ABSTRACT
Differentiation is inherent in performance management because, by its very nature, it demonstrates that while some employees meet and even exceed the performance standards of their jobs, others do not meet the same standards. The limited effectiveness of many performance management systems lies in the failure to make an objective and honest differentiation in the performance of the workforce. Nevertheless, potential assessment is critical because it enables an organization to differentiate talent from average or mediocre employees. According to, potential assessment consists of the following three mutually-related domains of leadership: how managers set their business agenda; how they take others along; and how they present themselves. Performance evaluation is therefore plagued by a number of pathologies which not only destroy its objectivity and credibility, but also compromise it as an instrument for differentiating talent from non-talent. Central tendency defeats the purpose of differentiation and puts at risk management's ability to reward and develop talent equitably.
