Talent Management Column

Are We Mismanaging Our Top Talent?

Asked why they left their past jobs, a group of high performers didn't offer the usual "I hate my boss" or even "I don't fit." Their unhappiness with their former employers boiled down to questions of fairness. And there might not be a solution to be found in today's organizations.

Monday, December 7, 2009
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This is mid-term exam season at the Wharton School, where I teach 210 first-year M.B.A. students about managing people at work. I've been teaching the same course for almost 20 years and giving the same mid-term exam each year. Here's the exam: Write about your last job, explain how you were managed, point out the successes and failures.

Our average students work six years or so after receiving their undergraduate degrees, so they actually have some experience about which to write. This year, in particular, we have lots of students who were in the investment industry -- it's a great time to be back in school -- but they cover almost the complete spectrum of industries including nonprofits and government. These are really high-performing individuals. They are self-motivated, they learn quickly, they work incredibly hard and almost without exception, they want to do big things.

The big change in these exams over 20 years looks like this. A generation ago, those who worked for investment banks and consulting firms worked like dogs but were reasonably happy with the experience because they got some opportunities to chase big goals. Those in corporations didn't work that hard and tended to be frustrated and unhappy about their jobs.

Now there isn't much difference.

Most everyone, regardless of their sector reports working like dogs -- at least 60 hours a week and 80 hours or more was common -- and they are much more likely to be given the opportunity to work up to their potential.

Here's the obvious point about these high performers. They all quit their last job. You might imagine that they planned to quit at some point, and no doubt that's true for many of them. But what the exams this year show is how many people quit because they were unhappy.

And what's interesting is why they were unhappy. It wasn't the usual "I hate my boss" or even "I don't fit." It was about questions of fairness.

Virtually all the people reporting on the reason they left their last jobs said it was because of some injustice concerning rewards and recognition.

While there has always been some of this phenomenon, it was overwhelming this year. Almost every one of these stories went like this: I sold twice as much as everyone else in the group, but my bonus was only 10 percent more; the company told me I was the highest performer and would get a faster promotion, but I ended up being promoted at the same time as everyone else.

What do we make of this?

I understand that most people think their performance is better than it actually is and that they are under-rewarded, but let's grant for the moment that their accounts have some truth to them. It wouldn't be surprising that they were the high performers in their jobs.

There are two explanations, and they could both be true. One is that there is something different about this cohort of high performers. Perhaps they are more used to recognition for stand-out performance and, therefore, more annoyed when it doesn't come.

The second explanation is that there is something about the organizations that has changed.

One thing that appears to have changed over time is that people who are willing and able to accomplish more at work are now likely to be given the chance to do more. There is more autonomy in jobs and more opportunity for individuals to contribute. That means there will be more variation in performance with more superstars who blow past average performance.

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What interests me is why the employers didn't offer rewards that were more in proportion with the performance differences.

I think the reason is that they are simply not capable of doing so. If the person who did twice as good a job as everyone else, for example, actually got twice as big a raise, it would soak up most of the salary pool, and the other employees in the group would end up with next to nothing.

Those employees would then have serious equity problems, and there are a lot more of those average employees. If we allowed the young best performer to literally jump the queue for promotion over the more senior good performer, it would rip up morale.

What's interesting about this is what it says about modern organizations. We have created an operating model that allows and may even need superstar individual contributors. But the organizations themselves are still social entities based around teams and collaboration.

And in those social entities, norms of fairness develop that aren't the same as simply paying for individual performance. So we create stars and then frustrate them.

Peter Cappelli is the George W. Taylor Professor of Management and director of the Center for Human Resources at The Wharton School.


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