Chasing Stars

The Myth of Talent and the Portability of Performance

De: Boris Groysberg

Narrado por: Don Hagen

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 200 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 Stars offers 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.

©2010 Boris Groysberg (P)2010 Gildan Media Corp

Reseñas de la Crítica

"What if talent is more like an orchid, thriving in certain environments and dying in others? It's an interesting question, full of nature-versus-nurture overtones; we could debate it endlessly. But Boris Groysberg, a professor at Harvard Business School, has spoiled the debate with an unsporting move. He's gathered some data. And what he discovered forces us to rethink the argument." ( Fast Company)

Great content in desperate need of abridgment

The author is an outstanding Harvard professor and the thesis is a great counter-argument to the strongly held belief in portable talent—especially in the modern ‘knowledge work’ world. More importantly, it makes a very compelling case for building deep developmental systems and a learning culture rather than over-relying on hiring skills (which is not only expensive, but it still much more of an art than a science).

However, the book itself is a bit dry and there's a lot of "inside baseball" when it comes to the background stories of the investment banking analyst industry. The individual stories were fairly engaging, but listening to all of the permutations and considerations they went through for this study made me very appreciative of the 1.75x speed in the Audible app.

In other words, a lot of it reads like a more elaborate version of an academic paper than a book. Rarely do I wish that a book were abridged. But this one would probably find a much wider audience with an abridgment…focusing on the conclusions, which were valuable.

Know Thy Self

This is well-Delivered and interesting content. Although Groysberg's focus is narrow, he shines light on information useful for other hiring managers and job seekers alike. He points out the difference in the ways men and women consider new job opportunities based at least to some extent on their perspective on personal skills versus social networking and infrastructure support. Though I'd like to see a broader study, he does a good job explaining why he chose sell side analysts and concedes that these reasons limit applicability in different spheres.

Great book on the portability of stars

This is a book made by Boris Groysberg, a teacher of leadership in HBS. It’s about the portability of star employees on different companies. The study considered several professions, but chose equity analysts on Wall Street. This was the only profession to have enough public data to be studied and reduced factors that could affect the study. It found that most star analysts were not as successful on the new company as they were in the previous one. Interesting results on the performance of analysts that moved with the whole team and different performance when considering gender.

It starts with the history of Ezquiavel, a textile analyst of Lehman Brother. It tells a little on her story, that she studied in HBS and ended up in Lehman were she had a very good “menthor”. He had the idea on becoming better ranked on the institutional investor pool. He made the teams work together were analysts from different sectors could exchange info and also had cross sector reports. He also focused on developing people instead of hiring stars from other companies. Ezquiavel got to top ranking really fast mainly when released a controversial report on Nike. She also exchanged a lot of info with her high ranking friend on the aeroespacial sector.
After her boss left the company she had some doubts on continuing.

In the following chapter the author explain the job description of the equity analyst and why it is a good group to study. It a “knowledge” job, the client base is the same, the industry they cover maintains the same, they don’t have to move and be negatively affected (most investment banks are located in Manhattan) and they are able to maintain their network outside of the work (contact with CEOs, industry experts , etc). This would be clear group that would prove that the portability is truth.

However, there are other several issues to be taken into account. The relations build in the company (sales force, jr team, peers, etc), the knowledge to leverage the companies capabilities. These are very important factors that impacted the performance when star analysts changed companies. The most relevant factor was the jr analyst.

Most of the changes made the performance to fall. In cases were the analyst went to a better firm (better resources and expanding), brought its team and the receiving company had the strategy for integrating faster, had better performance.

Hiring stars from outside also had other problems on the hiring company. The other employees might feel not motivated, don’t integrate the newcomers as needed, feels there is a new person to compete for funds and budget.

Statistics analyses made on stock performance found that hiring companies usually had stocks declines after hiring stars. Its a signal of higher competition and increasing costs.

There is a big differential on companies that focused on human capital and human firms specific capital. Companies with the second approach had much lower turn overs and better performance. These companies instead of focusing on star analysts, focused on collaboration between analysts, between offices abroad, on internal processes (like databases, cross function reports, interviews based on collaboration and made by different areas) and hiring smart people outside the capital markets. Also focused on training and development on the jr team and also focusing on innovation and impartiality.

The hiring process of Goldman Sachs vs DLJ Goldman has a very different profile when compared with DLJ. The first had a very cooperative and firm oriented strategy and the second a “entrepeurnership” strategy focused on the analysts franchise. The hiring process on Goldman was considered insane by a Ryan Reynolds partner that helped the company. It was more than 20 enter views with several different areas. In this case, the integration was more efficient because everybody had buy in for the new employee. They believed that he was good enough to take place from a possible intern hiring.

Another thing is if the acquiring company is hiring for exploitation (to exploit an existing area) other than exploration (to explore a new area) , the results are better. The traders and sales force for example knows how to sell and trade something they already know.

Hiring teams have better probability on succeeding, but there are some paths to improve the probability. You have to align before moving with team the expectations on the team as whole and not only with the leader. After joining the new firm you also have to align with the team. The next step is to integrate operationally and them culturally.

Women have also higher probability in succeeding in new firms. There are some thesis on psychological behavior and about women being more qualified when they reach certain levels on a company (they might need to prove themselves more than men needs - there is an mention on this on the Grit book). But the book focus on things women did more than man. For example, they build a external network better and rely less on the firm specific (this might be caused because the team are more inclined to favor man, a cause they have lower turn over and since its a majority of man, its easier to relate). Another thing is they usually analyze better when changing firms. They look at into the culture and not only the money.

The culture of development results in lower turn over ratios and better engagement than hiring stars from the outside. Training programs and mentoring are examples and firms that adopted this strategy had lower turn over and higher percentage of “star” creation. This lower turn over was truth from stars to average employees. There also a big difference when the company adopted intentionally the strategy of making the employees portable with a company that makes that unintentionally.

The book mentions also the turn over of stars to the entreupnership life. Some were out to hedge funds, consultancy or other industries. This kind of turn over is a little bit different than to a competing firm. It is more difficult to retain a star in this case. Normally the star wants more independency and flexibility and also more upside.

In case of compensations the portability and non portability also had very different methods. The non portability focused also in more qualitative items like training the team and helping the company as a whole and not only its specific area. Also companies tried to track, calls, trips, visita to clients, training sessions, number of reports and the relationship with other areas. The portability firms usually focused more on trading commissions and II rankings.

This study was also made on ex GEs employees and got similar results. People who moved with teams, in their area of expertise and on companies that needed their skills, ended up performing better.

Also it depends on the role you are hired. CEOs and CFOs for example are more specific and depends less on relations and are more portable. COOs and marketing for example depends more on relation and are less portable.

The most common mistakes when changing jobs is focusing on compensation, not doing a proper research on the new company, thinking short term instead of long term and wanting to left your job instead thinking on the new one.

Mauricio Madero

Love it. Great book from an amazing professor at Harvard Business School. You rock Boris.

relocating is not always the best option

the facts in this book are well explained, and it is well rounded and commented with exemple to make all the things more real, for me the part which was fascinating was the part about women.