Think before you poach talent.
By Boris Groysberg
“Buyer beware” is a sign that could be hung outside the door of many of today’s HR managers when it comes to talent acquisition. Too often HR professionals are seduced by high-priced stars from other companies when they should be looking internally. By strengthening their own talent management programs, they will be able to cultivate and retain the stars of their own.
Our research has shown that expensive “free agents,” who may have been stars at their previous organization, often suffer from a lack of performance when they leave the job for a similar position. In fact, my book Chasing Stars: The Myth of Talent and the Portability of Performance examined performance records of more than a thousand star analysts at Wall Street investment banks, and we found they often suffered an immediate and lasting decline in performance upon switching jobs.
In those cases, the success of those stars went beyond their individual abilities. It was actually linked to the processes, platforms, and relationships they had at their previous place of employment. Relationships are based on mutual trust, which oftentimes has to be rebuilt at a new company, even if the employee walks in the door with impressive credentials. And rebuilding takes time.
However, research has suggested a few exceptions to the “non-free agent” rule. In particular women who happened to be high performers at their previous jobs tended to maintain their performance even after joining a new company. One reason for this transitional success is that these women tend to keep most of their relationships outside of the firm. As a result, when they switch jobs, they still have the same supportive outside network rather than having to rely on internal relationships. Star women are also more strategic when picking their new firms compared to their male counterparts.
Still, for most employees, emphasis on growing and maintaining internal and external networks is vital. The talent management system at any company is partially responsible for an individual’s success. Robust training programs, and coaching and mentorship relationships, both informal and formal, can help develop and retain talented employees.
An employee who jumps to another company doesn’t take that strong “firm” capability with him, and therefore performance can suffer – even if the new company does similar work.
Instead of expending time, energy, and money on poaching talent from competitors, a better plan for organizations is to look internally and focus on creating an innovative and effective talent management program that will help retain high-potential employees. Some of the best firms, such as Google and Amazon, now practice a hybrid talent strategy combining strategic rather than reactive hiring and a strong internal talent development program. Great firms are not only rigorous and strategic in selection but they also help their newly hired stars to get integrated.
One trend that surfaced in a recent survey was that many executives have confidence in their CEO, but not in the depth of leadership on the bench. This further speaks to the need for managing talent both by developing it internally and hiring strategically from outside. Getting the best out of your talent is the next step.
Keeping those employees engaged requires a detailed talent management program that is firmly rooted in the company’s overall mission and business plan. At leading companies like Google, IBM and GE, HR plays a critical role in the company’s business strategy. That’s no accident.
In a 2008 case study Keeping Google ‘Googley,’ myself and several colleagues followed Kim Scott. Scott started with Google in 2004 and now leads Google’s AdSense online sales and operations. She wondered if she would she’d stay at Google, as she liked small, entrepreneurial companies. But she was still happy at growing Google in 2008. The most important questions in this case: How should Google keep Google “Googley”? What talent management practices does the company need to continue its success? This case generates passionate debate about the role and impact of talent management.
Google’s talent strategy involved a careful screening process, designed to match applicants with the company’s philosophy. They worked hard to maintain the company’s values through a period of rapid growth by maintaining a collaborative and rapid-fire decision-making process that centered around the company’s innovative character.
Google’s competitive advantage (in part) rests on its people practices and unique culture. The company is very rigorous in attracting, hiring, developing, engaging, retaining, rewarding, and firing (if needed). By focusing on attracting talent, as well as developing and retaining valuable employees, Google continues to build its high performance and high-values culture.
Examine your company’s HR needs and existing programs to identify your company’s unique needs and begin to build a robust talent management system. The most strategic and evidence-based talent models will help you attract, develop and retain star employees.
Boris Groysberg is a professor of business administration in the organizational behavior unit at the Harvard Business School (HBS). He is the faculty chair of Driving Performance Through Talent Management at HBS, which will take place May 4 to 9, 2014 on the HBS campus.