- Groysberg tracked more than a thousand star Wall Street equity analysts, ranked annually by Institutional Investor [1], through moves between firms: the probability of holding onto a #1 ranking the following year fell from 84.9% for analysts who stayed put to 69.4% for those who moved, and the decline persisted for at least five years [2].
- A lateral move to a comparably strong firm has a smaller, shorter decline — about two years — because a lateral move doesn’t cost the analyst the firm-specific resources a downward move does [3].
- What’s actually lost in a move is firm-specific, not personal: colleagues and teammates, the research director, and the firm’s technology platforms and corporate systems [4].
- Hiring a star away from a rival is a poor bet for the acquiring firm even when the star’s underlying talent hasn’t changed — star analysts lift a firm’s gross performance without improving its bottom line, because their pay captures most of the value they generate, the same “winner’s curse” pattern Groysberg finds in comparable corporate acquisitions [5].
- A star hire also carries a cost inside the department: lavishing a newcomer with outsized pay and resources instantly demoralizes incumbents who performed just as well for less [6].
- The core evidence is one labor market — sell-side equity analysts tracked via Institutional Investor’s rankings for 1988–96 [7] — but Groysberg argues the underlying mechanism should generalize, pointing to studies of other professions (cardiac surgeons, scientists, mutual-fund managers) that found the same context-dependence [8].
Chasing Stars: The Myth of Talent and the Portability of Performance
Groysberg's study of star Wall Street analysts who changed firms, showing that star performance is substantially firm-specific and typically declines after a move — performance does not travel intact.
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- 2010
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- When you’re hiring a star from a competitor and their track record tempts you to assume the performance travels intact: Groysberg’s data says the probability of staying a top performer drops for years after the move [2] — you’re buying the person, not the platform that helped make them a star, and a résumé doesn’t separate the two. See The Terrain Test.
- When you’re weighing a “step up” hire — someone moving from a weaker firm into yours — against a lateral hire from a comparable firm: lateral moves between similarly resourced firms recover faster (about two years versus five) [3] than moves that ask someone to operate in an unfamiliar, more resourced environment — “better firm” isn’t automatically the safer bet for near-term performance.
- When you’ve just landed an expensive outside hire and are focused on making them successful: watch your incumbents, not only the newcomer. A highly paid star hire routinely damages the morale and effort of the people already doing the job well [6] — the ramp-up risk is as much about the team around the hire as about the hire.
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