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Myths in management
competitor usually thinks they can just take it with them. But
often we’re all wrong.
For example, Professor Boris Groysberg, at the Harvard Business
School, examined the portability of star security analysts’
performance. Security analysts, as you may know, are employed
by investment banks to analyze companies in a particular
industry. They, among others, produce earnings forecasts, buy
and sell recommendations, and detailed reports on individual
companies. If they’re any good – because they, for instance,
produce quite accurate earnings forecasts – they can easily take
home several million in salary and bonuses per year. Yes really.
Investment banks pay them so much because they think they
can easily take their skills, nancial models, industry contacts,
etc. to a different bank if they wanted to, and analyze the same
sectors and companies. However, Boris found that that is actually
not as simple as it seems . . .
He analyzed the performance of 316 top-ranked security
analysts who switched rms, using rankings published by the
Institutional Investor All-America Research Team poll. He found
that star analysts who switched employers immediately experi-
enced a signicant decline in their performance. The effect was
substantial. For example, the chance that a particular analyst
would come out top of his sector’s league table (having made
the most accurate forecasts, etc.) would drop by 50 percent if he
had just switched rms. Actually, on average, it would take such
an analyst ve years to recover and make up for the switch and
subsequent drop in performance.
Hence, even security analysts, whose work seems highly
individual and not at all dependent on the particular organi-
zation that they work for, experience a very signicant decline
in their performance when they switch rms. Apparently, the
soft stuff, such as the intellectual capital imbedded in the fabric
of the organization, their relationships with colleagues, and
all sorts of other social and tacit processes (which are difcult
to identify, observe, or even name!) play a huge role, even
in the work of such star performers. Take them out of their