Boris Groysberg, an associate professor of business administration at Harvard Business School, has researched how firms hire and develop top talent. He took the time to speak with us about why star workers don't always succeed when they go to new organizations.
Companies look to hire talent, or "stars," but you argue that star workers who succeed in one venue may not succeed as much in another—that talent may not be as portable as we generally assume. Why is this?
My colleagues and I studied a number of labor markets: Wall Street analysts, star general managers—people who left GE and became CEOs of other companies—star football players. We've looked at stars who switch firms, switch allegiances—someone from Goldman Sachs going to Morgan Stanley, for instance—and these people really underperform compared to those who stay put.
This is because, in part, there are two types of human capital. The first, general capital, is valuable to different employers. Those are our innate abilities—our ability to do math, for instance. The second is firm-specific—skills and capabilities only applicable to one firm. So Firm A might have a very idiosyncratic computer system which is very valuable to that organization, but not to another. When people leave a firm, they take their general human capital. The firm-specific capital is left behind. When you give up some knowledge, it takes time to acquire more, and so you underperform until you get socialized and get skills applicable to the new company.
What creates stardom in the first place is having a really good match between employer and employee, which is very, very rare. There are exceptions. People who move in teams do really well, which makes sense, since they aren't unplugging all their relationships. And if they move together to a better platform, then they're going to do well. Also, this decline in performance is only really applicable to men. There are exceptions to this rule as well, but that's generally what happens on average.
How could a manager minimize the portability of a star position in order to retain a talented individual?
If someone values team work, collaboration, sharing ideas—also if they value certain idiosyncratic processes—all these things increase the barriers of leaving a firm. Basically, the more someone depends on a firm, the less likely their performance is portable.
Second, managers need to communicate value propositions to their employees—create value for them. If a firm has a great culture, processes and employees, these things are not portable. The thing is, it's hard for people to realize they are not portable. We attribute our successes to ourselves. It's the fundamental attribution error: We are more likely to point a finger to ourselves and say we are special. 'It's all about me.' Research suggests it's not all about you. Most people don't realize this, so managers really need to communicate it to their employees: We're giving you x, y and z. We're giving you great stuff. Companies communicate their value propositions to their customers. If they would just take even a small percentage of what they invest into that and address employees and explain to them that they're not free agents, then they would retain more talent.
How could people use this concept of portability in better managing their own careers?
It applies to successful and not-as-successful people. When you're looking to move somewhere else, or if you're a manager and looking to hire someone else, be honest in considering the factors and relationships that define your success.
For instance, I like working in teams; I like collaborating. And in working for Harvard Business School, I get to collaborate on a lot of papers and cases. I also like writing articles for practitioners. The more talents and processes align, the better off everyone is. You don't want mismatches: a company that is team-based hiring someone who hates working on teams.
My advice is to figure out what your strengths and weaknesses are, and then look at the company and figure out what they're good at, not so good at, what the norms and values and behaviors are. The more of a match, the more successful it's going to be.