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"Groysberg, Boris"
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Too Many Cooks Spoil the Broth: How High-Status Individuals Decrease Group Effectiveness
Can groups become effective simply by assembling high-status individual performers? Though an affirmative answer may seem straightforward on the surface, this answer becomes more complicated when group members benefit from collaborating on interdependent tasks. Examining Wall Street sell-side equity research analysts who work in an industry in which individuals strive for status, we find that groups benefited-up to a point-from having high-status members, controlling for individual performance. With higher proportions of individual stars, however, the marginal benefit decreased before the slope of this curvilinear pattern became negative. This curvilinear pattern was especially strong when stars were concentrated in a small number of sectors, likely reflecting suboptimal integration among analysts with similar areas of expertise. Control variables ensured that these effects were not the spurious result of individual performance, department size or specialization, or firm prestige. We discuss the theoretical implications of these results for the literatures on status and groups, along with practical implications for strategic human resource management.
Journal Article
Chasing stars : the myth of talent and the portability of performance
It is taken for granted in the knowledge economy that companies must employ the most talented performers to compete and succeed. Many firms try to buy stars by luring them away from competitors. But Boris Groysberg shows what an uncertain and disastrous practice this can be. After examining the careers of more than a thousand star analysts at Wall Street investment banks, and conducting more than two hundred frank interviews, Groysberg comes to a striking conclusion: star analysts who change firms suffer an immediate and lasting decline in performance. Their earlier excellence appears to have depended heavily on their former firms' general and proprietary resources, organizational cultures, networks, and colleagues. There are a few exceptions, such as stars who move with their teams and stars who switch to better firms. Female stars also perform better after changing jobs than their male counterparts do. But most stars who switch firms turn out to be meteors, quickly losing luster in their new settings. Groysberg also explores how some Wall Street research departments are successfully growing, retaining, and deploying their own stars. Finally, the book examines how its findings apply to many other occupations, from general managers to football players. Chasing Starsoffers profound insights into the fundamental nature of outstanding performance. It also offers practical guidance to individuals on how to manage their careers strategically, and to companies on how to identify, develop, and keep talent.
Book
The effect of colleague quality on top performance: the case of security analysts
Using a unique panel dataset of top performing security analysts over a nine-year period, we show that top performers do not \"own\" their performance, even in the knowledge-intensive work performed in this professional business services context. While an individual's past performance does indicate future performance, the quality of colleagues in one's organization also significantly affects top performers' ability to maintain their performance. Specifically, top performers in professional business services rely on high-quality colleagues both to improve the quality of their own work and to deliver it effectively to clients.
Journal Article
Can They Take It With Them? The Portability of Star Knowledge Workers' Performance
This paper examines the portability of star security analysts' performance. Star analysts who switched employers experienced an immediate decline in performance that persisted for at least five years. This decline was most pronounced among star analysts who moved to firms with lesser capabilities and those who moved solo, without other team members. Star analysts who moved between two firms with equivalent capabilities also exhibited a drop in performance, but only for two years. Those who switched to firms with better capabilities and those who moved with other team members exhibited no significant decline in short-term or long-term performance. These findings suggest that firm-specific skills and firms' capabilities both play important roles in star analysts' performance. In addition, we find that firms that hire star analysts from competitors with better capabilities suffered more extreme negative stock-market reactions than those that hire from comparable or lesser firms. These findings suggest that hiring stars may be perceived as value destroying and may not improve a firm's competitive advantage.
Journal Article
Now You See Me, Now I'm Gone
Technology-enabled remote work and changing work norms have made it easier for people to change roles or employers without uprooting themselves. This increased mobility is further facilitated by digital collaboration tools that capture individual-level contributions and talents, giving managers a clearer view of how teams work. Additionally, online platforms and digital tools allow individuals to widely share and promote their expertise, building their professional reputations and enhancing their visibility and mobility. The availability of credible information on worker quality and performance can narrow the information gap between incumbent employers and outsiders, allowing undervalued performers to gain more options to leave their employers. This increased visibility can lead to higher turnover rates. Employers need to understand the impact of visibility on mobility and develop strategies to retain strong performers, such as creating a development-focused environment, offering flexible work arrangements, and valuing employees through competitive compensation and a positive work culture. Companies also need to find ways to bind talent to the organization through unique company-specific characteristics, proprietary information systems, and product-based nonportability.
Journal Article
Hiring Stars and Their Colleagues: Exploration and Exploitation in Professional Service Firms
This paper examines exploration and exploitation in professional service firms by focusing on the individuals who carry out the exploration and exploitation activities. Specifically, we examine the performance of star security analysts who join new firms in exploration versus exploitation roles. We find that stars hired to explore (initiate new activities) experience a short- and long-term performance decline; by contrast, stars who join new firms to exploit (reinforce existing activities) suffer only a short-term drop in performance. Stars hired in exploration roles can preserve some of their performance by moving with a group of colleagues from the originating firm. Investors view the hiring of a star analyst as value-destroying for the hiring firm regardless of whether the firm is hiring to exploit or explore, but the negative reactions are economically more extreme for exploration hires. These findings indicate that, even at the individual level, probabilities of success in exploration activities are lower than in exploitation activities, thereby reinforcing the tendency toward exploitation.
Journal Article
JOB-HOPPING TOWARD EQUITY
The potential impact of job-hopping on narrowing the gender gap in executive compensation is discussed. The authors analyze data on executive employment and career histories to examine the progress made in reducing the gender pay gap. They find that while the pay gap has narrowed over the years, it remains significant, especially at higher earning levels. The authors argue that studying external job moves is crucial for understanding current compensation trends. They explore whether women, particularly those in senior roles, can leverage job changes to increase their own compensation and reduce the gender pay gap. The text highlights the need for a more nuanced examination of the issue and suggests that gains from switching employers may be less pronounced for women compared to men.
Journal Article
Job-Hopping Toward Equity
Movement toward parity has been sluggish in all segments, but it's slowest of all for people at higher earning levels, including managers and executives. Much of the research on this problem examines internal labor markets--that is, who gets promoted within organizations and how equitably they are compensated when they move up. However, the external market is becoming increasingly important in filling senior roles. Between 1970 and the early 2000s, the percentage of CEOs brought in from the outside jumped from 15% to 33% of all CEO hires. Here, Groysberg et al discuss how to narrow the gender gap in executive compensation.
Journal Article
What Drives Sell-Side Analyst Compensation at High-Status Investment Banks?
We use proprietary data from a major investment bank to investigate factors associated with analysts' annual compensation. We find compensation to be positively related to \"All-Star\" recognition, investment-banking contributions, the size of analysts' portfolios, and whether an analyst is identified as a top stock picker by the Wall Street Journal. We find no evidence that compensation is related to earnings forecast accuracy. But consistent with prior studies, we find analyst turnover to be related to forecast accuracy, suggesting that analyst forecasting incentives are primarily termination based. Additional analyses indicate that \"All-Star\" recognition proxies for buy-side client votes on analyst research quality used to allocate commissions across banks and analysts. Taken as a whole, our evidence is consistent with analyst compensation being designed to reward actions that increase brokerage and investment-banking revenues. To assess the generality of our findings, we test the same relations using compensation data from a second high-status bank and obtain similar results.
Journal Article