Talent! Even though many companies seem to have the pick of the lot in today’s job market, “talent” is still the rallying cry of hiring managers and CEOs everywhere. Indeed, particularly in industries based on knowledge and skill — from consulting to pharmaceuticals to professional sports to food services —organizations are still competing for the best, the brightest and the hardest working: those overachievers who regularly outshine the merely competent. The belief is that such individuals — the financial analyst with uncanny market insights, the baseball pitcher with a devastating curveball, the pastry chef with sumptuous concoctions — are a key source of competitive advantage.

Past research is clear on the benefits of high-performing workers (let’s call them “stars”). For highly complex jobs, the top 1% of employees tends to outperform average workers by 127%.1 Star computer programmers are more productive than average ones by a ratio of eight to one.2 The top 1% of inventors is five to 10 times as productive as average inventors.3 And so on. In fact, in nearly every industry studied, researchers have uncovered the disproportionate effects of talent. Clearly, why wouldn’t any organization want to corral as much as possible of that tiny fraction of people who are superstars in their fields?

But reaping the benefits of such talent is not so simple. Say you hire a star. Now you’ve got the talent you need to break into a new market and shoot to the top — but for how long? How can you guarantee that your new star will continue to be a star, and that he or she will stay with your organization long enough to make your investment worthwhile? Consider that employees have become increasingly mobile, as the popular notion of “free agents” suggests — workers who can pick up and take their skill sets into any environment. Although the term “free agency” originated in the sports world, it is now commonly used in reference to knowledge workers, such as management consultants, investment bankers, attorneys, financial analysts, research scientists and CEOs and other executives. Skilled craftspeople and other nonprofessionals (for example, hair stylists, massage therapists and restaurant chefs) might also be viewed as free agents, because when they move from one venue to another they can take their expertise (and their devoted customers) with them.

But, in actuality, stars may not be as portable as they — and the companies that woo them — might think. Indeed, our research has shown that hiring a star can be very risky not only to that individual’s subsequent performance but also to the morale and productivity of veteran employees (who might wonder why they are not getting the glory and high salaries that the stars command) and even to the stock value of the hiring company.4 So, how can you truly know if star performers can replicate their success in a new environment — in short, if they are portable?

Of course, one way to avoid the risk of high-profile hires is to develop that talent internally. But that is not always possible, and even then managers need to be concerned with retaining those in-house stars. Indeed, the issue of portability is complex and multifaceted. How can managers think strategically about why — and when — some workers are portable while others are not?

What Is Portability?

In the early 1960s, the economist Gary Becker identified two types of human capital: general skills, which have potential value to more than one employer, and company-specific skills, which are useful only to a single employer. General human capital raises portability; company-specific capital erodes it.5 Recently, after studying the portability of CEOs, we expanded Becker’s dichotomy into five different types of human capital, listed from most portable to least: general management (the skills, knowledge and traits required to manage), strategic (specific experience in cost-cutting, driving growth and so on), industry-specific (skills and training useful in one industry but not in others), relationship (interpersonal relationships within a company) and company-specific (knowledge of an organization’s routines and procedures).6 Although we were specifically studying CEOs, the five categories probably apply to most — if not all — managers in an organization.

To assess the portability of any particular job, managers should ask themselves various questions along the lines of the following: Does the position rely extensively on teamwork? Will a person in the position require sponsorship or buy-in from colleagues or others in order to take action and be effective? Will this person be engaged in extensive knowledge sharing? Does the position rely extensively on complementary functions or departments in order to reach or serve customers? Is the position primarily engaged in external relationships with customers, suppliers, partners or others? Does much of the value of the position come from unique capabilities, team building, an understanding of workplace culture or other intangible qualities?

Another important thing to note is that different workers, even in the same jobs, can develop differing degrees of portability, either because of personal preference or organizational constraints. Employees in corporations that have suffered from managerial turnover and lack of direction, for example, will tend to form stronger external relationships and thus become more portable.

Portability: Personal or Positional?

In the past, we have looked at portability as an attribute of a person, team or organization, but it can also be viewed as an attribute of a position. With that perspective in mind, the question becomes, are some jobs inherently more portable than others? Although some researchers have looked at differences in portability between industries, few have investigated it for jobs within a given industry. Specifically, do certain jobs require different levels of company-specific human capital, thus making some workers more portable than others?

To examine this question, we investigated a very different kind of free agent from the knowledge workers typically studied — professional football players. (See “About the Research.”) Interestingly, the labor market of the National Football League provides an almost ideal laboratory: All “companies” (that is, teams) are engaged in identical work; the job positions are the same for all teams; success can be quantified from game statistics; and employee moves are a matter of public record. The obvious choice would have been to study quarterbacks, but the best NFL quarterbacks (such as Tom Brady and Peyton Manning) rarely change teams. So we decided to focus on star wide receivers and punters, and we compared the performance of players who switched teams with that of those who did not.

The performance of wide receivers is governed by complex interactions with teammates. Receivers must have sufficient speed and agility to escape defensive players, but they must also do other things: run specific routes based on timing and calculated distances, catch balls thrown by quarterbacks who themselves are under duress from charging defensive players, and elude defensive backs chasing them (who may also interfere with a receiver’s attempt to catch a ball, within certain limits prescribed by the rules of the game).

Punters, on the other hand, engage in the simple but difficult act of kicking a football. How far a punter kicks a ball is almost entirely dependent on the player’s individual strength and skill. Throughout the league, punters may wear the same uniform as their teammates, but they are very much individual performers. The culture of football teams reflects that difference in the degree of company-specific human capital. Punters usually practice by themselves and, when even the best punters switch teams, few sports pundits take notice or care. The same cannot be said of any other position, except for that of a field-goal kicker (who has a role that is most similar to that of a punter). Are punters, then, more portable than wide receivers?

Yes, according to our study results. For one thing, punters move more than twice as often as wide receivers: The turnover rate for star punters during the 10 years of our study was 19.4% compared with only 8.3% for star wide receivers. This raises the question of whether wide receivers are, in fact, aware of the risk of changing teams, given the extent to which their performance is based on teamwork.

In general, the performance of pro athletes is affected by their age: All the wide receivers in our study declined in performance over their years of playing. However, those who moved saw their performance drop much more steeply. For wide receivers who switched teams, the average number of receptions, receiving yards and receiving touchdowns all declined compared with those who stayed put. Interestingly, the performance of those who moved stabilized after a year, which suggests that after a period of adjustment the team-specific human capital that had been lost with the move could be rebuilt at the new team.

Punters, on the other hand, can take it with them. We found no significant difference in performance between punters who changed teams and those who did not. The performance of those who moved remained stable and did not improve over time at the new team. This suggests that punters have little need for any team-specific human capital. Indeed, increased knowledge of their new team’s players and culture did not seem to benefit their performance.

Similar observations have been reported in studies of Major League Baseball. Specifically, players with the most company-specific human capital (catchers and shortstops) are the least likely to be traded; the independent outfielders are traded most often; and the remaining infield players rank somewhere in between.7 Such findings — in addition to our own results — suggest that managers should focus their attention not on the question of whether performance is portable, but on how much performance is portable and for which jobs it is portable.

(Reprint #:50112)

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