Monday, May 12, 2014

Hiring and Retention at High-Status Companies

Management scholars Matthew Bidwell, Ethan Mollick, Roxana Barbulescu, and Shinjae Won have written a new paper titled, “I Used to Work at Goldman Sachs! How Firms Benefit From Organizational Status in the Market for Human Capital.”  Their results are not surprising, though their paper is admirable for the rigor with which they document the relationship between company status and talent attraction/retention.   The study finds that top talent will accept lower total compensation if they have an opportunity to land a job at a high-status firm.  That won't shock anyone.   Interestingly, though, the hiring advantage at high-status companies then turns rather quickly into a retention challenge.   Once those employees gain some experience, they become rather difficult to retain.   These employees at high-status firms view themselves as very attractive to other companies, and therefore, they demand higher compensation, better benefits, promotions, etc.   The advantages of status, therefore, dissipate perhaps a bit more quickly than firms would prefer. 

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