Are Superstar Employees Worth It? The answer is yes -- but only if leaders understand how their value changes over time

"Every leader wants a superstar on the team -- the employee who can deliver double or triple the output of an average employee. These workers have the potential to single-handedly change the fortunes of a business.

But the promise of big results comes at a price. Business lore is filled with stories of organizations bending over backward to recruit and retain top performers, offering lavish salaries, perks and privileges.

Little wonder, then, that even as bosses are wooing superstars, there is inevitably a question gnawing at them: Is the superstar worth it?

The answer is yes, our research shows -- but only if leaders understand that the kind of value superstars bring to the company changes as the star's career evolves.

Early on, stars create enormous value through their individual output. As they age, stars may get less productive as individuals but can often make up for that loss by becoming great collaborators -- mentoring younger workers and helping teams succeed.

So, to get the most out of stars, companies must manage them correctly, giving them options and incentives throughout their career that play to their strengths at that particular moment. You shouldn't motivate and reward a wise old mentor the same way you would a newcomer bursting with energy and ideas.

Early on, stars focus intensely on personal achievement. They are driven to prove themselves and build their professional reputations through standout performance. Career-development researchers call this the "establishment" phase.

Our studies looked at how this drive toward independent work played out in actual performance and pay. In one study, we measured patent filings by individual inventors across a variety of industries -- more than 1.2 million filings over two decades -- to see how many they produced early in their careers and how the number changed over time. In the second study, we looked at a midsize financial firm to examine whether stars -- in all types of jobs across the company -- were overpaid compared with their peers.

In the patent study, young stars produced about 17 patents during an average five-year period early in their careers, compared with six for nonstars. Other research has found the same kind of outpacing performance across a number of fields.

As stars age, though, their individual output starts to decline. In our patenting data, stars' solo output peaked at 20 to 25 years into their career, with an average 35% drop in output every 10 years thereafter.

Our results at the financial firm, meanwhile, show how stars' compensation changes over time. Young stars at the firm -- who were also top solo performers early on -- were often underpaid versus their relative worth. Managers rated young stars 20% to 30% higher than nonstars in performance evaluations, but the stars were paid about the same as nonstars of the same age. On average, young stars were underpaid by almost $2,000 annually.

But as stars got older and gained cachet inside and outside their organizations, they commanded salaries 18% to 20% higher than their peers, relative to their individual output. Older stars were overpaid by almost $10,000, with peak overpayment around age 57.

We didn't study other industries, but it makes sense that the same pattern would hold, given that labor markets generally take some time to reward stars with higher wages. It takes time for pay to catch up with performance.

But aging stars are overpaid only if you focus on their solo work. As stars get older, companies are getting lower returns on the individual achievements that stars make, and this leads many bosses to think they are getting a raw deal. Their best days are behind them. That attitude doesn't take into account an important fact: As superstars age, they produce a different kind of value that can balance out their lost solo productivity.

Average employees tend to avoid leadership roles as they wind down their careers. They are looking forward to retirement and want less of that kind of responsibility. Stars, however, get more engaged in leadership. We surveyed seasoned stars and found that they have significantly more motivation to mentor compared with seasoned nonstars and have almost 50% more mentees than other employees of similar ages.

That is because, as stars gain experience and stature in their fields, their priorities and work orientation undergo a profound shift. The end of a star's career could represent the end of what had been a salient part of the person's identity. Mentoring can help the essence of the star live on in a chosen field long after retirement, helping cement a legacy and achieve symbolic immortality. Experienced stars also feel compelled to send the elevator back down and help junior colleagues rise.

It turns out those seasoned stars are just as good at mentoring as they are at individual work -- so good, in fact, that they can make up for their diminished individual output. Our study in the financial firm found that managers rated the performance of nonstars significantly higher on teams with older stars than teams with younger (or no) stars. Older stars increased nonstars' performance by 6.2% on average, transferring expertise, brokering connections and modeling winning behaviors.

So, what should managers do with this information? Put simply, they must recognize the evolving habits and talents of stars and leverage them.

The goal with young stars, of course, is to keep them focused on high-impact solo work. So companies should shield them from distracting tasks and red tape, perhaps with a dedicated support team or executive assistant to take care of the everyday work. Leaders should also give young stars a lot of leeway, giving them assignments that play to their strengths and aspirations, keeping them invigorated. And stars should get exclusive access to senior leadership as mentors.

At the same time, managers should prepare the young stars for the changes that will come later in their career. To that end, their compensation should deliver immediate rewards -- such as performance bonuses tied to specific achievements -- but they should also enjoy long-term rewards, such as equity grants vesting over time and personalized development opportunities like executive-education programs.

Later on, as stars get the urge to mentor, bosses should give them formal training and coaching for that role. They should collaborate with stars to figure out how the top performers want to transition to a leadership role.

Then, bosses should put stars alongside younger, high-potential employees, and reward them for both their own output and their positive impact on mentees' performance and retention. Bosses might also track stars' performance with metrics like the number of promotions among mentees and improvement in mentees' performance rating.

Organizations could reward older stars with bigger leadership opportunities, as well. They could appoint seasoned stars to advisory councils to help shape the company's long-term strategies. Stars could also get to spend time on passion projects that have impact on the whole business, like an internal startup-incubator program that shepherds promising projects from young stars.

Meanwhile, companies can play into stars' desire for a legacy. They might collect stars' knowledge, for instance, such as documenting how they leverage their professional connections, and using that information to create best practices for the company. Organizations might also create alumni networks and emeritus roles, for stars, extending their impact even after formal retirement.

Managers can't take a one-size-fits-all approach when it comes to stars. By empowering stars to shine in different ways as they mature, organizations can optimize value from these exceptional talents at every stage. For savvy employers, the star employee's luster only brightens with time.

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Matthew Call is an associate professor of management at the Mays School of Business at Texas A&M University. He can be reached at reports@wsj.com." [1]

1. C-Suite Strategies (A Special Report) --- Are Superstar Employees Worth It? The answer is yes -- but only if leaders understand how their value changes over time. Call, Matthew.  Wall Street Journal, Eastern edition; New York, N.Y.. 29 July 2024: R.1.