CEOs recognize that building and maintaining the pipeline of emergent senior management is getting more difficult. PricewaterhouseCoopers in a recent survey of CEOs discovered that they have a serious concern about the future of talent at all levels. Competition for hiring is going global, and demographics are resulting in a shrinking percentage of the workforce in the 35-to-44-year-old sweet spot for leadership development. For developed and increasingly developing economies talent shortage is an issue.

The executive search firm, Egon Zehnder, in a recent Harvard Business Review article, described how hiring, retaining and creating a leadership pipeline based on individual's potential is needed to succeed in today's ever-changing and complex business environment. "21st-Century Talent Spotting" by Claudio Fernández-Aráoz provides data from research that shows potential as the most important predictor of success at all levels of management, including the C-suite and the board. Zendher's data and our experience tells us that assessment based on potential can be done with a high level of accuracy, but it is much more difficult than assessing specific skill sets and competencies based on past performance.