Hire More Rookies to Grow Your Firm

Women Leading Research: Rajshree Agarwal

SMITH BRAIN TRUST – Conventional wisdom says firms are better off hiring people with prior experience and skills that mirror the job. But new research from the University of Maryland’s Robert H. Smith School of Business finds that many firms benefit from hiring rookies who are new to the top management level.

Rajshree Agarwal, the Rudolph P. Lamone Chair and Professor in Entrepreneurship, and two co-authors studied the wireless telecommunications industry from its inception through maturity. They examined where firms recruited new top management team members and what kinds of advantages and disadvantages each of them bring.

The researchers looked at whether the top management team’s new recruits should come from a rookie population – middle managers that don’t have experience at the top level – or from top management veterans from other companies. The researchers also considered other factors in the new hires: What type of experience do they bring? Are they from within the firm and being promoted internally? Are they from industry competitors from rival firms, or are they people who are coming from outside the industry?

To make the best hiring decision, Agarwal says a top management team needs to carefully weigh its options, based on the industry and what the firm needs. For new and growing industries, operational knowledge become much more important because the existing strategies that are working in other industries might not apply to the new industry.

New outside rookies – those new to top management and the firm – bring higher firm growth than other types of executives. They bring useful knowledge of the operations of competitors and other firms, and they are easier to socialize and integrate with the existing team. Seasoned outsiders – those with prior top management experience, but in a different industry – contribute to growth only when the existing top management team has a long tenure. Typically, says Agarwal, seasoned top managers have their own set ways of thinking about managing. Only a longstanding top management team can weather the disruption to internal power dynamics when adding a seasoned newcomer to see the potential benefits.

Rajshree Agarwal is the Rudolph Lamone Chair, Professor in Strategy and Entrepreneurship, and Director of the Ed Snider Center for Enterprise and Markets at the University of Maryland’s Robert H. Smith School of Business.

Research interests: Entrepreneurship and innovation at the industry, firm and individual levels; employee mobility and knowledge transfer; business strategy, especially in technology fields; enterprise and markets with a focus on the philosophical underpinnings of upward mobility and value creation.

Selected accomplishments: 2016 Best Paper Award from Strategic Entrepreneurship Journal; 2013 Graduate Mentor of the Year, UMD; 2005 Stephen Shrader Award, Academy of Management Meetings; 2004 Best Paper Award, Academy of Management Journal; 1997 Davis Productivity Award, State of Florida; University Scholar at University of Illinois.

About this series: The Smith School faculty is celebrating Women’s History Month 2018 in partnership with ADVANCE, an initiative to transform the University of Maryland by investing in a culture of inclusive excellence. Daily faculty spotlights support activities from the school’s Office of Diversity Initiatives, starting with the seventh annual Women Leading Women forum on March 1, 2018.

Other fearless ideas from:  Rajshree Agarwal  |  Ritu Agarwal  |  T. Leigh Anenson  |  Kathryn M. Bartol  |  Christine Beckman  |  Margrét Bjarnadóttir  |  M. Cecilia Bustamante  |  Jessica M. Clark  |  Rellie Derfler-Rozin  |  Waverly Ding  |  Wedad J. Elmaghraby  |  Rosellina Ferraro  |  Rebecca Hann  | Amna Kirmani  |  Hanna Lee  |  Hui Liao  |  Jennifer Carson Marr  |  Wendy W. Moe  |  Courtney Paulson  |  Louiqa Raschid  |  Rebecca Ratner  |  Debra L. Shapiro  |  M. Susan Taylor  |  Niratcha (Grace) Tungtisanont  |  Vijaya Venkataramani  |  Janet Wagner  |  Yajin Wang  |  Yajun Wang  |  Liu Yang  |  Jie Zhang  |  Lingling Zhang

Photo illustration: Cookie Studio