Reading the stars: Determining human capital's value in the hiring process

• Published date: 01 January 2018
• Date: 01 January 2018
• DOI: http://doi.org/10.1002/hrm.21832

RESEARCH NOTE

Reading the stars: Determining human capital’s value

in the hiring process

Sung-Choon Kang

1

| James B. Oldroyd

2

| Shad S. Morris

3

| Junwoo Kim

4

1

College of Business Administration, Seoul

National University, Seoul, Korea

2

Ford Motor/Richard Cook, Research Fellow

Organizational Leadership and Strategy

Department, Brigham Young University,

Provo, UT

3

Georgia White Research Fellow

Organizational Leadership and Strategy

Department, Brigham Young University,

Provo, UT

4

Samsung Engineering, Seoul, Korea

Correspondence

Sung-Choon Kang, Professor of Human

Resources, College of Business Administration,

Seoul National University, Seoul 08826,

Korea.

Email: sk229@snu.ac.kr

Star employees are highly sought after by competitors and thus more likely to move from one

company to another. However, not all the factors related to stardom are as mobile as the stars

themselves. We argue that while simply possessing star status leads to increased movement,

differences in the attributions of human capital and value appropriation will also influence a

star’s movement to competing firms. To test this, we analyzed the careers of 695 security ana-

lysts over a 10-year period. We found that while stars are more likely to move to competing

firms than nonstars, the difference in movement between stars and nonstars decreases as the

status of their current firm and their tenure increases.

KEYWORDS

careers, employee movement, human capital, star employees

1|INTRODUCTION

A company’s overall value proposition is due, in part, to a small group

of elite employees (Aguinis & O’Boyle, 2014; Lepak & Snell, 1999;

Ready, Conger, & Hill, 2010). For example, 80 percent of company

sales are often attributable to 20 percent of their employees

(Aoyama, Yoshikawa, Iyetomi, & Fujiwara, 2010). A study across mul-

tiple industries points out that the top quartile of employees are

responsible for over 50 percent of company production (Aguinis,

2012). In professional service industries, an organization’s top perfor-

mers both generate the bulk of that organization’s business and con-

stitute its core knowledge assets (Eccles & Crane, 1988). And studies

of scientists and academic researchers have consistently found that

employees at the top of the performance distribution are many times

more valuable than their lower-performing colleagues (e.g., Cole &

Cole, 1973; Ernst, Leptein, & Vitt, 2000; Narin & Breitzman, 1995).

As a result of their uniquely valuable contributions, top perfor-

mers are the most widely recognized employees in a given organiza-

tion (Trevor & Nyberg, 2008) and are often highly visible in the

external labor market (Groysberg, Lee, & Nanda, 2008). When top

performers possess high visibility in the external labor market they

are considered to be stars (Oldroyd & Morris, 2012). The high perfor-

mance leads to high visibility, which makes these employees more

widely recruited than their less visible peers. Given greater access to

employment opportunities, star employees are more likely to move

across organizations than their less visible peers (Trevor, 2001). In

fact, unlike traditional theories of turnover where employees must

engage in job search behaviors, stars often do not need to contact

employers (Aguinis & O’Boyle, 2014); rather, because of stars’high

visibility, companies actively recruit stars (Gardner, 2002, 2005;

Insead & Chatain, 2008). Yet we know very little about the types of

external employment opportunities that stars have relative to other

employees and, more importantly, what types of stars are likely to

move from one organization to another.

To predict star employee movement,we juxtapose the research on

market signaling and strategic human capital. Signaling theory suggests

that because star employees have high visibility in the external market,

their performance in one firm will signal that they will be able to per-

form well in another organization. This signaling increases the star

employee’sability to capture more of the value theycreate for the com-

pany (Spence, 1973). Strategic human capital research suggests that

stars must possess a type of generally applicable human capital that

allows them to transfer their productive skills fromone organization to

another (Oldroyd & Morris, 2012). However, scholars such as Groys-

berg and Lee (2008) foundthat stars suffered significant and long-term

drops in productivity when they changed organizations. Hence, it is

DOI: 10.1002/hrm.21832

Hum Resour Manage. 2018;57:55–64. wileyonlinelibrary.com/journal/hrm © 2017 Wiley Periodicals, Inc. 55