Boris Groysberg’s research while affiliated with Harvard University and other places

We use proprietary data capturing compensation levels of executives placed by a global search firm to investigate how executives evaluate rewards and risks of human capital investment choices. Our findings suggest that more isolated industries with lower opportunity to acquire transferable industry knowledge are associated with higher required raises to motivate job switches among rising executives. For senior executives, moving to narrower industries does not evoke such changes in required raises. We control for a host of individual, firm, and industry characteristics surrounding both the preceding job and the placed position.

Prior research on equity analysts focuses almost exclusively on those employed by sell-side investment banks and brokerage houses. Yet investment firms undertake their own buy-side research, and their analysts face different stock selection and recommendation incentives than their sell-side peers. We examine the selection and performance of stocks recommended by analysts at a large investment firm relative to those of sell-side analysts from mid-1997 to 2004. We find that the buy-side firm's analysts issue less optimistic recommendations for stocks with larger market capitalizations and lower return volatility than their sell-side peers, consistent with their facing fewer conflicts of interest and having a preference for liquid stocks. Tests with no controls for these effects indicate that annualized buy-side strong buy/buy recommendations underperform those for sell-side peers by 5.9% using market-adjusted returns and by 3.8% using four-factor model abnormal returns. However, these findings are driven by differences in the stocks recommended and their market capitalization. After controlling for these selection effects, we find no difference in the performance of the buy- and sell-side analysts' strong buy/buy recommendations. This paper was accepted by Mary Barth, accounting.

In traditional markets, the price mechanism directs the flow of resources and governs the process through which supply and demand are brought into equilibrium. In the investment-research industry, broker votes perform these functions. We contribute to the literature by investigating the responsiveness of broker votes to changes in three categories of sell-side analyst service: published research, high-touch meetings and phone calls, and concierge services that connect client investors with corporate managers. We find that broker votes are most responsive to services suited to the revelation of fundamental, but not necessarily timely investment information, consistent with broker votes being used to compensate analysts’ information-intermediation role. Supplemental tests are consistent with institutional investors using broker votes to budget future aggregate commission payments across brokerage firms and brokerage firms using their clients’ votes as a quasi allocation base to indirectly reward individual analysts for contributions to brokerage-wide commission payments. Overall, our results suggest that broker votes function as the nexus for a set of implicit contractual relationships between sell-side brokers, their affiliated analysts, and their buy-side clients.

Globalization and new technologies have sharply reduced the efficacy of command-and-control management and its accompanying forms of corporate communication. In the course of a recent research project, the authors concluded that by talking with employees, rather than simply issuing orders, leaders can promote operational flexibility, employee engagement, and tight strategic alignment. Groysberg and Slind have identified four elements of organizational conversation that reflect the essential attributes of interpersonal conversation: intimacy, interactivity, inclusion, and intentionality. Intimacy shifts the focus from a top-down distribution of information to a bottom-up exchange of ideas. Organizational conversation is less corporate in tone and more casual. And it's less about issuing and taking orders than about asking and answering questions. Interactivity entails shunning the simplicity of monologue and embracing the unpredictable vitality of dialogue. Traditional one-way media-print and broadcast, in particular-give way to social media buttressed by social thinking. Inclusion turns employees into full-fledged conversation partners, entitling them to provide their own ideas, often on company channels. They can create content and act as brand ambassadors, thought leaders, and storytellers. Intentionality enables leaders and employees to derive strategically relevant action from the push and pull of discussion and debate.

It was June 2011 and Alexander Saint-Amand, President and CEO of Gerson Lehrman Group, the largest expert network firm globally, has found his firm once again in the midst of controversy. This controversy centered around a number of insider trading cases that had been brought against consultants working for competing expert network firms. While GLG was in no way implicated in these cases, and GLG had invested significantly in its compliance policies and controls in order to prevent the mishandling of public information, the entire industry was being impacted. Saint-Amand is faced with the challenge of deciding how best to handle this crisis.Learning Objective: To provide insight into the handling of a business crisis situation; discussion of challenges faced by an emerging, high-growth industry.