Don’t try to hire that star from the other firm

July 30th, 2008 - 4:18 pm ICT by IANS  

Washington, July 30 (IANS) Managers seeking to prise star performers away from competitors might rue their decision later and the star is likely to be as unhappy, finds a new study. In their study, the authors addressed questions like whether switching firms have an effect on the short-term and long-term performance of stars? And is hiring a star a value-enhancing or value-destroying activity for a firm?

From an empirical analysis over eight years (1988-1996), they found hiring stars is neither advantageous to stars themselves, in terms of performance, nor to hiring companies in terms of their market value.

The performance of a talented worker depends in part on firm-specific human capital embedded in colleague relationships and firm capabilities.

The issue of whether workers’ performance is portable across firms is relevant for firms that seek to build a sustainable competitive advantage on star talent.

The authors find that stars are imperfectly mobile resources that can represent a potential source of sustained competitive advantage for firms.

The findings suggest that managers hiring stars and the stars themselves should be wary of decline in performance following moves to a new firm.

Authored by Boris Groysberg, Linda-Eling Lee of Harvard Business School and Ashish Nanda of Harvard Law School, the study has been published in the current issue of Management Science.

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