Wednesday, April 17, 2024

When We Hire, Should We Consider How Well-Connected Candidates Are?

Does an organization benefit when its employees are highly connected to workers in other firms and industries? Or does the benefit simply flow to the employees themselves, as they perhaps are building better future job prospects through these connections. Shelley Li, Frank Nagle, and Aner Zhou set out to examine this question. They built an enormous dataset comprised of approximately 9 million employees with 2 billion individual employee relationships at more than 7,000 publicly held companies in the United States. The scholars discovered that companies whose workforces are more connected tend to produce more valuable innovations. The authors summarized their conclusions as follows:

Although employees do not necessarily make connections for the company’s benefit, we find that companies’ centrality in the employee network positively predicts company value. This effect is largely driven by mid-level employees. Furthermore, company centrality in the employee network predicts company innovation inputs (R&D spending), and controlling for these inputs, predicts the quantity, scientific impact, and economic value of companies’ patented innovation outcomes.

Nagle commented to HBS Working Knowledge about their findings: "What we’re trying to say is there are many more jobs than you might imagine where having the right connections can be helpful to your company.”  He also notes the implications for managers as they search for job candidates. 

“Managers, when they hire somebody, know to look for many different qualities. How well-educated are you? How much job experience do you have?  Today, in some jobs, such as sales or higher-level management, managers may think about how well-connected you are, but our work shows that might be a consideration for a broader set of jobs.”

I'm quite interested to know more about the particular jobs where these connections matter most.  Beyond science, engineering, and sales roles, are there other positions where these networks are important?  Moreover, rather than simply thinking about hiring people who are quite connected, I'm curious to know how organizations can help their employees build more relationships with workers in other organizations.  What can business leaders do to help foster these connections for their middle managers?  

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