Many companies hire top-notch talent but then fail to reap the full benefits of those star employees. Often, the culprit is faulty managerial practices.
The current economic recession has provided managers with a tempting environment for acquiring “star” employees on the cheap. Consider, for example, how the recent failures of large organizations like the investment banking giant Lehman Brothers and the venerable law firm Heller Ehrman Partners have enticed competitors to go on a hiring spree, acquiring top-notch talent from those now-defunct businesses. Similar opportunistic hires occurred after the downfall of Drexel Burnham Lambert in 1989 and Arthur Andersen in 2002. But the track record of such acquisitions of human capital has been mixed, with many companies failing to integrate their new talent.
Apparently, an organization can’t just hire star employees and then expect those individuals to automatically shine in their new environment. But how, then, can companies ensure that they get the most out of the talent they hire? Our research suggests that co-workers are a crucial factor. In our study of equities analysts, for example, we found that the greater the number of high-quality colleagues an analyst had the better that analyst performed.1 But it wasn’t enough just to have smart teammates: Analysts also benefited from good portfolio strategists (who help investors allocate their entire investment portfolio and whose research complements and contextualizes an analyst’s work) and high-performing salespeople (who ensure that clients are aware of the analyst’s work — and name). In addition, having better colleagues in the immediate workgroup, at the department level and in client-facing roles all contributed to lower analyst turnover, especially among the best performers.
The Leading Question
How can managers get the most from their star employees?
- Stars shine brightest when surrounded by colleagues of equally high quality.
- Because the best employees are typically over-scheduled, managers should never assume that collaboration will “just happen.”
- High-achieving professionals may be willing to accept a significant pay cut to work with other talented individuals.
In other words, to get the best out of top-quality workers, management shouldn’t treat them as solo performers but should instead surround them with colleagues of equally high quality. Done correctly, this practice provides three main advantages: It boosts the quality of each individual’s work; it improves the delivery of service to customers; and it reduces turnover among the top performers.