Knowledge Is Power

Save $300 by Registering Today for SCIP's Annual Conference May 9-12, 2011

The conference with executive, networking, and 8 tracks of sessions will be held May 9-12, 2011 in Orlando, Florida. Register for this event by January 31st and pay just $1,250, (nearly a $300 savings). Check www.scip.org for the schedule and session titles. This is the second conference produced with the help of Frost & Sullivan so it should be even better than last year's highly praised event.

Does Hiring Stars from Outside Make an Organization More Competitive?

Two studies by Harvard Business School professors suggest that the answer depends on the similarity of the corporate environment, if the stars can bring his/her support team to the new firm, and the size of the organizations.

Boris Groysberg’s book, Chasing Stars: The Myth of Talent and the Portability of Performance, based in part on earlier research with Ashish Nanda, Andrew McLean, and Nitin Nohria, explores the question and is discussed in 11/8/10 HBS Working Knowledge newsletter.

The first research effort studied “top investment analysts (as identified annually by Institutional Investor magazine) and the organizations that develop and hire them away from each other. Their analysis is based on a large base of data for 1988 through 1996. It includes ratings before and after an analyst's transfer from one investment bank to another as well as the results of extensive interviews over several years of study.”

The results showed that "star analysts who switched employers paid a high price (in performance, not compensation) for jumping ship relative to comparable stars who stayed put."

However, these findings apply only to men who switched firms; women who moved to a new employer did not show a drop in performance. One can debate why: are women, by nature or nurture, more sensitive to the nuances of their environments and more able to build relationships in the new environment, or to be a successful female star takes such talent that portability is relatively easy? Or perhaps another reason exists.

“For those hiring stars, Groysberg says the evidence ‘strongly suggests the wisdom of hiring from firms with similar orientations … and lesser or equivalent quality’ that are less ‘resource-rich’ than one's own, with every effort made to redress the asymmetry in information and inadequate due diligence that almost always accompanies hiring from outside. He suggests that every effort should be made to avoid the ‘winner's curse’ of overbidding to get talent without a clear picture of how they fit into a longer-term strategy.”

“Groysberg, along with Andrew McLean and Nitin Nohria, extended the inquiry to 20 General Electric top executives who moved to high positions in other companies. They concluded that those who ‘took over, built, or implemented management systems that resembled GE's were more successful,’ while ‘those who went to different industries, those who moved solo (rather than with a team), and those who joined companies whose needs (exploiting existing business opportunities as opposed to exploring new business opportunities) called for different skills performed poorly.’"

These studies suggest that an analysis of the potential for success for new top executives at competitors must include the following factors:

1. Similarity of environments

2. Ability to bring his/her team along

3. Relative size or resource availability of the prior and new organizations

4. Expectation for the performance of the new executive relative to his/her demonstrated successes at the previous employer

Hewlett-Packard has chosen three CEOs in a row from outside the company. The first, Carly Fiorina, failed at providing new vision for the company. Of course, her former employers, AT&T and its spin-off Lucent Technologies, were process companies, not vision organizations. The second, Mark Hurd, had a reputation of being an excellent process manager and excelled at imposing new processes on HP—until he tripped up over inaccurate expense reports. The board then decided on a new strategy for HP emphasizing software, and hired a leader Leo Apotheker from the software industry to make a statement to the world (and the employees) about the company’s future direction.

Of course, other large technology firms have done well with outsiders; Gerstener at IBM, for example. But you should consider the listed factors carefully whenever a competitor hires from outside. Prior success is no guarantee of future performance.

Harry Markopolos to Speak Feb 9 at SCIP Boston Meeting

SCIP Massachusetts/Boston Chapter

Register now! For details and registration (to be up shortly), go to www.scip.org.

Bernie Madoff was the mastermind behind what is widely described as the largest Ponzi scheme in history. How was he uncovered? Did you know that CI techniques played a role? Join us for this unique event, as Harry Markopolos, “the Madoff Whistleblower,” details for the first time how he uncovered Madoff’s scheme using CI techniques and how CI techniques continue to help him in his current cases. Don’t miss your chance to hear first-hand about this tale of rare, high-profile CI intrigue!

SCIP Massachusetts/Boston Chapter Presents

Harry Markopolos, “The Madoff Whistleblower”

Hult International Business School Wednesday, February 9, 2011 5:00PM – 8:30PM

Speaker

Harry Markopolos, CFA, CFE, is an independent financial fraud investigator who brings fraud cases to the US Department of Justice, Internal Revenue Service and various State Attorney Generals under existing whistleblower programs. He has been featured in the leading business media, including Wall Street Journal, CNBC, and Bloomberg, and he has provided testimony before the United States Congress.

The Madoff investigation was his first financial fraud case, which he started in early 2000. He’s been hooked ever since. Mr. Markopolos is co-author of the best selling book “No One Would Listen: A True Financial Thriller” published by Wiley & Sons, Inc.; March 2010. The film documentary about his Madoff investigative team, “The Foxhounds: The Pursuit of Bernie Madoff” premiered in November 2010 at the International Documentary Film Festival in Amsterdam.

Program

In 2000, Harry Markopolos recruited and led a four-man team of industry experts to track Bernie Madoff's $65 billion feeder fund network across two continents. This team's eight-and-one-half year long investigation identified dozens of Madoff feeder funds which were delivering a steady stream of new victims to Madoff's doorstep on a daily basis. Most of their intelligence was gathered in person at industry events, conferences, and during meetings. (In fact, very little of their investigation took place on the internet and there was a reason for that – Madoff was so secretive that he made sure that none of these feeder funds was mentioning him by name in their marketing efforts.) Mr. Markopolos will speak about the case from an intelligence gathering standpoint and take your questions.

Mr. Markopolos will also sign your copy of his book, No One Would Listen: A True Financial Thriller, detailing his investigation. There will be no books for purchase.

The SCIP Massachusetts/Boston Chapter thanks Hult International Business School for hosting this event.

Location

Hult International Business School EF Education First Boston Headquarters 1 Education St. Cambridge, MA 02141

Registration

Includes dinner and soft drinks. Cash bar available. SCIP Member $35.00 Non-Member $45.00

Please note: This will be a popular event – register early!

Agenda

5:00 to 6:00 Networking 6:00 to 7.30 Presentation and Q&A 7:30 to 8:30 Networking

Contacts

Cynthia Cheng Correia, SCIP MA/Boston Chapter Coordinator, [email protected], 1.877.400.0883 Robyn Reals, SCIP Education Manager, [email protected], 703.739.0696 X 107

Are you on the SCIP MA/Boston Chapter LinkedIn Group? Stay in the loop! http://www.linkedin.com/groups?about=&gid=2200786&trk=anet_ug_grppro

Jan 2011 EastSight InSight

Some economists believe that signs are pointing to increased hiring by US organizations in 2011. Check out your competitors’ job descriptions. Even replacement positions are useful information as firms are not replacing people in shrinking businesses. Ask if your rivals hiring overseas to lower costs, or hiring for new positions that indicate growth or new endeavors?