Hiring Superstars vs Growing Them

If South Park’s underpants gnomes were talent management leaders, their organization’s talent strategy might look something like this:

All too often, companies look for superstars whom they can steal away from others and put to good use. The problems is, this often does not work out so well for the superstar or their new home.

An article in the latest issue of Wired addressed the challenges of superstars moving from one company to another, where they often fail. They cited the example of Ron Johnson — leader of the effort to create the Apple Store, who then went to discount retailer JC Penney as CEO and was gone soon after the stock dropped 50% over a year — and others who did great things for Company A before failing at Company B. They noted the research into talent portability by Boris Groysberg at Harvard Business School, whose 2012 book Chasing Stars looked at over a thousand financial analyst rock stars who changed firms, with about half of them doing poorly in the first year after they moved. Hiring a superstar is not necessarily the answer to your problems; it could instead be the start of new ones.

Why is that? Well, a lot of it seems to do with the idea that when people do well, it’s in part because they are in an environment that allows them to. Context is important, so having the right combination of organizational culture, industry subsector, timing, and people surrounding them, all play into someone’s success or failure. Move someone out of that context, and they may not be the right person for the job. Someone who led a company well during a recessionary period, for example, whose job was to keep the company open, is probably not the person who should lead a company in a growth industry where risk-taking is essential for success. Before you try to hire a superstar, you need to ask yourself if they can really do for you what they did for someone else. In many cases, the answer is “no.”

What should you do instead? Try building your own superstars. In the “build or buy?” talent debate, buying is usually going to cost more, and has an uncertain outcome. Yes, you do want to get new perspectives into your organization, and yes, sometimes you train people and then cannot keep them without expensive retention bonuses, but to the extent that you can, you should try to create your own superstars. As they move up, they have corporate knowledge that a new person is going to have to learn. You have seen them in the context where they will operate and you know if they are right for it or not. As people see a potential career path rather than just a bunch of senior executives parachuting in, they are more likely to stay with you because they see a future. Try creating superstars rather than poaching them.

What else can you do? Try finding the toxic employees in your organization. As much as you may want superstars, the sad truth is that very often a toxic employee can cost you more than you will benefit from a strong employee. The Wired article noted the research of Harvard’s Dylan Minor, who found that, on average, a superstar can net you $5,303 in savings, while resolving the problem of a toxic worker can save you $12,489. Rather than looking outside for heroes to save the day, first take a look inside to see where you can repair some expensive damage.

Whether you are in a large MNC or a startup, at the World Bank or a local non-profit, it is tempting to look outside for someone successful and start thinking about ways to bring them to you. But remember, between “Hire Superstars” and “Profit,” there is always at least one more step, and you need to make sure you have the right person in place who can really do the things you need them to do.