Magazine

The Folly of Star Wars


Why it's often wiser to let a top performer walk than get into a bidding battle

How far should I go to keep a star performer who has an offer to work at a competitor? — Hymie Betesh, New York

Not as far as you're probably considering, given the panic mode most managers enter when a star threatens to shoot out the door. But before we expand on that answer, let us thank you for being one of the first people to ask us about the care and feeding of top performers, which has more to do with a company's success than virtually any other factor. After all, the team that fields the best players usually wins, doesn't it?

Most of the people-management questions we receive, both through this column and during our travels, pertain to managing employees who are floundering. We hear: "Isn't it cruel and heartless to let go of the people each year with the worst performance and least potential?" To which we answer: "Just the opposite. Poor performers need to know where they stand so they can start looking for the kind of work in which they will excel for the long term."

Sorry to digress. Underperformance, obviously, is not your problem. That should be a good thing, and typically it is. Under normal circumstances, to keep stars happy, you just need to give them what they crave: outsize compensation; effusive recognition; enjoyable, challenging work; and the feeling that they're not being micro-managed. But all that changes in a split second when a star asks to see you, closes your office door, and says: "I've gotten an offer I think I just can't refuse."

Your first instinct will be to match the offer financially. Usually, though, that won't be enough. The competitor luring your star has been smart enough to make the deal richer in other ways with, say, more job responsibility or a bigger title. You can match those, too. And that's where the trouble starts. Because promoting stars just to keep them can incite a little riot, especially if the promotion is over people who feel they deserve the same kind of treatment but just haven't threatened to leave.

Before you know it, other stars will be insulted by your accommodation, and even some midrange performers will feel resentful. And at the end, the only contented person left in the place might be your overperformer, who has decided to stay, now feeling more indispensable than ever.

Sounds deadly? It is. Which is why we would recommend another, more proactive approach. During normal times, make the management of your stars a top priority. Never take them for granted, and be sure all of your managers do the same by making star retention a key measure of performance. But at the same time, remember that stars sometimes leave for the simple reason that they have outgrown the opportunities at a company. By consistently overdelivering, they have earned the chance to reach for horizons beyond what you can offer them over the long haul. And because of that reality, you must always be prepared to fill the wing tips of any key person who departs, no matter what the size of the business. That's the beauty of a rigorous human resource program, with frequent reviews, consistent coaching, and backup planning for every key position that can readily answer the question: "Who replaces George or Carol if they leave?"

Such backup planning, by the way, must happen at least annually and can never become a rote, fill-in-the-blanks exercise. Instead, it must be conducted with the gritty intensity of a war game. Only then will your organization be able to replace a departing star within eight hours—yes, eight. Only then will your organization be able to send the important message that no star is bigger than the organization.

Now, we realize it is natural to fight for a star, especially since a competitor is involved. But experience also tells us that once a top performer gets the bug to leave, heroic rescue efforts are of limited use. You can come up with a fancy title, add an extra layer of management, and in the short run persuade someone to stay.

But when people go, you're left with a cobbled-up organizational chart and a bunch of confused employees. Better to keep your house in order and send your star off with good wishes. If you've done your job, another star will soon be born.

Jack and Suzy Welch await your questions. For their video podcast, go to businessweek.com/search/podcasting.htm.

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