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ORGDYN-696; No. of Pages 5

Organizational Dynamics (2018) xxx, xxx—xxx

Available online at www.sciencedirect.com

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journal homepage: www.elsevier.com/locate/orgdyn

How to best utilize star employees

Daniel Tzabbar, Yamuna Baburaj

“Success is going to require talented experts, a beginner’s customer-employee interactions that not only serve as the
mind, and a long-term orientation” –— Jeff Bezos, CEO of hotbed for great ideas and creative capital but also gener-
Amazon.com ates long-term customer-employee relationships. We
explore ways in which companies can effectively integrate
How does an organization’s dependence on star perfor- and retain star performers.
mers impact its ability to sustain its competitive advantage?
Extraordinary human capital is a critical factor for compa-
nies seeking to revitalize their creative capabilities in knowl- THE INFLUENCE OF STAR PERFORMERS
edge intensive sectors. However, star talent — the top 10%—
20% of performers who are believed to have a significant
There are well-known examples of star performers changing
impact on the company’s performance and survival — is
the fortunes of companies in different sectors. Shigeru
scarce. Star employees are repositories of technical, indus-
Miyamoto designed some of the most popular video games
try and firm knowledge, with disproportionately high levels
of our times such as Mario, Donkey Kong, and Wii games,
of performance and significant visibility in the external
steering Nintendo from near bankruptcy to industry leader-
market. For instance, the best software developer in Apple
ship. Howard Schultz helped transform Starbucks from
is several times more productive than his or her counterpart
impending collapse to a powerful contender in a struggling
in other technology companies. Similarly, a top-notch sales
economy through dedicated leadership efforts focused on
associate sells at least eight times as much as his or her
innovation and reinvention. Andrew Jassy helped Amazon
competitors in other department stores. Top talent often
diversify into the technology infrastructure services sector
change jobs quite frequently and may take key members of
and became the force behind Amazon Web Services, which is
the team they worked with and the company’s customers
growing unabatedly. In the sports realm, following LeBron
with them. Consequently, less prepared companies suffer a
James move to Miami Heat they have clinch the NBA titles in
severe blow when such talent leaves.
2012 and 2013 and his move back to the Cleveland Cavaliers
However, companies can take steps to protect themselves
lifted them from the bottom of the league all the way to
against such situations and in fact, integrate stars seamlessly
clinch its 2016 championship.
into their organizations. For example, SAS Institute, the
Management research has made some interesting revela-
world’s largest privately held software business, has an
tions regarding star performers and their influence. First,
annual employee turnover of less than 5%,1 compared to
the nature of this influence in organizations is complex,
the industry average of over 20%. The company has effec-
having both positive and negative effects their colleagues,
tively mobilized talent by developing a framework that rests
work environments and outcomes with regard to innovation.
on an egalitarian work culture and intellectual engagement
Second, hiring stars or exceptional performers helps a com-
methods tailored to different types of employees along with
pany reposition itself favorably in the technological space
benefits in the form of day-care, on-site medical facilities
only when the company succeeds in integrating the new
and workout options. SAS provides a platform for frequent
knowledge that the stars bring with the company’s existing
knowledge base. Interestingly, research also contends that
star exits could open up opportunities in unexplored areas.
1
Fishman, Charles (December 31, 1998). "Sanity Inc.". Fast Com- Given the evidence of this complexity of star effects, the
pany. implications for managers and organizations are equally

https://doi.org/10.1016/j.orgdyn.2019.01.002
0090-2616/© 2019 Elsevier Inc. All rights reserved.

Please cite this article in press as: D. Tzabbar, Y. Baburaj, How to best utilize star employees, Organ Dyn (2019), https://doi.org/10.1016/
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ORGDYN-696; No. of Pages 5
2 D. Tzabbar, Y. Baburaj
important. We begin with a discussion of the nuanced effects
highlighted by recent scholarship in this area. We then
recommend ways in which stars can be managed at different
stages of their life cycle in the organization by identifying
the situational factors that maximize the value of stars and
moderate their damage.
Influence on innovation and productivity
Direct effects. Star employees assume dominant positions
within an organization, controlling the flow of key resources
within and outside its boundaries. Their expertise and
experience are highly valued in ambiguous and uncertain
contexts, such as R&D labs, hospital settings, and financial
investing. Star scientists, engineers and analysts also add
value because of the clientele they help attract. High profile
customers are drawn to and stay with an organization due to
the trust they have in the key employee(s). The centrality in
position and expertise of stars make them an extremely
valuable resource that is difficult to replace or imitate
and contribute to the organization’s competitive advantage.
Star scientists occupy an important role in the organization’s
activities devoted to innovation through their research agen-
das. They orchestrate key resources and provide essential
direction and support to other employees to realize these
agendas.
Indirect effects. Star employees not only contribute
directly to improving the productivity of their organizations,
but also contribute indirectly to improving the productivity
of other employees in the organization through knowledge
spillover.
Other employees benefit from the offshoots of the
research programs that the stars pursue. Highly respected,
they serve as role models to younger and other non-star
scientists and analysts who learn behaviors conductive to
productive research from them. Nevertheless, there are less
favorable influences as well. Stars’ disproportionate access
to and control of key organizational resources enable them
to advance their own research agendas, limiting the oppor-
tunities and resources for other non-star employees. This
situation not only makes the organization more dependent
on the star performers but also leaves fewer opportunities
for other non-star performers to take lead roles because the
resources and power are asymmetrically distributed.
Key Situational and Personal Factors
Research has established that stars who collaborate broadly
with other employees or have a breadth of expertise in
several areas contribute much more to the overall develop-
ment of the organization’s innovation than stars who rarely
collaborate.
The Dual Impact of Star Turnover
On the one hand, star employees’ exits can deplete the
organization of its bank of skills and organizational memory,
leading to severe disruption in innovation activities, and lack
of direction and leadership among non-star employees who
relied on the expertise of stars. The scale of disruption is
influenced significantly by the extent to which the star
Please cite this article in press as: D. Tzabbar, Y. Baburaj, How to best utilize star employees, Organ Dyn (2019), https://doi.org/10.1016/
j.orgdyn.2019.01.002
performers were engaged with the various stakeholders,
specifically, the involvement of such stars in innovative
activities, and collaboration with colleagues, vendors and
customers. Knowledge depletion is more severe when the
experts are heavily involved in the innovation activities of
the firm. Since individuals have cognitive limitations, stars
are likely to pursue projects that build on their past work and
enhance their knowledge in specific areas. As a result, the
rest of the organization is dependent on the stars for their
expertise for problem solving, increasing the disruption that
occurs when they leave. In contrast, the benefits of colla-
boration have been documented in management research,
enabling the development of a shared framework and knowl-
edge absorption. Thus, when stars collaborate with their
colleagues in innovative efforts, the latter’s new knowledge
becomes part of the organizational memory and the impact
of the stars’ exit is felt less severely. Other organizational
members are less dependent on the stars’ expertise and
can continue research programs left incomplete by the
stars’ exit.
There is a silver lining, however, because the star’s exit is
rarely an isolated event. It is associated with a shake-up in
the organization’s resource allocations, power structure and
knowledge stocks. A star’s exit opens up new avenues for
research programs that were not considered before due to
star led research agendas and incentivizes other employees
to pursue new directions. This is particularly true when the
stars are less involved in the innovation activities of the firm.
Thus, such exits can promote organizational renewal in the
firm, prompting the company to explore areas beyond its
familiar boundaries. For example, Atera Restaurant, a Man-
hattan based fine dining place, was in the midst of a crisis
when its multi-starred executive chef announced that he was
leaving. The leadership took this an opportunity to imple-
ment some radical changes in the company. They created a
new restaurant concept run by a more cohesive, enthusiastic
team and a new chef.
IMPLICATIONS FOR MANAGEMENT PRACTICES
Companies can experience success with star performers by
creating a culture emphasizing collaboration, providing ample
and exciting learning opportunities in a breadth of subject
areas, developing a leadership committed to sustainable
innovation goals, formulating clear HR policies, and building
a non-constraining organizational structure. We identify the
key policies and practices that influence the company’s rela-
tionship with its top performers and make recommendations
about balancing this relationship so that managers are well
equipped to deal with opportunities and challenges.
Hiring Practices
Aside from the technical skills and intellectual capabilities of
the potential hire, what are the other dominant traits that
are required to ensure that the individual shares knowledge
and integrates seamlessly into the organizational fabric? In
this regard, hiring managers need to carefully assess how
well potential star hires fit with the company’s key cultural
attributes related to work norms, reward systems, knowl-
edge complementarity and leadership.
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ORGDYN-696; No. of Pages 5
How to best utilize star employees
 Personality tests and multiple interviewers to assess
attitudes and work norms
Personality tests could be used to assess the fit with the
company’s culture. The interviewers should also arrive at a
consensus about the potential hire’s fit with the culture. For
example, MFS Investments, a leading financial services firm
based in Boston, goes to great lengths to ensure that the
candidates they hire fit well into their team based culture by
being open with candidates about their expectations in
terms of pay raises, promotions and team work. The com-
pany also favors developing talent from within rather than
seeking star players from competitors. For example, during
his tenure at Lehman Brothers, Jack Rivkin was unequivocal
about not hiring analysts who were self-aggrandizing or
difficult to manage. About a dozen colleagues were involved
in the interview process, and the hiring decision was based
on consensus among them. In a decade, a change in leader-
ship resulted in different star oriented hiring practices, with
Lehman Brothers eventually slipping from its leadership
position in the financial services sector.
 Hiring those who fit with culture
Duetto, the only revenue strategy platform in the hospi-
tality sector, recently secured an $80 million series D finan-
cing from a leading global private equity firm.2 Marco
Benvenuti, along with the other co-founders of Duetto,
has created a culture that is creative, caring and brings
out the best in its employees. New hires are given ample
freedom, but are made aware of the company’s high expec-
tations. In the interview process, Benvenuti assesses an
aspiring employee’s willingness to collaborate, personality
and thought process, and his or her fit with the company’s
culture. There are no offices, and no one punches a time
clock. The company encourages individuality and diversity.3
It also has a partnership with a leading university, which
provides the company with outstanding students looking for
internships and full time jobs.
Transitioning Star Hires into the Organization
Research suggests that star analysts experience a decline in
performance immediately after being hired that lasts up to
five years. This situation is particularly true for those who
moved from better organizations and those who moved
individually. Leaders who are aware of the fact that despite
the best intentions of the new hire, the star (a scientist,
analyst or other) is likely to encounter resentful attitudes
from new colleagues and bosses can deal with the issue. For
example, Donaldson, Lufkin & Jenrette, a now defunct
technology investment group, hired prominent bankers from
UBS, but conflicts surfaced between the newcomers and the
older employees. DLJ did not have a culture or procedures to
contain the disruption, and several employees eventually
left the company.4 Since firm specific factors are known to
2
https://www.prnewswire.com/news-releases/duetto-closes-
80-million-series-d-financing-round-led-by-warburg-pincus-
300596679.html.
3
Benvenuti M. Take a different approach to attracting top talent.
Las Vegas Business Press (10712186). 2015; 32(6): 4.
4 5
Wipperfurth, H. Exodus of its top talent leaves DLJ tech effort
adrift. Investment Dealers’ Digest. 1999; 65(14): 6.
Please cite this article in press as: D. Tzabbar, Y. Baburaj, How to best utilize star employees, Organ Dyn (2019), https://doi.org/10.1016/
j.orgdyn.2019.01.002
3
play a key role in a star’s stellar performance, companies
must anticipate challenges at least in the short term, when
integrating new star hires.
 Catering to the needs of star performers
Brad Margus, the CEO of a newly formed biotech company,
Perlegen, devoted considerable time to understanding what
motivated each of the newly hired star scientists. For exam-
ple, to create a comfortable environment, he agreed to the
demand of one star scientist for a skylight in his office.
Providing strong managerial support throughout the process
of integrating star performers into the new company helps
those who have a great deal of expertise in technical areas
but may lack managerial skills.
 Managerial support for coordination and administra-
tion
It is challenging to motivate collaboration among senior
star performers or specialists. Furthermore, given that
star performers are vital to the implementation of new,
creative ideas, underemphasizing their effort is a recipe
for failure. Organizational structure and managerial pro-
cesses for coordination are thus crucial for integrating
ideas effectively and recombining knowledge at an expert
level. Structures can enable or constrain the firm’s ability
to assimilate and recombine knowledge effectively. For
example, Chung & Dasgupta, LLP, a leading IP law firm
based in Massachusetts, has a higher number of associates
per partner than most of its competitors. The associates
provide the managerial and coordination roles, and
free the legal experts to focus on the technical details
of each case.
Nurturing a “non-star” Culture of Collaboration
and Organizational Wide Learning
“We want star performers, not star egos” –— Jeffrey
Shames, CEO of Massachusetts Financial Services, 2001.
Star performers can be difficult to manage. Their
competitive and achievement oriented personalities can
make them difficult collaborators, impatient and ruthless
with less talented coworkers, who sometimes make unre-
lenting demands. The extent to which the company’s
strategic leadership succeeds in conveying the company’s
tolerance for such behaviors through various policies is
critical.
 Promoting an inclusive culture
The success of MFS Investments, one of America’s oldest
mutual fund companies, is attributed to its culture. The
company adopted a non-star philosophy that favored team
performance and talent development from within rather
than attracting stars from outside. Similarly, SAS Institute,
a company where star talent thrives, has shunned the
practice of a star system.5 Such companies have even
delayed a star’s promotion or bonus increases till the star
complies with the required interpersonal behavioral
changes.
PREWITT E. How to keep your company’s star employees. Har-
vard Management Update. 1999; 4(8): 4.
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4 D. Tzabbar, Y. Baburaj
 Cultivating teams of excellence
Studies on star recruitment and their exit unequivocally
indicate the perils of total dependence on stars and their
agendas. An organization should build pools of expertise that
are centered not solely on a few high performers, but rather
create teams where expertise is distributed. High perfor-
mers should be motivated to share knowledge, which should
be captured and codified as much as possible to minimize the
depletion of organizational memory. Given the significance
of collaboration for reducing the impact of star exits, com-
panies must take steps to increase collaborative efforts as
soon as stars are recruited, so that it becomes part of the
stars’ work ethic. For example, the New England Patriots
have not relied on one or two star players. Instead, com-
plementary efforts by the entire team have been the key to
the team’s success.6 Thanks to the coach’s strategy of turn-
ing unsung heroes into important contributors, the team’s
defense continued to play at its best in the absence of star
players such as Chandler Jones and Jamie Collins.7
When stars collaborate, the results are often extraordin-
ary. Companies that invest in developing a collaborative
work ethic amongst its employees are rewarded. For
instance, six hundred engineers at Apple developed the
groundbreaking OS X within two years. Similarly, ToyStory
was the creative manifestation of Pixar’s top artists and
animators, the legendary Steve Jobs, as well as Disney’s
veteran executives.
 Cultivating multiple employee contacts with presti-
gious clients and customers
The organization should build a network of relationships
with clients that are independent of a few stars. A strong
reputation that succeeds in attracting new customers will
also draw leading performers into the organization and help
retain them.
 Providing opportunities for frequent collaboration
Organizations influence collaborative efforts by the man-
ner in which tasks are structured. When stars mingle fre-
quently with non-star employees, the social boundaries
progressively dissolve, promoting efficient knowledge trans-
fer and reducing the costs of coordination in future joint
efforts.
Compensation Plans
Compensation plans with the appropriate criteria are
intended to elicit a range of employee behaviors that
enable the organization to execute its strategy effectively.
Particularly in professional service firms, senior star ana-
lysts play a decisive role in the implementation of a com-
pany’s strategy. The organization needs to balance its
efforts to retain its star performers with that of building
collaborative teams. Compensation plans aligned with
these objectives ensure that their exemplary performers
are not poached by other companies or headhunters and
also enable employees to recognize the value of sharing the
rewards.
6
https://nesn.com/2015/11/bill-belichick-chandler-jones-
success-reflects-patriots-collective-work/.
7
https://www.si.com/nfl/2017/02/03/patriots-defense-
without-jamie-collins-chandler-jones.
Please cite this article in press as: D. Tzabbar, Y. Baburaj, How to best utilize star employees, Organ Dyn (2019), https://doi.org/10.1016/
j.orgdyn.2019.01.002
 Using monetary rewards and recognition strategically
to retain star talent
Stock options and benefits components can serve as useful
tools. Companies that recognize the value of their star
performers should also attempt to retain their best when
possible. For example, Chung & Dasgupta, LLP promoted one
of their star litigators to a partner position two years ahead
of her tenure, upon hearing that the employee was offered a
lucrative offer by a competitor. Benefits are indicative of the
concern that employees perceive employers have for them.
The Strategic Human Resource Management’s 2014 Strategic
Benefits Survey found that a combination of health care,
flexible work arrangements, and leave benefits helps retain
employees. Companies also use vacation policies and sub-
sidized cafeteria benefits to retain top talent.8 For example,
Marshall & Gordon offered a mix of monetary and non-
monetary awards to its specialists to reorient its culture
from one that encouraged individual expertise to one where
seamless collaboration was required among different spe-
cialists.
However, it is also important not to set a faulty prece-
dent. Excessively uneven salaries and bonus awards to stars
can demoralize non-star employees and create a divisive
culture that is ultimately corrosive. Nevertheless, if stars
leave for higher compensation offers, trying to match these
offers would send the wrong signal to the stars and the entire
organization. When two of their extraordinarily successful
portfolio managers threatened to leave, MFS Investments
refused to match the external offers. Rather, they chose to
stay true to their team oriented, non-star culture.
 Designing a challenging and learning work context
There are limits to the extent to which financial compen-
sation can be used to change behavior. Moreover, excessive
salaries and bonus awards to stars can demoralize the other
employees and create a divisive or exclusive culture.
Furthermore, talented employees are not always seeking
excessive compensation. Star performers are self-motivated
individuals who value opportunities to learn, the chance to
exercise their creativity, and flexibility in their work.
Research has shown that jobs that are intrinsically rewarding
and a culture where employees feel emotionally connected
create an environment that is far more sustainable than
extrinsically motivated rewards. For example, SAS Institute
has been very successful in retaining its top talent by creat-
ing a creative and caring culture and environment, providing
opportunities to work with like-minded people and paying
competitive salaries that do not include large bonuses.
Being Prepared When Stars Exit
Organizations that have developed a strong brand and image
are less likely to feel the blow when celebrated talent
leaves. In addition, companies can take several steps to
mitigate the risks associated with star exits. Companies
should use these as opportunities to reorient a star oriented
culture to one that rewards knowledge sharing and develop a
better balance between the organization and its employees.
8
https://www.huffingtonpost.com/2013/11/18/
best-places-to-work_n_4240370.html; Schramm J. Targeting Top
Talent. HR Magazine. 2015; 60(3):61.
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How to best utilize star employees
 Rotating key employees serving key clients reduces the
dependence of a client on a particular employee(s).
 Growing talent from within the organization rather
than hiring stars from outside.
CONCLUSION
The quality of an organization’s human capital is increasingly
important in knowledge-based sectors. Management
research has noted the inherent conflicts associated with
highly prolific performers in advancing the company’s inno-
vation portfolio on the one hand, while also constraining the
emergence of alternative innovative leadership on the other.
We set out to highlight the intricate influence that star
performers have on organizations noted in management
research and analyze their implications for firms. Organiza-
tions that design their work structure, hiring, performance
evaluations, cultural values, and compensation and reward
systems so that they favor knowledge sharing, collaboration
and a greater loyalty to the organization as a whole are likely
to maximize the value of star capital. Finally, we suggest how
companies could use star exit(s) as an opportunity for orga-
nizational change.
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Tel.: +1 215 571 3825; e-mail: dt396@drexel.edu (Corresponding author)).
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j.orgdyn.2019.01.002
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The examples related to hiring practices, compensation
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9906034, L., “Lehman Bothers: Rise of the Equity Research
Department”; Gardner, HK. & Herman, K., 2013. HBSP case
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son at Morgan Stanley”; Tempest, N., 2002. HBSP case
9402026, “Perlegen Sciences”; Leleux, B., Kohlrieser, G. &
Borregaard, O., 2016, HBSP Case. “Atera NYC: Turbulent
Times in the Kitchen”, Florida, R., & Goodnight, J., “Mana-
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