OVERVIEW
Companies are faced with a number of employment related decisions and need to connect their
HR strategy to their business strategy. Here you will read about a highly-valued employee at a
firm and the firm’s decision to make a counteroffer or not.
INSTRUCTIONS
This written case analysis must be at least 1500 words (not including the title, abstract and
reference pages), double-spaced, and in current APA format. Please note that the stated word
count is a minimum. Therefore, you are encouraged to ensure that you have thoroughly
researched and responded to each question/prompt provided below. Each assignment must
include a title page, abstract and a references page. Include an introduction and a conclusion.
Use at least 4 scholarly sources (published within the last 5 years), the course textbook, and
biblical integration.
See the Module 3: Week 3 Learn materials and answer the following questions in regards to the
Groysberg et al. case:
· Discuss how to align a company’s strategic direction with its human resource
planning.
· Explain the relationship of HR strategy to business strategy.
· Introduce the situation in the case. Should the company make counteroffers to
either or both of the employees? Defend your choice.
· Discuss a possible concern with succession planning and a best practice on how to
avoid it.
· Recommend a possible practice for the company that would further align HR with
the accomplishment of organizational goals.
Note: Your assignment will be checked for originality via the Turnitin plagiarism tool.
CASE STUDY Should You Fight to Keep a Star?
Images
Authors:
Groysberg, Boris1
BHOGAL, MEHTAB2
MATHEWS, KRISTA3
Source:
Harvard Business Review. May/Jun2020, Vol. 98 Issue 3, p152-157. 6p. 3 Color Photographs, 2 Illustrations.
Document Type:
Case Study
Subject Terms:
*Employee retention
*Supervisors
*Decision making in business
*African American women employees
*Job offers
*Corporate culture
*Promotions
Abstract:
A case study is provided on a supervisor’s decision whether to retain a highly-valued African American woman employee who has a new job offer from a different company, including the counteroffer the supervisor offers the woman employee to retain her. Topics, including corporate culture, promotion opportunities for minority employees and bonuses, are discussed.
Author Affiliations:
1Richard P. Chapman Professor of Business Administration at Harvard Business School
2cofounder of Karta Ventures, a Vancouver
3chief customer officer at Overstock.com.
Full Text Word Count:
3236
ISSN:
0017-8012
Accession Number:
142838338
Notes:
Liberty University subscribes to this resource in print. Check “Get it @ LU” if no full text links appear in this record.
Publisher Logo:
Images:
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CASE STUDY Should You Fight to Keep a Star?
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Contents
- DO YOU HAVE A few minutes to talk?
- NOT THAT MANY ALYSHAS
- WE NEED CONTINUITY
- CONSIDER THE RISKS
- Case Study Classroom Notes
- Should Connor match Alysha’s offer, promote Trent, or try to find an external hire?
- THE EXPERTS RESPOND
- Connor should extend a counteroffer to Alysha, with her future opportunities at P&H as the centerpiece.
- Connor has put himself in a tricky situation, and he doesn’t have great options.
Full Text
HBR’s fictionalized case studies present problems faced by leaders in real companies and offer solutions from experts. This one is based on the HBS case study “Roller Coaster Ride: The Resignation of a Star” (case no. 405031-PDF-ENG), by Boris Groysberg, Steve Balog, and Jennifer Haimson, which is available at HBR.org.
DO YOU HAVE A few minutes to talk?
The Slack message from Alysha Stark made Connor Stephenson uneasy. He was the managing director of equity capital markets at Paulson & Harper, a Chicago-based boutique investment bank, and Alysha was one of the directors on his team. She’d been leading the upcoming deal with MicroBase, and things had been going well. But Connor knew that urgent meeting requests were often bad news.
Sure, he typed. I’m free now.
When Alysha stepped into his office, she closed the door and sat down across from him.
“I might as well come right out with it,” she said. “I’m resigning.”
Connor’s heart sank. He didn’t know how the firm could handle MicroBase without Alysha; she was the only person at P&H who knew the intricacies of the semiconductor industry.
“Where are you going?” he asked. He tried to keep his voice calm, though he felt something between panic and anger.
“I’m taking a job at Randall,” she replied. Connor visibly winced. Randall was one of P&H’s competitors.
“They’re offering me 20% more base pay, plus a higher bonus range,” she explained.
Just two months earlier, Connor had asked Alysha about the rumors that she was thinking of leaving. She had reassured him: “We all get calls, of course, but nothing I would consider.” Connor had believed her. After all, her recent bonus had been generous, and she was on track for a promotion to managing director.
“Who else knows?” he asked.
“Right now, just my family. And Trent, of course.”
Trent Tucker was an up-and-coming associate who worked closely with Alysha, and they made a powerhouse team. Connor instantly realized that Trent might follow her — such moves were common in their industry. But it was good that Alysha had been discreet so far. If others knew that one of the firm’s best bankers was about to leave for Randall, it could hurt morale, not to mention the MicroBase deal. At least now he — and HR — would have more leeway to negotiate. At a previous firm, he’d made the mistake of extending a counteroffer to a VP being wooed by a rival, and then he’d spent the next six months fielding raise requests from the rest of his team.
Connor knew that many firms had a no-counteroffer policy; their attitude was “If you want to quit, quit.” But P&H took it case by case. Leaders would discuss deals with people they truly wanted to retain, while letting less valuable employees go.[ 1] Alysha most certainly fell into the first category.
“I know the timing isn’t ideal,” she said now.
“It’s not,” he replied. They were set to start raising a new round of funding for the semiconductor company in the coming quarter. “But I’m not only worried about MicroBase; I’m concerned about you and your future. We’re one of the top boutique firms in the country. Why do you want to leave? Is it really about the money?”
“That’s only part of it. I’m just ready for a change — or I will be, after the mandatory few months off.[ 2] I’m getting stale here, and I’m really intrigued by the culture at Randall.”
Connor tried to read between the lines. Did Alysha feel uncomfortable at P&H? Was she implying that as a black woman, she’d be treated better at Randall?[ 3]
“Alysha,” he said, “you know how much you’re valued here. We all see you as a future leader of this firm. Can you give us a shot at keeping you?”
Alysha started to shake her head, but Connor kept going: “Just give me the rest of the day to see what we can come up with. I don’t want you to make this decision lightly. And I can’t tell you how sad I’d be to lose you as a colleague.” With that, Alysha’s expression softened. She promised to wait the day out in the conference room and consider a counteroffer.
As soon as Alysha left his office, Connor texted Malik Turner and arranged to meet him in the downstairs cafe. Malik, a fellow managing director who focused on M&A, was his closest friend at the firm. While filling him in, Connor felt his resentment rising.
“Maybe I shouldn’t fight to keep her. I mean, maybe it’s more like ‘good riddance,'” he said.
“Good riddance to Alysha? We’re still talking about your favorite team member, right?” Malik asked, confused.
“Yes, I know. But two months ago she said she wasn’t looking to make a switch. Then clearly she interviewed behind my back.”
“OK, so you feel betrayed. But did you really expect her to tell you that Randall was trying to poach her? No one does that.”[ 4]
“And think about it,” Malik continued. “She’s an incredibly talented black female investment banker focused on tech. Of course she’s going to get offers.”[ 5]
Connor had to admit that he knew how much in demand talent like Alysha was. But he’d let his conversation with her too easily assuage his concerns.
“Have you talked to Joshua yet?” Malik asked. Joshua Schafer was the president and cofounder of the firm.
“We had a quick text conversation. He said that he trusts me to figure out what’s best and that he’ll have my back.”
“Good. Now what about Trent? Does he know enough about MicroBase to jump in?”
“He’s smart, and he knows a lot. But he’s more junior than Alysha is, and the client is not going to see him the same way they see her. I’ll have to step in myself, and I’m already spread thin. Plus, I’m sure he’s got an offer from Randall as well.”
“OK, here’s your game plan. Talk to Trent and find out what he’s thinking. Then have HR get on the phone with some recruiters to see who else might be out there.”
Connor rolled his eyes. Of course he needed to consider external candidates, but given P&H’s hiring protocols, there was no way he’d have someone in the role soon enough to get moving on MicroBase.
“If I were you, Con, I’d put together a counteroffer.[ 6] There aren’t that many Alyshas in this business. Losing her — and perhaps Trent — would be bad for you and the whole firm.”
Connor asked Trent to meet him in his office. “I hear Alysha’s already told you about her offer.”
“She has. It seems like a great opportunity.”
“For her?” Connor probed.
“Of course,” Trent replied, “and for me too.”
“You’re thinking about going with her?”
“Well, Randall’s made me an offer, and it’s more money. But I haven’t accepted yet.”
Connor knew that pay was often the primary motivator for bankers, but other things also mattered: firm culture, reputation, opportunities, a good team leader. He believed that Trent had to care about P&H’s cachet, management’s support, and the possibility of an early promotion.
Ordinarily, such rapid advancement for an associate would have been out of the question. But if Alysha were really walking today, elevating Trent was probably Connor’s most time- and cost-efficient option.[ 7]
“I can’t promise anything yet, Trent, but I’m wondering if a promotion could entice you to stay.”
“That would definitely make me think twice,” Trent said, looking pleased.[ 8]
“I’ll be straight with you. If Alysha leaves — and I’m still hoping she’ll reconsider — I’d prefer to bring in an established banker with the same level of experience that she has. But I might not be able to do that for a variety of reasons.”
Trent nodded.
“So this could be a great opportunity for you. I’d like to do whatever it takes to keep you. We need continuity on MicroBase. You helped construct all the models, and you’re well-acquainted with the players there.”
“I’m certainly interested,” Trent replied. “Of course, I’d need specifics.”
Connor stood up and shook his hand. “OK. Let me get back to you.” Inside, he felt queasy. Now he was looking at preparing two counteroffers.
CONSIDER THE RISKS
Early that afternoon, Connor sat down with Liana, an HR manager.
“I’m kicking myself for ignoring all the signs,” he said. “This shouldn’t be a crisis. I should have had a pipeline, been more proactive about succession planning, retention — all of it.”[ 9]
Liana didn’t respond immediately, and he suspected she agreed with him but didn’t want to rub salt in his wounds.
“Let’s go over your options,” she said, jotting down “Counter,” “Promote,” and “External” on a notepad.
“I guess ‘Go back in time’ isn’t really one of my choices, is it?”
“Afraid not,” Liana said. “Now, I talked to two of our recruiters earlier, and they didn’t sound hopeful about finding someone with Alysha’s expertise in semiconductors. There are people out there, as you know, but most of them have made moves recently, and none of them have her profile.”
“She’s one of the few women in this field — I realize that.”
“And one of fewer women of color, which may be why she’s considering Randall. They’re known for their inclusion initiatives, and they’ve got great diversity on their executive committee.”[ 10]
“And we don’t,” Connor acknowledged.
“No, not yet. But we’re working on it, and we should be sure to communicate that to Alysha.”
“Are those recruiters looking only at the big firms?” Connor asked. “We should check the smaller, regional firms too. That’s where Alysha came from.”
“I’ll follow up with them,” Liana said, “but I think there’s a pretty limited pool to choose from right now, given how hot the semiconductor industry is. Besides, even if we found someone, the hiring, relocation, and onboarding process usually takes two or three months — and longer if we have noncompetes to deal with. Who’s going to cover MicroBase in the meantime?”
“Trent would,” Connor said. “He’s Alysha’s number two.”
“Then I’d lean toward promoting him,” Liana said. “We talk a lot about internal advancement here, and this is a chance to put our money where our mouth is.”
“I’m worried that Trent’s not ready. I’d have to get heavily involved. Can’t we just match Randall’s offer to Alysha?”
Liana sighed. “Money may not be what matters to her.”
“It’s the first thing she mentioned this morning,” Connor said.
“We can certainly try that approach, but we need to consider the risks carefully. If we bump up Alysha’s base salary by 20% and give her a higher bonus range, it’s likely that word will get out, and then everyone else will start to feel underpaid. And I don’t have to tell you how corrosive that can be to a culture.”
Connor sighed heavily. What am I going to do? he thought. I need to have a plan by the end of the day.
[1] A 2018 survey of 5,500 hiring managers found that 58% had extended counteroffers to retain employees being recruited by other companies.
[2] In the finance world, it’s common for firms to require departing employees to take”gardening leave’ — a period of paid time off before they start work for a competitor.
[3] In a 2017 Gallup poll, black employees reported fewer opportunities to learn and grow at work than their white colleagues did.
[4] Do employees have a responsibility to tell their managers they’re job hunting?
[5] Many companies recruit minority candidates, but black managers tend to be promoted more slowly and experience less support at work than their white peers.
[6] CEB data shows that 50% of employees who accept a counteroffer end up leaving within 12 months.
[7] Some experts argue that counteroffers are more cost-effective than internal promotions or outside hires.
[8] In a 2017 survey, close to 40% of senior executives and HR leaders agreed that accepting a counteroffer from a current employer will adversely affect one’s career.
[9] What exactly should Connor have done to prevent this situation?
[10] Fewer than 5% of Fortune 500 board seats are held by women of color.
Should Connor match Alysha’s offer, promote Trent, or try to find an external hire?
THE EXPERTS RESPOND
Connor should extend a counteroffer to Alysha, with her future opportunities at P&H as the centerpiece.
That’s the approach we use at our company. Rather than offering an immediate pay jump, we lay out a road map that explains what it would take for the employee to reach his or her goals.
When people tell us they’re weighing an outside offer, there’s often a deeper issue going on. They may not understand their long-term prospects at the firm, or their manager may not be developing them to their fullest potential.
Connor has made mistakes leading up to Alysha’s resignation — and assumptions following it. For example, he presumes that she might be leaving because of cultural issues at P&H, but he hasn’t tried to confirm this. His first step should be to find out more from Alysha. Why is she really resigning? Is it because of salary? Does she not see a future for herself at the firm?
If it’s true that Alysha is leaving because she perceives the firm’s culture to be discriminatory or unwelcoming, then Connor should give her an opportunity to help fix the issue for herself and others, perhaps by offering her a role in addressing representation at the firm. However, if money is the core issue, then Connor might need to let Alysha go. In the past, when I offered pay increases to keep people, I found that it encouraged bad behavior; employees courted outside offers just to get a salary boost.
If Connor takes the road map approach with Alysha but she leaves anyway, he should focus on Trent. But I wouldn’t promote him right away. Instead, allow him to lead the MicroBase deal and reward him with a better title and salary after he earns them.
Early in our firm’s history, an executive threatened to leave because he felt his cash salary was too low. We tried to help him appreciate his total compensation package and future prospects, but he was still unhappy, so we let him go. As a high-growth firm, we need people who truly believe in the value of equity.
By contrast, another employee wanted to leave not for another job but to pursue an MBA. After I described a few different career paths he could have with us, he decided to stay — without an immediate pay increase.
But you can’t get mad at people who receive other offers. When you have talented employees, that’s to be expected. So my partner and I encourage people to talk openly with us about any job opportunities and their future. Then we do our best to persuade them to stay.
Ideally, Connor can show Alysha a promising future for herself at P&H. It may be an offer she can’t refuse.
Connor has put himself in a tricky situation, and he doesn’t have great options.
His best bet may be to handle the MicroBase deal himself.
I don’t think he should present Alysha with a counteroffer. Money may be the first thing she mentioned, but departing employees often use pay as an excuse. It’s the easiest explanation and saves them from talking about other concerns that are more difficult to express. Connor might be able to keep Alysha by delving into — and solving — those problems. But he doesn’t have a lot of time, and her mind may already be made up.
I also don’t like the other options that he and Liana have laid out. Trent’s not going to know the nuances of the MicroBase relationship, and an external hire will take too long to ramp up. Instead, Connor has to step in himself.
I was in a similar situation recently when one of my direct reports left for another job. His work was critical to meeting our strategic goals, so I got deeply involved in the program he was running and cleared my calendar for his duties. That’s what Connor needs to do here. Perhaps Trent will want to stay on at P&H with a view to an early promotion and a pay raise. But I don’t think it’s wise to make him a counteroffer now either.
Once this crisis is over, Connor should think about how he can better manage people like Alysha and Trent in the future. Step one is to ensure that everyone on his team feels valued. I learned that lesson early in my career. I was about to give one of my best employees a promotion, but when I asked her to go for a walk so I could share the news, she started crying, thinking she was getting fired. I’d somehow failed to let her know how much I appreciated her. Now I ask myself all the time: Am I reminding my people — in language they understand — how much they bring to the organization? Connor should do the same.
Connor could also get better at noticing — even proactively looking for — signs of discontent. I have quarterly development conversations with all my direct reports and “skip-level meetings” with the rock stars on their teams — the Trents of my world. I check in with them about where they are in their careers, what they’re enjoying about their current roles, and what’s draining them. I get a good sense of which folks are flight risks and then take steps to retain them, whether it’s giving them bigger challenges, removing obstacles, or even finding them a more suitable role on another team.
I expect every one of my employees to be able to answer what I call “the lottery question”: If you won a huge sum of money and left the company, who would replace you? Then we discuss whether the likely successor is ready and, if not, how we can fix that.
There are also organization-level improvements that P&H could make. For starters, it should consider beefing up its noncompete clause. When I worked at Target.com, half of the 50 or so employees on the merchandising team went to Amazon within a year because we didn’t then have a noncompete. The company does now!
Obviously, P&H also needs to make sure that its all-star employees feel supported. Every organization should be focused on creating a culture where people can bring their authentic selves to work. If that’s not happening, invaluable employees such as Alysha are likely to walk out the door. ©
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By Boris Groysberg, Richard P. Chapman Professor of Business Administration at Harvard Business School; MEHTAB BHOGAL, cofounder of Karta Ventures, a Vancouver and KRISTA MATHEWS, chief customer officer at Overstock.com.
BORIS GROYSBERG is the Richard P. Chapman Professor of Business Administration at Harvard Business School, a faculty affiliate at the HBS Gender Initiative, and a coauthor of Talk, Inc. (Harvard Business Review Press, 2012). Twitter: @bgroysberg.
MEHTAB BHOGAL is the cofounder of Karta Ventures, a Vancouver-based private equity firm.
KRISTA MATHEWS is the chief customer officer at Overstock.com.
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