Why You Should Let Your Favorite Employee Move to Another Team

You have a superstar on your team. They never miss a deadline or fail to impress a client. They put out fires, support their colleagues, and mentor junior team members. You cannot imagine your work life without them.

And then they tell you that they are ready to grow and want to find their next opportunity at the company. Do you bury your disappointment, thank them for all they have done for you, and immediately help them chart their next step? Or do you act selfishly and suggest that they aren’t quite ready for a bigger job but might be in six months?

The latter is an example of internal talent hoarding, which refers to a host of manager behaviors that prevent subordinates from pursuing jobs elsewhere within the organization. The available data suggests that most managers have hoarded talent at one time or another. In a recent study, 75% of managers openly admitted to hoarding talent — and, given that this is not exactly a socially desirable behavior, you can bet that that percentage is actually much higher.

Over the past five years, we have spoken with managers from dozens of companies around the world about hoarding, and every single one of them has (often sheepishly) admitted to holding on to at least one employee longer than necessary. Those conversations led to a years-long search for a persuasive, data-backed argument that might convince managers that it is actually in their best interests to let their best employees go. We think we have found it. But first, it helps to understand what hoarding looks like in practice and why managers hoard talent.

What Hoarding Looks Like in Practice

Managers engage in a variety of hoarding behaviors. One set of behaviors aims to reduce the visibility of superstar employees to the rest of the organization. For example, managers may choose not to expose employees to high-profile developmental opportunities or work assignments that would enable them to gain broad internal recognition. We have heard countless stories of managers failing to sing their subordinates’ praises during performance calibration sessions, internal talent reviews, and succession planning conversations. In many cases, employees are unaware of the lack of public support because their managers praise them privately.

More directly, managers can block promotions. Many companies require employees to get their current manager’s approval to apply internally, so managers can simply say no. Others may block promotions by overtly asking other managers not to consider a particular subordinate for an open job or by commenting unfavorably about an employee to a would-be future manager. A manager at a health care company told us, “A manager’s influence on [their employees’] career advancement is massive. Managers can easily block advancement by telling employees they aren’t ready or saying something not so great (or just not saying something good) to another manager.”

Perhaps most often, however, managers engage in hoarding by discouraging their employees from pursuing other opportunities. Our colleague at Utah State University, Tim Gardner, has shown that managers are particularly prone to engaging in persuasion tactics aimed at convincing their subordinates that pursuing other internal opportunities would be disadvantageous.1 Managers may also imply that a subordinate is not ready to advance or that moving to a new manager would be disloyal.

Why Do Managers Hoard Talent?

Underlying the apparent lack of support for employees’ growth is the reality that managers often have incentives to hold on to their high performers. Managers’ raises, bonuses, and promotions are often linked to the performance of their unit or team. Losing an employee — even one who is not a star — can impede unit performance in a number of ways. It can cause disruptions to the work tasks or routines of that unit, alter the group culture or cohesiveness, and even encourage other employees in the unit to similarly seek new opportunities. Managers can be particularly sensitive to seeing employees depart for other units, given that they often see themselves competing with other managers for scarce internal resources, including talent.

Moreover, managers are rarely sanctioned for hoarding. Many of the organizations we work with have formal rating systems that distinguish between business performance and leadership performance. The idea behind rating managers on their people leadership is that this will incentivize them to invest in their subordinates’ development. It is a great idea in theory. In practice, however, almost all managers get a passing grade on their leadership, and when it comes time to decide which managers to reward, nearly all of the weight is placed on business performance. Put differently, business performance is a “must do,” while developing employees is merely a “nice to have.”

As a result, managers naturally become territorial about holding on to their most valuable employees, primarily driven by uncertainty about their ability to replace them with other high performers. Indeed, many managers told us that they would be willing to let an employee move within the company and actively support their career advancement if they knew they could find a suitable replacement.

The Benefits of Supporting Employee Advancement

In our study of nearly 100,000 internal applications submitted to about 10,000 open jobs posted by more than 3,000 hiring managers at one U.S. company (see “The Research”), we found that managers with higher rates of promoting subordinates received significantly more internal applications when a spot on their team opened up.2 Perhaps more notably, they received significantly more applications from top-rated employees. Likewise, these managers received more applications from employees in other functions who could expose them to new ideas and skills that could lead to innovative solutions.

What’s more, these effects persisted even when managers changed jobs. We found that managers who helped their previous subordinates earn promotions still received more, better, and more functionally diverse applicants when they first took over a new team. Their reputation for getting people promoted followed them throughout the organization.

Managers who failed to support subordinates’ promotions had a much harder time attracting talent to their teams. In particular, we found that employees actively avoided applying to work for managers whose teams had high turnover rates, often based on the assumption that the subordinates had left because their managers were not supportive of their career advancement.

In our conversations with employees and hiring managers, we also heard about managers engaging in what one employee called “coercive promotions.” These occurred when managers would give an employee a better title, and sometimes a slight pay bump, to continue doing the same work. In other words, these were promotions in name only that were simply intended to keep employees on the team for a bit longer. Our data allowed us to distinguish between promotions that resulted in employees working for other managers and promotions that kept employees reporting to the same manager. While managers who support promotions that lead to work with other managers attract more internal job applicants, those who give promotions that keep workers in place see no positive effect.

The dual rationale behind our findings is fairly straightforward but still quite interesting. The first is that because there are fewer and fewer well-worn career paths within organizations in today’s work environments, employees now pay close attention to the outcomes of their colleagues within their employer and use those observations to inform their own career decisions. The second is that employees are attracted to — and therefore more likely to pursue — those job openings that they believe will provide opportunities for future career advancement. In other words, when employees consider whether to apply for an open job, they not only ask themselves, “Will this job help me to advance my career now?” but also, “Will this job help me to advance my career in the future?”

Implications for Managers

A key takeaway from our work is that talent hoarding is bad for organizations, employees, and managers themselves. Specifically, managers should keep the following points in mind when considering their own leadership performance.

Managers must be willing to give up talent if they wish to become talent magnets. While it may seem to provide a short-term gain, hoarding talent is a losing long-term strategy for managers. Managers who hoard talent will eventually lose that talent anyway, often because an employee will simply ditch the organization altogether. Even before they leave, those employees are likely to become less productive due to a lack of motivation and time siphoned from their work to look for external jobs. When they do have jobs to fill, hoarders will find slim pickings. Perhaps even more importantly, they will develop a reputation as a manager no one wants to work for, which will limit their own ability to advance in their career.

Letting people move on is good for organizations and managers. A study of the labor market for lawyers found that law firms tend to be preoccupied with retaining associates. Yet when associates left for higher-ranking positions at other firms, the “losing” firm was actually a winner; other lawyers came to see the firm as a launching pad for a successful career, so they wanted to work there.3 The implication is that law firms that are supportive of external advancement benefit from having a steady supply of top-quality associates flowing into the firm.

We wondered whether the same might be true of managers: Would employees actually know which managers were better at getting their people promoted and which managers were more likely to hoard their subordinates? And, if so, would this affect who they wanted to work for? The answer to both questions is a definitive yes.

Employees know which managers hoard talent. Employees want to know which managers are better at getting their subordinates promoted and target their interests accordingly. They want to work for managers who help them truly advance; they are less interested in managers who give out fancy titles and pay raises but do not give them a meaningful amount of new responsibilities. Mostly, employees find out which managers are better at getting their subordinates promoted through good old-fashioned gossip. As one manager observed, “Employees can quite easily figure out who are facilitators and who are blockers.”

Hoarding is costly. Talent hoarding can be incredibly costly to organizations, especially given recent investments they may have made to promote internal mobility. The spike in voluntary turnover at the beginning of the decade, followed by economic uncertainty, has caused organizations to value their current talent more than ever before. Decades of research have shown that the best way to get employees to stick around is to show them that they can advance their careers within the organization. Yet, year after year, employees report that the No. 1 reason they leave is a lack of opportunities for career advancement.

Many companies have addressed this by creating talent markets that facilitate internal mobility by making opportunities visible to employees and employees visible to hiring managers. Managers can post open jobs to an internal job board, and employees can nominate themselves for consideration by applying for jobs that match their qualifications and preferences. One of the authors’ (Keller) own research has shown that these markets are incredibly effective at generating high-quality person-job matches. Free-flowing internal talent markets increase retention and allow the company to ensure that talent flows efficiently to the areas where it is most likely to create value — all while reducing recruiting costs and the time a job is left open.

When managers hoard talent, they limit how freely people can flow through these markets. This diminishes the return they see on the financial and technological investments they have sunk into creating the market. The lack of internal movement stifles the breakthrough innovations often spurred by moves across functions and business units. Critical roles take longer to fill because hiring managers must now look externally, and recruiting costs skyrocket. In large organizations, these costs can easily reach several million dollars annually.

Toward Talent Development

Organizations that wish to discourage hoarding should consider seriously incentivizing managers to develop their employees and facilitate their advancement to other areas of the company. To date, few organizations appear to formally reward managers for developing employees. None of the leaders we spoke with had any such mechanism in place, and, in fact, only 5% of those who participated in a 2018 study on total rewards reported that their organization’s reward programs were “very effective” at growing and developing talent.

One way to improve employee development is to put real teeth behind leadership ratings, which often requires a large-scale change in organizational culture. More immediately, organizations could financially reward managers who get their employees promoted. For example, Chipotle once offered general managers a $10,000 bonus (plus other perks) each time they trained a crew member to become a general manager. Advances in human resource information systems make it relatively easy to track promotion rates by managers and offer such rewards. While such programs are certainly not cheap, we would expect the costs to be at least partially offset by their retention and performance benefits. An added benefit of keeping tabs on this metric is that leaders can see which managers are great at advancing their employees and talk to them about why and how they are so successful. Leaders can then identify managers who have had less success and share with them insights from the more successful managers.

We encourage managers to think about the time and energy they spend providing their subordinates with development and career advancement opportunities, increasing their visibility, and helping them make internal connections as an investment not just in their subordinates’ futures but their own. Our advice to employees is to keep talking to each other. Ask around about potential managers before you apply for jobs, and share your own experiences with your colleagues. Help your organization identify talent hoarders and intervene. Doing so will help everyone advance.

“The MIT Sloan Management Review is a research-based magazine and digital platform for business executives published at the MIT Sloan School of Management.”

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