May 21, 2004

Homegrown Talent

Winning with Homegrown Talent

I get a newsletter from EZI which usually has a couple of articles about Leadership and this time they profiled a good HBR article.

Hiring outside talent is a costly, common strategic error made by many companies, write Boris Groysberg, Ashish Nonda and Nitin Nohria in the Harvard Business Review.. Their survey of top stock analysts showed an average 20% drop in performances after stars switched companies. This is because an A player’s performance depends on both personal abilities and the organization s/he works for, explain the authors. Company-specific factors in a star’s success include: human and financial resources, systems and processes, leadership and training, internal networks and strong teams. Hiring high-fliers can also embitter loyal employees, create interpersonal conflicts and send a company’s share price plummeting, as shareholders anticipate higher wage bills, note the authors.

They consequently urge companies to develop talent internally through careful selection, training and mentoring processes. Retaining top talent involves showing flexibility, offering stars public recognition and encouraging them to acquire new skills, claim the authors. Imported stars, however, are tough to tie down and easily lured away by higher salary offers. If forced to hire externally, companies should ensure that replacements have similar profiles to departing A players and strong general skill sets. Successfully integrating outside stars also involves drawing up detailed plans and setting long-term goals, note the authors. Growing talent internally still gives a company the competitive edge, they conclude.

-- Didn't we see a lot of such examples when CEOs left Blue chip firms and moved to the dotcom world. They failed because the took the processes in their large firm for granted and did not factor their absence in a start up - and so failed. Sometimes I wonder if people overestimate their abilities in the Leadership arena !