Boris Groysberg is a professor of business administration in the Organizational Behavior unit at the Harvard Business School. Currently, he teaches courses on talent management and leadership in the school’s MBA and Executive Education programs. He has won numerous awards for his research, which focuses on the challenge of managing human capital at small and large financial organizations across the world. His work focuses, in particular, on how firms can achieve a sustainable competitive advantage by engaging employees in the implementation of business strategy. Groysberg is author of the award-winning book Chasing Stars: The Myth of Talent and the Portability of Performance. He also co-authored Talk, Inc.: How Trusted Leaders Use Conversation to Power their Organizations with Michael Slind. A frequent contributor to Harvard Business Review, he has written many articles and case studies on how financial firms hire, engage, develop, retain, and communicate with their talented employees. Before joining the Harvard Business School faculty, he worked at IBM.
* * *
Morris: When and why did you decide to write Chasing Stars?
Groysberg: A few of my colleagues and I became interested in this topic in the late 1990s. The people around us believed that with the emerging knowledge-based economy, a new knowledge-worker also emerged. He or she owned his or her means of production, which in theory would make them more portable. We wanted to know if this was truly the case-a myth or reality. A lot more people believed that organizations need people more than people need organizations. It was a very different climate.
Morris: Were there any head-snapping revelations while writing it? Please explain.
Groysberg: We looked at star Wall Street analysts who were portable free agents and found that, on average, they lose a lot in terms of performance when they switch companies. This is based on performance data, which is closely monitored and tracked in this industry. Not only can we find that they lose, but we also tried to understand under what conditions this is the case.
Morris: To what extent (if any) does the book in final form differ significantly from what you originally envisioned?
Groysberg: This was a multi-year project, and I have to give credit to many co-collaborators who contributed to this research stream, such my colleagues, as well as the doctoral students and research associates who compiled articles and case studies on various pertinent topics. Also, I have to thank the industry insiders who gave me feedback and venues for additional research. We started out seeking to understand if stars were portable, the conditions for their portability and success (such as moving up vs. down, gender, company), and whether or not my insights were generalizable. The end product ended up being different than what I expected, thanks to the help of many others.
Morris: What are the defining characteristics of what you refer to as a “star”?
Groysberg: There is no universal definition- the definition is setting-specific. Stars’ attributes may differ among different organizations. For example, team-centric stars are about “we”, individual-centric stars are about “I”, and stars who lie in between are about “Wii”. And whether or not those attributes are valued depends on the culture, industry, company and so on, in which a star is working. Stardom is content-dependent.
Morris: Are there significant gender differences between and among stars? Please explain.
Groysberg: You have asked me already about surprises, and this was one: gender differences. The drop in performance is mostly applicable to male stars who change companies. Women who make it to the top do better. I found that star women build more external relationships, and external relationships are portable, while internal ones are not. Furthermore, external relationships are helpful in a new working environment. Lastly, star women’s reasons for switching companies are different than star men’s. Star women are more selective, considering not just compensation, but the culture, the executive leadership and whether or not the company employs an objective measurement of performance. Star men expect new companies to make them better, while star women are looking for companies that won’t kill their careers.
Morris: You suggest in the Introduction that investment banks’ research departments turned out to be a near ideal laboratory for assessing the portability of talent. Please explain.
Groysberg: This setting allows for the observation of stars as they transition to similar jobs, and there’s lots of performance data. We can control for other attributes, it’s a highly visible industry, and many claim that the cost of switching companies is minimal for most. It’s a matter of taking a different subway train.
Morris: You indicate that your research sample consisted of more than 1,000 star analysts. To what extent (if any) is their talent more portable than, say, the talent of C-level executives in finance, human resources, information, marketing, and operations? Please explain.
Groysberg: Another reason why we studied star Wall Street analysts is that they make for a hard test. You can make an argument that if they’re not portable, others are not portable, either. We found this to be true in our other research on general managers and footballers. For example, punters are more portable that wide receivers because the performance of wide-receivers is based more on the relationships that they have with their teammates. The performance of general managers who left GE to become the CEOs of different companies is heavily dependent on the skills learned at GE. For instance, if they were cost-cutters at GE and they joined a company that requires cost-cutting, they do well. Revenue-growers do not do well in a cost-cutting setting.
Morris: What specifically can mobile analysts take with them from one firm to another?
Groysberg: There is both portable and non-portable human capital. Gary Becker at the University of Chicago won a Nobel Prize for his work on this. Portable human capital can go many other places, but non-portable human capital is lost during firm transitions. Some organizations create more non-portable human capital than others, such as Goldman Sachs, GE, or McKinsey.
Morris: For those who have not as yet read Chasing Stars, you examine the process of hiring stars in Chapter 4. What is “the winner’s curse” and why is it especially significant?
Groysberg: In some cases, the “winner” overpays for an acquisition and is disappointed by the actual vs. expected performance. In fighting for the same star, the company that “wins” might overpay for that star, and that star may not perform at the same level as he or she did in their previous position because some performance is not portable.
Morris: What are the especially important do’s and don’ts to keep in mind when integrating stars?
Groysberg: In my research, I found that only a few companies know how to plan or execute integration. This is more than showing someone where the restroom is or giving someone passwords or handing out an HR booklet. Integration happens at a relationship and cultural level. It is about being integrated with your team, colleagues and boss, as well as with the values and norms of the organization. It takes trust and time. Integration plans are developed within the fabric of an employee’s new organization.
Morris: As I read Chapter 7 and the discussion of liftouts, I was reminded of several great teams in years past. The scientists involved with the Manhattan Project, the Disney animators who created classic films such as Snow White and Bambi, Lockheed’s Skunk Works, and Xerox PARC. Here’s my question: What unique leadership challenges do teams of stars such as these pose? Any advice?
Groysberg: Diversity and collaboration are key to successful teams. Eventually, more stars realize that they have to rely on others and that stardom equals partnership. The common challenge is how to get stars to work together on a common goal. Colleagues and I have done papers on this topic (i.e., “Too Many Cooks Spoil the Broth: How High-Status Individuals Decrease Group Effectiveness” by Boris Groysberg, Jeffrey T. Polzer, and Hillary Anger Elfenbein in Organization Science, May/June 2011). We found that too many stars on team may not be good for team, unless the stars are diverse. Leaders who managed diversity and created inclusive cultures and structurally had diverse stars on their teams were more successful at reaching common goals and reduced the “too many stars syndrome”.
Morris: What seem to be the major reasons why stars leave one firm for another? In your opinion, how best to reduce (if not eliminate) such attrition?
Groysberg: There are many reasons why people leave a company. As it is often said, people join companies, but leave managers. Also, some people have the propensity to move. Organizational factors that contribute to a person’s decision to leave include having a bad boss, a lack of feeling of accomplishment, and no room for growth. Turnover is also dependent on the economy. Factors are individual, organizational, related to industry or country, or macro-economic.
Morris: In the final chapter, you cite and discuss several lessons “from Wall Street and elsewhere.” In your opinion, which will probably be most difficult for your readers to act upon? Why?
Groysberg: Acquiring companies and acquiring stars present similar challenges. An acquisition can decrease a company’s value if the acquired company is not well integrated. If you want to be better than the average, you cannot skip the integration of stars. It’s not expensive, but it is difficult. It’s also not an event; it’s an ongoing process.
Morris: Looking ahead (let’s say) 3-5 years, what do you think will be the single greatest challenge in what has become a [begin italics] global [end italics] competition for talent? Any Advice?
Groysberg: I have collected a lot of data on the quality and depth of leadership benches, and global trends make me worry. There is a lack of depth on many leadership benches, and many managers are becoming more specialized. People who run companies in 20 years need to be general managers. They need to be skilled at talent development and succession planning. Also, if there is less investment in company culture and cultures are less unique, how does that affect the portability of stars? If that happens, we will have lots of free agents who will likely move every 3-4 years. Will we find more portability in 20 years than 5-10 years ago? If so, it will be harder for companies to sustain a source of competitive advantage based on talent.
* * *
To read my interview of Boris and Michael Slind, please click here.
Boris cordially invites you to check out the resources at these websites:
His HBS faculty page
Chasing Stars page
Talk, Inc page
You can contact him directly by clicking here.