Recruitment-of-a-star

9-407-036REV:MARCH26,2007________________________________________________________________________________________________________________ProfessorBorisGroysberg,StephenBalog(CedarCreekManagementLLC),andResearchAssociateJenniferHaimsonpreparedthiscase.Allnames,places,andcompanieshavebeendisguised.HBScasesaredevelopedsolelyasthebasisforclassdiscussion.Casesarenotintendedtoserveasendorsements,sourcesofprimarydata,orillustrationsofeffectiveorineffectivemanagement.Copyright©2006PresidentandFellowsofHarvardCollege.Toordercopiesorrequestpermissiontoreproducematerials,call1-800-545-7685,writeHarvardBusinessSchoolPublishing,Boston,MA02163,orgoto—electronic,mechanical,photocopying,recording,orotherwise—withoutthepermissionofHarvardBusinessSchool.BORISGROYSBERGSTEPHENBALOGJENNIFERHAIMSONRecruitmentofaStarStephenConnor,directorofresearchattheNewYorkinvestmentbankingfirmofRubin,Stern,andHertz(RSH),wasinabind.Hisstarsemiconductoranalyst,PeterThompson,hadabruptlyannouncedhisresignation;hehadreceivedanofferfromoneofRSH’scompetitors.ButPeterwasnotonlyastaranalyst,hewasalsoRSH’sonlysemiconductoranalyst.Thiswascertainlynotarolethatcouldbeleftvacantforlongand,rightnow,RSHparticularlyneededstrongcoverageofthesemiconductorindustrybecauseofanupcomingdealwiththePowerChipcompany.(SeeExhibit1.)StephenexaminedhowmuchmoneyPetergeneratedforthefirmandsawthathecouldlegitimatelyraisePeter’scompensation.Thenhedevisedabackupplan:tosplitPeter’steambyencouragingPeter’sjunioranalyst,RinaShea,tostayatRSH.PeterendedupleavingthefirmandStephenpromotedRinatosenioranalyst,assigninghertocoverPowerChipandtherestofthesemiconductorindustry,atleasttemporarily,whilehedecidedwhethertoofferherthepositionpermanentlyorhiresomeonefromoutsidethefirm.NowStephenfacedthetaskoffindingapermanentreplacementforPeter.ShouldhemakeRinaapermanentofferorhirefromoutside?RSHResearchDepartmentRSH’scorporateculturewasespeciallystronginitsresearchdivision.Seniorresearchanalystsoftenbeganasjunioranalystsandremainedatthefirmlongaftertheresearchdirectorgavethemtheirownfranchises.Insteadofcompetingwitheachother,mostanalystsatthefirmsupportedoneanother;manyhadopen-doorpoliciesandencouragedless-experiencedanalyststoconsultthemiftheyhadquestions.EachanalyststrovetobecomerankedbyInstitutionalInvestormagazine(II),butmanyconsideredthesuccessoftheresearchdepartmentasawholeequallyifnotmoreimportant.AnalystsatRSHworkedlongdays,spendingcopiousamountsoftimeresearchingcompaniesintheirsectors.ItwascommonforRSHanalyststodevelopcontrarianviewsonstocks.Quiteafewoftheseanalystswererecognizedasindustryexperts.ManyconsideredRSH’scultureoneofitsprimecompetitiveadvantages.Teamworkledtosuperiorcompanycoverage.Asanadditionalincentivetoteamwork,thedirectorofresearchtiedanalysts’bonusesnotonlytoindividualsuccessbutalsotothesuccessofthegroup.Atthedepartment’ssemiannualoff-siteretreat,analystscouldworkonanalyticalandwritingskillsinfocusedworkshopsandparticipateinexercisesaimedatfosteringcommunication,trust,andThisdocumentisauthorizedforuseonlyinDrElizaByington'sBUSS5020S12017courseatUniversityofSydney,fromMarch2017toJune2017.407-036RecruitmentofaStar2commitmenttothefirm.Senioranalystsmentoredjunioranalystsandtherewasaformaltrainingprogramtomoldpromisinganalystsintosuperstars.Itwasnotuncommonforanalyststorejectoffersof15–20%payincreasesatotherfirmsbecausetheylikedthecamaraderieandteamworkencouragedatRSH.Furthermore,thefirm’slowturnoverrateenabledStephenConnor,theresearchdirector,tobeselectivewhenhiringnewanalysts:Itwasessentialbothtobeafirst-rateanalystandtofitinwellwiththefirm’sculture.RSHwasdedicatedtoitsemployeesandexpectedsimilardedicationinreturn.Inallofthefirm’sdivisions,itwascommonforpeopletoremainforthebulkoftheircareers.Theturnoverratewassolowthatitstungwhenanyoneresigned.EngagingaRecruiterThoughdistressedoverPeter’sdeparture,Stephennowhadacrucialpositiontofill.HewasgladhehadpersuadedRinatoremainatRSHforthetimebeing.Atworst,shewasagoodstopgap,butshemightnotbetherightchoiceonapermanentbasis.Stephen’sfirstphonecallhadtobetoCraigRobertson,headhunter.CraigworkedforSuperiorStaffingServices,familiarlyknownas“TripleS.”Itsteamofexecutiverecruitersconstantlysurveyedthemarketplace,gatheringinformationfromallpossiblesources—includingbuy-sideanalystsandportfoliomanagers(analysts’clients)—toidentifythebestcandidates.StephenhadworkedwithTripleSforsevenyears;duringhisfouryearsatRSH,hehadworkedspecificallywithCraigRobertson,whohadalwayscomethroughforhim.Craigandhisassociatesunderstandmyneedsbynow—thecultureatRSH,ourteamapproach,andallthat,Stephenthought.They’llknowthetypeofanalyststotarget.StephenpunchedCraig’scell-phonenumberonhisspeeddial.“Craig,thisisStephenConnor.I’vegotabitofaproblem.PeterThompsonjustquitwithoutanynotice.HewascoveringPowerChipandwehavethisbigdealwiththemcomingupinacoupleofmonths.Ineedaseniorpersoninhererightaway—someoneII-ranked,ifpossible.Canyoudoaqui