Out of the shadow? The effect of high‐status employee departure on the performance of staying coworkers in financial brokerage firms

Abstract

Because high‐status employees make disproportional contributions to firms, prior literature suggests that their departure would undermine various organizational outcomes. Building on recent literature, however, we suspect that a high‐status employee may have seized disproportional resources and credits from coworkers, thereby restricting them from performing, particularly when the work context is more independent and contested. As a result, the departure of a high‐status employee may bring staying coworkers more resources and incentives to perform, causing their performance to improve. To test this possibility, we examine the effect of high‐status analysts' departure on the individual performance of analysts who remain, using a sample of sell‐side analysts in Chinese financial brokerage firms. Employing a before‐and‐after treatment research design, we find evidence that after the departure of a high‐status analyst, the staying coworkers' individual performance is significantly improved. It is particularly so when they share greater industry overlap with the departing analyst. Our extensional analyses also investigate additional contingencies, which helps provide valuable hints about possible mechanisms.

The Status of Status Research: A Review of the Types, Functions, Levels, and Audiences

“…This negative effect is attributed to the considerable resources that are needed to attract high-status individuals, which, in settings with low task interdependence, amount to costs that can outweigh their contribution to the organization’s knowledge pool. Wang, Hu, and Liu (2023) provide a parallel analysis, showing that when a high-status analyst departs, coworkers who stay gain more resources, enhancing their performance. Chen and Garg (2018) accentuate this point in sports, observing that NBA teams can inadvertently benefit from the temporary absence of their star members due to injuries.…”