Why Importing Superstars From Outside Your Organization Fails

Is talent portable?

Peter Drucker famously said that, unlike manual workers, knowledge workers carry their knowledge in their heads and can always take it with them. This has guided ‘head’ hunting practices across the world, with hiring managers scurrying to find heads with knowledge. However, it turns out that knowledge is not in the head. Talent is not portable.

Read on to find out why.

Professors Robert Huckman and Gary Pisano tracked the performance of 203 cardiac surgeons from 43 hospitals over a period of two years, covering more than 38,000 procedures. They wanted to know if the surgeons’ performance improved with practice. When the surgeons practiced at a given hospital, the risk of patient mortality was reduced by 1% (from 3% on average), but when they moved to a new hospital, the risk of mortality remained the same.

The surgeons were not improving their technical craft; the reduced risk of patient deaths came not from any improvement in their skill in performing surgery but from their improved familiarity and working with their teams of nurses and other support doctors. Okay, we understand surgeons need the company of familiar colleagues to keep up their performance. What about other professionals?

Analyzing the performance of 2,086 mutual fund managers between 1992 and 1998, a study by Klaas Baks and colleagues found that only 30% of the performance of the mutual fund was due to the individual fund manager, while the rest depended on the team. Similarly, another study by Boris Groysberg and colleagues of more than a thousand security analysts over a 9-year period found that when star analysts switched firms, their performance plummeted and stayed poor for at least five years.

Their performance, even after five years, was nothing to show for: they had an 8% higher chance of being unranked. Not only that, hiring star performers from outside destroyed the bottom line of the hiring businesses: on average, they lost about $24 million in the process. Organizational psychologist Adam Grant adds that hiring stars is neither advantageous to the stars, nor the hiring organizations. He notes that this is the case in an industry known for individual superstars.

The stars who thus jumped did not last long. More than one-third of the analysts left their new organizations within three years, and two-thirds left within five years. It is also important to note that when stars were imported, the performance of the teams to which they were imported also suffered. David Burkus, a management professor, attributes this to the demoralizing effects of hiring from outside on the teams.

Groysberg’s study, however, showed that when some of these stars moved with their teams, their performance remained high. They, in fact, had a 10% higher chance of being ranked first. The star analysts relied on knowledgeable colleagues for information and new ideas. Talent is not in anyone’s head. It is distributed among a close-knit team experienced in solving problems together or innovating together.

Why should lone stars suffer a performance decline and initiate a decline in their new teams? A clue comes from studies that analyzed the cases of women imports. Performance worsens less when female stars move to other companies. However, the effect is only in softening the duration of the decline, not the decline itself. Women have a superiority in social sensitivity, and this might be one reason they are slightly immune to the effect.

What could be the reasons why moving with your teams sustains performance? What makes some teams better than others? We will consider these questions in another article. Meanwhile, if you are contemplating a move to another organization, invest in developing a “village” of personal and professional supporters, as Olympic cyclist Megan Gaurnier urged. And carry them with you as you move.