Are superstars as good when they move jobs?
That is debatable. On average, internal hires outperform external ones. People promoted from within have some obvious immediate advantages over new joiners. They know who to approach to ask dumb questions; they can actually log in. If these kinds of basic procedural issues were the only problem, then a star should quickly brush them aside. But the more profound issue is that a person’s performance is not just a matter of their own brilliance. It is often inseparable from the context—the relationships, culture, processes and tacit knowledge—that surrounds a star.
A variety of studies have tried to tease out how much these firm-specific factors matter to the performance of hotshots. Perhaps the best-known research in this area has been done by Boris Groysberg of Harvard Business School. In one paper written with Linda-Eling Lee, of MSCI, and Ashish Nanda, also of Harvard, Mr Groysberg looked at the performance of the best investment analysts, as measured by external rankings, after they had moved firms.
In theory, a move ought not to have made much difference to how well they did their job: analysts often cover the same firms for the same clients. In practice, the stars’ performance declined compared with colleagues who stayed put. More recent research, by Claudia Gabbioneta of the University of York and her colleagues, found the same thing. They looked at recruitment among British corporate-law firms between 2000 and 2017, and found that, on average, practice areas that hired a star underperformed those that did not in the subsequent year.
That may be because incoming stars disrupt the performance of existing employees. A study by Matteo Prato of ESADE and Fabrizio Ferraro of IESE, both in Spain, also looked at the movement of securities analysts to see if the arrival of an ace affected their new colleagues. They found that the performance of the existing team fell, particularly among lower-ranked analysts; that fits with the hypothesis that stars will gobble resources and attention which might have gone to less celebrated peers.
There are nuances. In another co-written paper, Mr Groysberg looked at the performance of top American football players who moved teams. Wide receivers, whose job entails complicated plans involving words like scrimmage, did worse if they switched teams than those who did not. Punters, who are very good at kicking a ball but don’t have to interact much with their teammates, saw no such drop. If a job genuinely depends on individual prowess, talent can travel.
Alternatively, if high performance is caused by the interactions of a group of people, then one answer is to lift out an entire team. Changing employers did not greatly affect the performance of top-tier analysts who moved with their teammates, according to the study by Mr Groysberg et al. The personality of the new recruits also matters: a study of American biotech firms by Rebecca Kehoe of Cornell University and Daniel Tzabbar of Drexel University found that collaborative stars helped their peers become more productive.
A superstar strategy may make more sense when it comes to AI. This is a field where cutting-edge knowledge is at a premium. Small numbers of talented people can have a disproportionate impact. And there are fewer incumbent employees to disappoint. Equally, the research also suggests that stars do best when they move to a higher-performing firm; what they lose in organisational knowledge and relationships they make up for with an environment better able to harness their talents. Spraying money on stars in order to play catch-up, in other words, is a gamble that may not pay off. ■
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