Why Female Stars Succeed in New Jobs

By Hua Wang (Chicago)

According to a recent study, when changing jobs, women are more likely to continue to shine than men. Harvard Business School professors compiled data on 1,052 star Wall Street research analysts (defined by their Institutional Investor rankings) in the United States from 1988 to 1996. They found that a significant number of stars show a decline in performance in their new jobs and were likely to leave their new firms within five years. However, the decline in performance was found mostly in men.

The research showed that women who switched firms were able to maintain their star status, unlike their male counterparts. Talented women who switch firms tend to maintain their stardom, and their new employer’s share price holds steady. The implication of the study is that firms seeking to hire a top performer cannot accurately value the likely return on their investment based purely on that individual’s accomplishments in another organization.

Power of Relationships

Women, who made up 18% of the analysts in the study, were more likely than men to have built their success on relationships with clients and companies they covered. High-performing female analysts are boundary spanners—they tend to forge relationships with people outside their work environment and are connected to disparate groups of people. The network of support may contribute significantly to an individual’s ability to maintain top performance.

Male analysts, by contrast, relied more on internal networks within their companies. The gender discrepancy suggests that, the more star employees’ performance depends on the people around them and on their familiarity with their company’s processes and culture, the less likely they are to perform at the same level at a new firm.

Women tend to invest in both external and in-house relationships. As women in a male-dominated industry, female analysts face a lack of mentors and are often in a vulnerable position in the labor market. They might find it difficult to create good in-house relationships, and, thus, are forced to invest in external networks. Some women face less-than-wholehearted acceptance at work, especially given the locker-room and sports-bar cultures characterizing many workplaces. Others fear that close relationships with male peers could have an appearance of impropriety.

Men, on the other hand, experience less of a need to venture outside their internal firm network and political capital to get things done. People who have developed extensive firm-specific human capital (in the form of relationships or mastery of the firm’s system and processes) should weigh carefully the decision to change firms.

What Women Want

Boris Groysberg, a HBS Professor involved in the study, thinks that “female star analysts take their work environment more seriously yet rely on it less than male stars do. They look for a firm that will allow them to keep building their successful franchises their own way.”

Women tend to do more due diligence in deciding whether they will be a good fit with a new employer, as well as ascertain their chance for success there. Women are more prone to ascertain that the new firm has a female-friendly environment and that they will be given substantial responsibility and not be treated as token females. In researching potential employers, women learn a lot of valuable information that helps them make good strategic decisions. They make sure that the firm will invest in their long-term success by investigating the firm’s management, culture, resources, and level of commitment to new hires.

Women seek answers to these tough questions: how do I tap into informal networks, who will advocate for me, how do I find a mentor, will I be judged fairly, and how do I need to adapt my style?

Men, on the other hand, tend to prioritize financial compensation above all other concerns. This makes them more vulnerable to bad management and cultural mismatches, which hinder their ability to replicate their previous success in a new environment. As Professor Groysberg observes, “a company that is willing to double your current salary, but will not invest in your long-term success, is not a good choice. Don’t let yourself be blinded by the money!”

Implications for Firms

Professor Groysberg also noticed that firms that invest resources in creating female-friendly work environments have a competitive advantage in the marketplace. At these firms, performance evaluations are conducted more objectively. Moreover, there is intense mentoring at all career stages and access to an internal network of relationships. These firms developed more stars and benefited from their loyalty as employees. Firms that really embrace women and respond to their unmet needs with skill, nuance, and genuine engagement enjoyed greater breakaway growth and industry dominance. It is thus important for firms to identify the issues the limit women’s ability to build lasting careers and address them systematically by tackling the underlying systems, beliefs, and behaviors that get in the way of women being successful.