Monday, February 28, 2022

The quantification of talent hoarding in companies

Via the Marginal Revolution blog, this interesting economics observation by Dr. Ingrid Haegele: 
Most organizations rely on managers to identify talented workers. However, because managers are evaluated on team performance, they have an incentive to hoard talented workers, thus jeopardizing the efficient allocation of talent within firms. This study provides the first empirical evidence of talent hoarding using a unique combination of personnel records and application data from a large manufacturing firm. When managers rotate to a new position and temporarily stop hoarding talent, workers’ applications for promotions increase by 123%. Marginal applicants,who would not have applied in the absence of manager rotations, are three times as likely as average applicants to land a promotion, and perform well in higher-level positions. By reducing the quality and performance of promoted workers, talent hoarding causes misallocation of talent. Because female workers react more to talent hoarding than males, talent hoarding perpetuates gender inequality in representation and pay at the firm.

Having scanned the paper, I see that it's of a very large German manufacturing firm. I can easily imagine talent hoarding happening, i.e. managers saying to their employees "you're good, so I want to keep you working for me." At the same time (and I confess that I haven't read the paper closely), it feels like there's also "talent stickiness" (?) in the sense that people like working in a successful group and are incentivized to do so. That might also be difficult to quantify...

1 comment:

  1. I would expect this to be less of a problem with the churn and constant re-orgs of a modern company. I once replaced a retiring chemist who had the same boss for his entire 36 years with the company. By contrast, I've never had the same boss for more than about 4 years ever.


looks like Blogger doesn't work with anonymous comments from Chrome browsers at the moment - works in Microsoft Edge, or from Chrome with a Blogger account - sorry! CJ 3/21/20