Learn How to Spot Portable Talent

My wife, children and I have a farm in beautiful and peaceful Patagonia, where we fatten cattle.  Each fall we buy a few hundred calves, recently separated from their mothers, and then keep them for 11 months, letting them feed on our natural grass.  Once they’ve gained enough weight, we sell them and restart the cycle.  The first year we did this, results were spectacular:  The animals doubled their weight and prices were sky-high.  In the years that followed, we started buying calves from better farms but, for some reason, our average annual weight gain kept dropping, along with our revenues. And last year’s selling season was our worst ever.

Puzzled, I asked a good friend, whose family has a three-generation history of breeding and fattening cattle in Patagonia, for advice.  “Claudio, that first year when your animals gained so much weight, where did you buy them?” he asked me.  I told him they came from a dry-land farm with very poor soil and low quality grass.  “See,” he said.  “That’s what you want.  If you find calves that can survive in a poor and hostile environment, the minute they get to your farm they will blossom.”

Last month I bought half of my cattle from a seller with low quality grass, and a year from now I’ll be able to tell you whether my friend’s theory is right or not.  But his insight makes a lot of sense — and it applies to human talent as well.

The best employees and executives are what talent management experts call “portable”. They are able to effectively transition from one role, company, industry or country to the next, not only bringing their unique strengths to each but also growing stronger in the process.   My great colleague and hero, Harvard Business School professor Boris Groysberg, is the father of this field of research (indeed, his wife Lilyia tells me that their youngest daughter’s first word was “portability”). He wrote an excellent book on the topic, and each year, when I visit HBS as a guest lecturer, I never miss a chance to watch him teach the subject to his students.

Most people assume that the best hiring strategy is to find the best performers in a given field and get them on your team.  But Boris has found that most people aren’t so portable:  some who are shining stars in one context can fall out of the sky in another.  One of the best ways in which he demonstrates this is with a study on equity research analysts moving between Wall Street investment banks. You would expect high portability in these situations. As Boris puts it, when a star analyst at investment bank A accepts an offer to join investment bank B, he gets a box, puts his laptop and a few other things in it, goes down the elevator, looks left and right before crossing Wall Street, goes up the elevator, and exactly 56 seconds later he is working at his new job.  He operates in a similar environment, analyzes the same companies in the same sector, and has the same clients.  He doesn’t have to sell his house, move to another state, buy a new house, look for new schools for the children, or help his spouse cope and adjust to a move.  What could be easier?  Yet, Boris has found that, while star equity research analysts that stay at one firm continue to shine, the performance of those who move declines quite dramatically in the following year and remains below previous heights even after five years.

Talent is much less portable than what we think because performance isn’t just one P; it stems from five — processes, platforms, products, people, and politics – and most of those you can’t take with you.

Am I, a 28-year veteran search consultant, confessing my sins and telling you that executives can’t successfully move from one organization to another and so you shouldn’t ever hire from the outside?  Of course not.  Sometimes it’s the only alternative, or the best one.  But you should  help yourself make better decisions on outside hires, as well as internal moves, by learning the key lessons on talent portability.  While falling stars are the average outcome, there are several caveats.

First, origin and destination matter.  While cattle from fertile farms didn’t gain as much weight at ours, the survivors of poor environments flourished.  Likewise, when an executive moves to a weaker firm, performance is likely to decrease; if the person moves to a stronger firm, he or she will keep shining.  Think about it in more practical terms:  Should you only embrace candidates from outstanding firms like McKinsey or Goldman Sachs, as many companies do? Or would you be better off following a more counterintuitive strategy and finding the true stars who have managed to thrive at weaker firms?

Team-specific human capital is important too: when people move together, they tend to do better than when they do it alone.  Boris has also found that starting something new in a new company (what he calls “exploration”) is much harder than taking over an existing project, team or unit (“exploitation”).  In addition, some types of roles are more portable than others: COOs are much less so because their job requires lots of internal knowledge and many relationships; CFOs and other functional experts are usually better positioned to move.

Finally, you must check for how well an incoming star will fit into your industry given its dynamics; your organization given its culture and strategy; and your team given the personalities on it.  Consider the performance of GE executives hired to lead other companies.  We all know that the company has long been a factory for talent, so much so that its alumni account for the second largest group of CEOs within the Fortune 500, after Harvard MBAs.  Whenever an executive leaves GE to become the CEO of another firm, the market value of the latter typically spikes — by at least a billion dollars for large entities, and in some cases by up to $10 billion.  Yet when Boris, along with HBS’s Andrew N. McLean and Nitin Nohria, analyzed the performance of those stocks over the following three years, the results, presented in this article, were mixed. While many of the newly appointed CEOs created great value, others presided over huge value destruction.  What made the difference?  Fit, and especially the strategic kind:  some people are great for startups, others for turnarounds, others for managing cyclical businesses.

If you want to keep your stars bright, reject the myth of the executive who shines at all times and in all places. Instead, assess for your candidates’ portability, including a careful check for fit.

This post is adapted from my forthcoming book, It’s Not the How or the What but the Who:  Succeed by Surrounding Yourself with the Best (Harvard Business Review Press, 2014).

Talent and the New World of Hiring
An HBR Insight Center

Read Original Post from the Harvard Business Review


Leave a reply

Your email address will not be published. Required fields are marked *


ERROR: si-captcha.php plugin says captcha_library not found.