| Boris Groysberg, Princeton University Press, 2010, 445 pages, price
£24.95. |
| Media types used to call it ‘Morecambe and Wise’ syndrome. This was
the tendency for the careers of well-known television stars to nosedive
when they ditched a long-standing association with the BBC to join ITV.
Eric and Ernie’s shows for the Beeb in the 1970s remain legendary. Those
subsequently made for the commercial broadcaster prior to Morecambe’s
death in 1984 are all but forgotten. The comic duo undoubtedly benefited
financially from the move but paid the price artistically and
consequently did little to boost the commercial success of their new
employer. |
| The lesson of this and similar stories seems to have been forgotten
in recent times. As the entertainment business has become more
competitive so has the almost frenzied struggle to focus on what media
moguls refer to as ‘the talent’. Staggering amounts of money are offered
to prise ‘top talent’ away from rivals on the implicit assumption that
this will guarantee a return. However, before signing-off the next pay
cheque, talent hungry bosses are advised to read Boris Groysberg’s book
which, although based on a detailed case study of a different type of
stars, equity analysts employed by Wall Street investment banks, offers
some cautionary insights into simplistic talent grabbing. |
| Groysberg looks at 1,000 star analysts in a highly fluid
occupational/local labour market for which a good objective proxy of
individual performance is provided by Institutional Investor, a trade
journal that ranks analysts on the basis of assessments made by those in
the trade using their services. The research covers the period 1988-96,
including the ‘greed is good’ era of Gordon Gekko but well before the
financial crisis. |
| Analysts strive for a high ranking because this boosts their labour
market value, and in doing so they don’t hide their light under a
bushel. The vast majority reckon their performance reflects their
individual skill and talent in spotting equity market trends, a
conclusion equally widely shared by those who employ their services. But
as Groysberg reports, the success of star analysts owes much to the
financial and human resources and specific ways of operating of the
firms they work for – indeed so much so that high fliers invariably
suffer an immediate and lasting drop in performance when they change
firms. As a result firms chasing stars in the hope of acquiring talent
that will ‘make the difference’ are likely to be disappointed. |
| Although Groysberg’s findings overall suggest that talent isn’t
portable, analysts were found to maintain their performance if they
brought teams with them when moving jobs or were able to move to already
well-performing firms. Women also fared better than men when moving, in
part because they gave more attention to the contextual conditions in
destination firms before deciding to switch jobs. |
| Groysberg concludes that what is true of Wall Street analysts is
likely to apply to many other occupations. Economists long schooled in
Gary Becker’s distinction between general (transferable) and firm
specific human capital – which provides a theoretical backdrop to
Groysberg’s analysis – will not be greatly surprised. But this book will
have served its purpose if writers on management and the businesses they
influence discover that the ‘war for talent’ is unlikely to ‘bring them
sunshine. |
| John Philpott |
| Chief Economic Adviser at the Chartered Institute of Personnel and
Development (CIPD) |