Is It Worth Breaking The Bank To Hire Rock Stars?

Published in the San Diego Union-Tribune, April 4, 2016

Rock stars! Gimme a break. Everyone thinks they are one or want to be one (groupies). They are the famous ones in your company. They crush it, they bring in the big money, and they move the market. But is it really worth it to “pay up” to get them on your team?

To get the answer, I turned to Boris Groysberg, a Harvard Business School professor, who has written extensively on “The Myth of Talent and the Portability of Performance” – which is code for when the big guy wants to jump ship and come over to work for you, should you chase the “star” give him the big money bonus? The question you need to consider – is past performance any indication of future performance?

The answer is – often not. Now this concept is important in the startup world, because the day after you get venture financing, your pal in Silicon Valley is going to say, “Let’s bring in Joe Blotz, he was head of worldwide at Google and he can take us to the next level.” Maybe the next level of hell, but unlikely in your company. And after all, if he crushed it at Google, he should be able to crush it at your little startup, Amalgamated Borscht Circuits.

Groysberg did lots of studies, and what he found was that the guy who crushed at one company often does not crush at the new one. His research is fascinating. The reason that the big guy did not always excel was because the environment was different. Groysberg studied Wall Street, where in theory, the guy who leaves Goldman and walks across the street to UBS should do as well or better. All he is taking with him is his brain. Turns out that is not enough.

And that is because much of his previous success was based on the place, the coffee room, the other people, the environment, the soft stuff. And that stuff does not cross the street as easily as the person.

What he found is that the team trumps the individual. The 1990s were all about the individual and the 2000s are all about the team. Google often buys a team – the infamous “acqui-hire” – because they don’t want just the technology. They want the small group that developed it. Groysberg says the 20th century was the “learning century” (a time to figure it out) while the 21st century is the “performance century.” Now there is no time for training, sink or swim, you get three months, if you can’t deliver, out on your keister.

In Roman times, a “talent” was a measure of gold. Today, we talk about the search for talent, but a significant part of an individual’s talent is the institution in which he works. Think about that for a moment. The institution plays an outsized (and underestimated) role in an individual’s success, Groysberg says. That is why it is so hard to take a General Electric executive and put him into a startup. He is there four days and asks, “Where is my secretary?” He has always relied on processes and systems that have been in place for decades.

(Neil’s note: I did hire an ex-GE manager as CEO for one of my companies, and he proved to be terrific – but I think in retrospect, I was just lucky.)

Now to the killer. Female rock stars do better than men when they transition, Groysberg says. And that is because to be a rock star, women have had to “do what Fred Astaire does, but in heels and backwards.” Those who survive and excel have had to mostly rely on themselves, whereas men have a much deeper bench (mentors and pals and a network). It turns out women rock stars can crush from both sides of the plate. Star women are “much more strategic.” They don’t jump for just more money. They look at a lot more elements, and they demand an environment where there are objective levels of performance. Goodbye, good ol’ boy network. No more 80 cents on the dollar for the female paycheck.

And finally, Groysberg says to hire diversity. “Give a chance to someone who looks different than you.” But the corollary is this – you also need to give them more time to succeed. “We hire them because they are different and then we fire them because they are different.”

Rule No. 460

Stardom is contextual.

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