potential Ratings: Case in Petrochemical Industry, United Arab Emirates
Authors: Arao Juan Paolo 
Published: November 2020

Globally, the petrochemical industry has increasingly become a vital component of numerous industrial processes as it provides raw materials for a wide range of products that find application in automotive, construction, and manufacturing. With the recent development in the petrochemical industry, the need to identify, select and develop future leaders based on evidence-based criteria has become significantly important to ensure leadership and business continuity in the petrochemical industry in the United Arab Emirates.

The objective of the proposed paper is to determine the relationship between high employee performance and leadership potential ratings as two factors being considered in a talent pool wherein potential leaders are selected during succession planning.

Fifty-five (55) high performing leaders whose performance rating is either exceed expectations or significantly exceed expectations were extracted and correlated against their potential ratings using correlational data statistical analysis. The composition of 55 high performing leaders came from various leadership levels such as section heads, supervisors, department managers, and vice presidents. Each employee's performance rating was correlated against each of the 5 factors that constitute leadership potential resulting in a unique correlational coefficient for each of the leadership potential factors.

The result of the correlational research analysis revealed that there is no correlation between high employee performance and leadership potential ratings. Employees who have high performance at the current role do not necessarily become an effective leader in a higher and more complex leadership role.

The correlation coefficient of each of the five factors against the employee's performance ratings:

Performance and Innovation: −0.067

Performance and Performing: +0.086

Performance and Reflecting: +0.197

Performance and Risking: +0.190

Performance and Defending: +0.173

In order to establish that there is a strong correlation between the two variables, the correlation coefficient must be between .80 to 1.0.

The findings supported the fact that after administering potential assessments and generating employee's potential rating plotted in the 9-box grid, some leaders still manually calibrate (decrease or increase) employee's potential rating and sometimes including performance rating. Furthermore, not all employees who are high performers and got high potential ratings were perceived as potential leaders nor demonstrated leadership effectiveness when promoted to a more senior role.

This paper will present novel and additive information to leadership development and succession management by providing guidance on utilizing evidence-based indicators for leadership potential as an alternative to employee performance and potential ratings.

Some of the practical implications to oil and gas and petrochemical companies using employee performance and potential ratings as inputs to the talent pool and leadership potential identification: Leadership development programs and readiness level progress in succession management must be anchored in evidence-based criteria on leadership effectiveness.Inputs to future leader's personal development plans must be aligned to factors contributing to an effective and successful leadership.Leadership potential assessments must be anchored based on evidence-based criteria on successful leadership.