Once in the market for talent, there is natural appeal to hire the best (Stars), given their easily availability (surfing for best deals) and enhanced affordability made possible by liberal compensation guidelines (better than for those paid within the system). However, the irony is, the repeated experience and extensive research reveal that “Stars suffer a performance decline when they move to new firms” and “mostly destroy value for the hiring firm” especially given the premium paid for their acquisition. Quite like M&A, this implies the need to acquire and integrate RIGHT Stars - the right way, to realize the potential Value.
It starts with recognizing that Star performance is outcome of three key determinants: Business Environment, Firm Specific Characteristics, and Individual Talent. Everyone in sunrise industry looks talented, when seen from mature industries perspective, and everyone working for well run companies may be performing better than staff from average company, not necessarily due to better individualized talent.
And often the relative contribution from each of these three factors towards overall outcome is difficult to ascertain, but is the key in choosing the right Talent and not lucky Stars. Recruiters explicitly recognize concerns about the potential portability and replicability of performance by Stars across firms, but often fail to test it well enough during the selection process. Why so?One reason could be overreliance on what Stars tell them during interaction. Stars often tend to overstate their contribution, as part of self serving performance enhancing bias, and ignore the firm specific performance enablers. This may not necessarily be a projection but actual belief.
Second reason is an inherent assumption that when sourcing from competition, the firm specific enablers are likely to be of same order, and hence performance of the Star is likely to sustain in new firm setting as well. This is truer for companies, especially those with similar size and overall characteristics, and serving same customers/markets. While, the tangible hard characteristics like Resources, Brand, Market Access, Financial leverage, Process maturity, Work practices, may be of similar order, it is the intangible firm specifics like leadership, decision making, information sharing, collaboration, culture, which may vary a lot, and to that extent their influence as performance boosters gets ignored. Accordingly, it pays to investigate to what extent the firm specific intangible performance boosters will the new firm able to provide, to ensure replicability of star performance.
Recruiters may like to ask Interviewees the following (and reflect on similarities between the responses given and what’s true for your firm) as a quick check:
- To what extent did you leverage your colleagues support and informal inputs in meeting your objectives/improve quality of outcome? (Colleague role in success)
- What is the preferred approach to access information required to deliver? (Information is available freely on shared platforms/strictly on need to know basis/heavy reliance on knowledge bank)
- Share an instance wherein you have taken decision (risk) beyond your regular mandate.. (Is your firm ok with that kind of risk/deviant behavior?)
- Discuss any cross functional initiative and approach taken towards solving conflict between competing priorities (gives insight into decision making, escalation management, credit sharing etc)
Often discussions around the above help understand the role firm specific performance boosters have played in Stars performance and provide good indication of the extent to which the performance is replicable in the absence of these boosters. This may be revealing to candidates as well!
Of course, choosing the right Star is only half battle won, the other half lies in developing right integration strategy that help Stars overcome natural resistance from incumbents, and quickly assimilate specific advantages/ performance boosters associated with new firm. There are quite a few challenges in doing this right as well.
Happy to know your experience with Hiring Stars and tricks that work?
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