The Risky Business of Hiring Stars

Boris  Groysberg; Ashish   Nanda; Nitin   Nohria

Article | Harvard Business Review | May 2004

The Risky Business of Hiring Stars

by Boris Groysberg, Ashish Nanda and Nitin Nohria

Abstract

With the battle for the best and brightest people heating up again, you're most likely out there looking for first-rate talent in the ranks of your competitors. Chances are, you're sold on the idea of recruiting from outside your organization, since developing people within the firm takes time and money. But the authors, who have tracked the careers of high-flying CEOs, researchers, software developers, and leading professionals, argue that top performers quickly fade after leaving one company for another. To study this phenomenon in greater detail, the authors analyzed the ups and downs of more than 1,000 star stock analysts, a well-defined group for which there are abundant data. The results were striking. After a star moves, not only does her performance plunge, but so does the effectiveness of the group she joins--and the market value of her new company. Moreover, transplanted stars don't stay with their new organizations for long, despite the astronomical salaries firms pay to lure them from rivals. Most companies that hire stars overlook the fact that an executive's performance is not entirely transferable because his personal competencies inevitably include company-specific skills. When the star leaves the old company for the new, he cannot take with him many of the resources that contributed to his achievements. As a result, he is unable to repeat his performance in another company--at least not until he learns to work the new system, which could take years. The authors conclude that companies cannot gain a competitive advantage or successfully grow by hiring stars from outside. Instead, they should focus on cultivating talent from within and do everything possible to retain the stars they create. Firms shouldn't fight the star wars, because winning could be the worst thing that happens to them.

Keywords: staffing; Employee Retention; Selection and Staffing; Employees; Retention; Competitive Advantage; Human Resources; Performance;

Format: Print

9 pages

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Citation:

Groysberg, Boris, Ashish Nanda, and Nitin Nohria. "The Risky Business of Hiring Stars." Harvard Business Review 82, no. 5 (May 2004): 92–100.

Case | HBS Case Collection | September 2020

Lojas Americanas: Project DNA and the 'People Machine'

Boris Groysberg, Eric Lin and Sarah L. Abbott

Lojas Americanas (“Americanas”) was one of the largest retailers in Brazil. Via its stores, digital platform and Innovation Engine, the company served more than 38 million people. In recent years, Americanas had enjoyed rapid growth; growing from 98 stores in 2001 to 1,700 stores in 2019. As each store had its own manager, and there was a growing need for district and regional managers, meeting these human resource needs had become an increasingly large challenge. Compounding this, one of the company’s core talent management principles was that store managers should be hired from inside the company. This challenge was the genesis for what became known as Project DNA. Via Project DNA Americanas executives aimed to: determine empirically the extent to which store managers impacted store performance; identify those characteristics that differentiated a good manager from an average one; and create a leadership training program to develop and reinforce those characteristics. To date, approximately 1,500 managers had participated in the training, and while it was still early days, initial results had been impressive. The question for Americanas’ management was: what could be done to improve and update the project? And, could the learnings of Project DNA be applied elsewhere?

Keywords: retail; Brazil; Data Analytics; training; growth and development; Data and Data Sets; Analysis; Training; Performance; Employees; Management; Retail Industry; Brazil;

Citation:

Groysberg, Boris, Eric Lin, and Sarah L. Abbott. "Lojas Americanas: Project DNA and the 'People Machine'." Harvard Business School Case 421-038, September 2020. View Details

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In the summer of 2020, Jan Swartz, President of Princess Cruises, was persevering to lead her company back from the depths of the COVID-19 Pandemic. Diamond Princess, one of Princess Cruises’ 18 ships was the site of one of the earliest large outbreaks of COVID-19 outside of China. The outbreak led to hundreds of cases, at least a dozen deaths, media scrutiny, government investigations, and legal proceedings. In early March 2020, Swartz made the decision to pause all global operations of her company, the first cruise company to do so. Six months later, how could Princess Cruises restart operations safely and profitably?

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