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Saturday, April 19, 2014

The Big Reason to Hire Superstar Employees Isn’t the Work They Do 04-19


The Big Reason to Hire Superstar Employees Isn’t the Work They Do

Most companies will tell you they want to hire and retain “A players”, and why not? It’s hard to object to building a company around the best possible talent. But what is it about superstar talent that actually improves performance? 

A recent paper from the National Bureau of Economic Research examines this question by looking at academic departments, where productivity can be measured in terms of papers published and citations from other researchers. Superstars were defined as academics who ranked above the 90th percentile based on citation-weighted publications. 

The paper points to three different ways that superstars can improve an organization, and measures the magnitude of each in the context of academic evolutionary biology departments. The first, and most obvious, is the direct increase in output that a superstar can have. Hire someone who can get a lot of great work done quickly and your organization will by definition be producing more great work. But, perhaps surprisingly, this represents only a small fraction of the change that superstars have on output. The authors write:
On average, department-level output increases by 54% after the arrival of a star. A significant fraction of the star effect is indirect: after removing the direct contribution of the star, department level output still increases by 48%.
Some of that remaining increase stems from the fact that departments hiring superstars tend to be growing. Even so, output per researcher also increases substantially, well beyond the added output that the superstar adds herself. So if the superstar isn’t responsible for the organization’s increase in productivity directly, what is? The paper looked at two different explanations: that the superstar makes her colleagues more productive, and that she helps the organization recruit better talent going forward.
The researchers found that the superstar’s impact on recruiting was far and away the more significant driver of improved organizational productivity. 
Starting just one year after the superstar joins the department, the average quality of those who join the department at all levels increases significantly. As for the impact of a superstar on existing colleagues, the findings are more mixed. Incumbents who work on topics related to those the superstar focused on saw their output increase, but incumbents whose work was unrelated became slightly less productive. (This latter effect was too small to be statistically significant, and the authors posit that allocation of resources toward the areas the superstar works on could explain it.)
“Additional research is required to have confidence in generalizations, but there are reasons to suspect that the broad findings are not unique to academic science,” said Ajay Agrawal, professor of entrepreneurship at the University of Toronto and one of the paper’s authors. He pointed to the research on clustering, whereby the geographic concentration of talented individuals and firms in a sector increases the productivity of those participants, as consistent with the idea that talented workers can have measurable indirect effects on those around them.
Nonetheless, he suggested, the effect of superstars likely varies across and even within industries, and previous research has demonstrated that superstars do vary in how much they help their colleagues.
While generalizing these results to a particular industry or firm is unwise, the research nonetheless provides a framework for firms to think about hiring top talent. The direct benefits of a superstar can be substantial, but it’s also important to consider how the hire will effect other employees’ productivity. 
Not all superstars are equal in this regard, so look for someone who’s likely to up the game of those around her. Finally, it’s critical to consider the impact the hire might have on recruitment. In at least some cases, the biggest effect of hiring a superstar is who it allows you to hire next.

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