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Chasing Stars

By Boris Groysberg

Princeton University Press

446 pages, $38.50

The declaration in recent years that companies have to recognize they are caught up in a talent war has led to a free-agent mentality. Companies with bulging pockets will lure away knowledge workers from their competitors, as if they were basketball or baseball stars. The 2003 bestseller Moneyball, however, suggested that may not be the best strategy, recounting how the Oakland Athletics, under general manager Billy Beane, picked off low-priced players other teams ignored and made them into stars. Now Harvard Business School Professor Boris Groysberg has written what might be the clincher, Chasing Stars, outlining his elaborate study of investment bank analysts.

He chose analysts because they are the ultimate free-agent knowledge workers. The best ones are celebrities, regularly in the media, so their abilities are well known to competing firms. Their expertise is viewed as portable. An analyst who switches companies usually follows the same industries, so the job and external contacts required to carry out that work remain the same. They also don't get distracted by the hassles of moving themselves and family; they continue working in New York and simply go to a different Wall Street address each day. Finally, their performance is tracked by a respected trade journal, Institutional Investor, which compiles an annual ranking of the best analysts, so it's easy to compare how they fared before and after a switch.

Companies are usually eager to woo away the best - and pay bitterly for that lust. First, the seducer often spends too much for the new star, Prof. Groysberg writes. He calls it the winner's curse: There is often an auction for the star's services, and the bidder who most liberally estimated the value of the analyst will win, probably overpaying.

And the star doesn't compensate by increasing his or her output. The study found that these mobile stars experienced an immediate degradation in performance. For example, an analyst who in a given year made the Institutional Investor top rankings and didn't move made the rankings the next year 84.9 per cent of the time. But a top-ranked analyst who moved had only a 69.4 per cent chance of being ranked the following year. "Even after five years at a new firm, star analysts who changed employers underperformed comparable star analysts who stayed put," he reports.

The reason - and it applies well beyond this field - is that at work we have some skills that are portable should we move, and other less-fluid skills that are related to the workplace in which we situated. The analysts took their brains and outside contacts with them. But they couldn't take the special culture in which they were used to working, or the unique computer economic models their company had developed, or their colleagues who analyzed related industries and gave them useful advice, or the salespeople who promoted their work, or their supportive boss and mentors at their existing firm.

"What they left behind, in short, were the capabilities of the old firm and the practised, seamless fit between their own skill and the resources of the company," he notes.

There were two instances where stars didn't suffer a performance dip after switching, but both exceptions actually prove this point about firm-specific factors that tend to limit portability of talent.

The first occurred when a star moved with a bunch of teammates. Presumably in such "lift outs," as they are know, the group of stars was able to bring with them some knowledge and capabilities from their old workplace lacking in the new firm, helping each other to be effective after the move.

The second involved women, who didn't experience the same performance dip as men. That apparently stems from the fact that Wall Street investment houses have a notoriously macho environment and can be inhospitable to women. Prof. Groysberg's research shows how women tend to deliberately cultivate external relationships and resources, which are likely more welcoming to them than in-house colleagues as they carry out their work, and that pays off when they move compared with men who focused more of their efforts inside their existing firm and are thus more wedded to it for their success.

As well, women are more acutely aware of the importance of bosses and mentors; when courted for a new job they are more cautious, and less likely than male analysts to run off with an investment banking sugar daddy.

The book is fascinating reading, as Prof. Groysberg digs deeper into the implications for knowledge workers and portability of jobs. For some readers it may be too general and not practical enough; busy executives outside investment banking may find themselves being drawn into specifics of that field they could live without knowing. Still, there are lessons in here for executives and knowledge workers in general and, more particularly, human resources officials concerned about the talent war for knowledge workers.

In addition: 100 Things I Learned In Business School (Grand Central Publishing, 101 pages, $18.00) by Matthew Preis, a visiting professor of business at the University of Illinois, with sketches by Matthew Frederick provides a series of short, punchy lessons about business that you might learn - or should learn - at business school. Some are well known, while others will likely be new to you, but together they form a quick, engaging reminder of the vast canvas on which a business person paints.

Just in: Executive recruiter shows how to climb the career ladder to success in Getting To The Top (Silicon Valley Press, 264 pages, $21.00).

Tech expert Elizabeth Charnock explains how to optimize your professional digital presence in E-Habits (McGraw-Hill, 250 pages, $26.95).

Motivate Yourself And Reach Your Goals (Hodder Headline, 366 pages, $17.95) by performance coach Frances Coombes is part of the Teach Yourself series that gives you tools for change.

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