There are many companies which boast about hiring the best of the best. Looking for stars sounds like a great business approach to staffing your company. Who wouldn’t want to work with people renowned in their field of expertise or known for their successful careers?
Managers also tend to believe that hiring stars is the best way to keep them one step ahead of their competitors. Great team = great success. Many people management strategies rely on that hypothesis. But a few weeks ago it occurred to me that the reason for that might not be so clear. So I started asking myself:
Why do companies want to look for and hire only top performers?
In one of my previous article about the cost of toxic coworkers I quoted a study [1] that put more value on replacing a toxic coworker than hiring a star. But then again while reading “Chasing Stars: The Myth of Talent and the Portability of Performance” [2] I got inspired to question that thesis once more and analyze what Boris Groysberg, a professor of business administration at the Harvard Business School, managed to inspect.
Talent research
In his research Boris Groysberg examined over a 1,000 stock analysts working at 78 investment banks and over 20,000 non-stars coming from 400 banks. It was a good idea to research the financial market since it’s small and concentrated. Most of top stock analysts work in Manhattan and to them changing jobs means simply moving to another building on Wall Street. Thus, they don’t experience the stress that comes with leaving their city, their state or most importantly their family.
Talents are not portable
After switching companies, star analysts who had been very good before suddenly suffered an immediate and lasting decline in performance. The most important finding was that the exceptional performance turned out to be far less portable than it was believed.
This proves that perks of the job like high salary or company stocks don’t make talents more portable. A person who is the best in one company is not going to be automatically a top employee in the next corporation. Acquiring even the brightest star on the market doesn’t guarantee the company’s success. There were few exceptions in Boris’ study, such employees who switched to better companies. Their performance increased but it was thanks to additional settings.
Why is it so?
Exceptional performance is dependent on company-specific factors. They can either help or disturb employee in working effectively and they are tied to the specific company. Boris Groysberg found that:
Their earlier excellence appears to have depended heavily on their former firms’ general and proprietary resources, organizational cultures, networks, and colleagues.
Individual performance is a result of not only talent and education, but also company resources and capabilities. You can find three main categories of resources that affect individual performance. First, hard nonportability – dependent on proprietary information systems and so on. Then product-related nonportability – linked to a unique product and soft nonportability – connected with relations.
Teams are more portable
The additional phenomenon that Groysberg managed to prove is that teams don’t experience a performance decline while moving to another company. He found that people
I know of a few outsourcing companies that this rule applies to. They prefer to outsource a whole team to a customer rather than a single employee. This confirms that it’s not only about the money. Of course more people outsourced means more income for outsourcing company but it’s also about the overall performance and customer satisfaction.
Don’t buy starts, grow them!
Based on those results maybe you should ask yourselve which is better – hiring stars already established on the market or breeding them internally? And it looks like employing top performers isn’t necessarily the best option.
There are so many factors you need to consider apart from individual performance, like culture and company-specific attributes. According to study you cannot expect that hiring top performer is going to help your team instantly. Especially if a company struggle with poor culture.
And what’s your experience with this issue?
References
[1] Michael Housman, Dylan Minor. (2015). Toxic Workers. Harvard Business School.
[2] Viswesvaran, Chockalingam (Vish). (2011). Boris Groysberg. (2010). Chasing Stars: The Myth of Talent and the Portability of Performance. Princeton, NJ: Princeton University Press. 464 pages. Human Resource Management. 50. 10.1002/hrm.20427.