Organizational Management: The Impact on Team Performance After the Departure of a High-Ranking Employee From the Company | Prof. LIU Jingjiang

Teamwork is very common in the workplace. When choosing "teammates", people are more and more inclined to "couple up" and look for higher-status partners to work with. They believe that collaboration can enhance team performance. For example, scientists tend to do academic research with colleagues with high academic status, and directors prefer to invite A-list stars to ensure a good box office result.

But does working with high-profile members actually improve team performance? Will the performance of other team members inevitably decline if these high-profile members leave the team? Is there a specific scenario in which high-ranking members can inhibit the performance of others?

Recently, Associate Professor LIU Jingjiang and his team from the Department of Innovation, Entrepreneurship and Strategy, School of Management, Zhejiang University published their research in the Human Resource Management Journal (one of the FT50 journals) in the field of human resource management, in which they investigated the impact of an employee’s departure on the performance of remaining colleagues in financial brokerage firms.

LIU Jingjiang  |  刘景江

School of Management, Zhejiang University


Academic Background:  Dr. LIU Jingjiang is an Associate Professor at School of Management, Zhejiang University, China. His research focuses on innovation, entrepreneurship, operations strategy, computational social science. His research has appeared in the Journal of Product Innovation Management, Management and Organization Review, International Journal of Technology Management, and Journal of Technology Transfer, among others.

You can learn more about Prof. LIU Jingjiang’s academic background  here 

HU Jianhao  |  胡建豪

School of Management, Zhejiang University


Academic Background:  HU Jianhao, 2023 PhD graduate in Enterprise Management from the School of Management, Zhejiang University.

With the Questions in Mind, the Team Focused on Specific Industry Examples and Carried Out Studies

Members in high positions have more influence and pull within the organization and are more valued by the organization. Therefore, previous studies have generally assumed that organizations can benefit from the resources, relationship networks, and knowledge that high-level employees bring to the table. Therefore, after high-level employees leave, other members can no longer benefit from the spillover effects of high-level employees, which can lead to a decline in performance.

But is this always the case? LIU Jingjiang and his team found through observation that in many scenarios, the spillover effect that high-level employees bring with them is not as obvious as one might imagine. On the contrary, organizations usually allocate more resources to high-ranking employees, which are disproportionate to the resources allocated to other employees, resulting in "neglect" of other employees.

Through further observation and comparison, the research team found that, especially in industries where work tasks are relatively independent and internal competition is exceptionally fierce, ordinary employees are always in the shadow of high-level employees. Therefore, the research team questions whether the departure of high-level employees under this "high pressure" will be a relief for other remaining ordinary employees.

With such doubts in mind, LIU Jingjiang’s team started to selectthe samples. They focused their sample on sales analysts from Chinese financial brokerage firms. The reason for this is that New Fortune magazine has published a list of the industry’s "best analysts" every year since 2003. The 30 selected analysts are recognized by a large number of stock research institutes and investors and are gradually becoming the authoritative analysts in the field. This means that these analysts who have been awarded the title of "Best Analyst" have a higher status and more say in the investment firms than other employees. Due to the pursuit of the "Best Analyst" title by investment firms, the trend of "job hopping has spread throughout the industry, and the salaries of listed analysts have also increased significantly.

The status differences among analysts and the frequent occurrence of job-hopping events provide rich samples for research, while the fierce competition and relatively independent work patterns among analysts provide suitable contexts for research. More importantly, the analytical reports produced by analysts can serve as effective tools for measuring analysts’ personal performance. Therefore, LIU Jingjiang’s team conducted a survey based on the sample of analyst turnover in the Chinese sales analyst industry from 2010 to 2017, and conducted in-depth research on the impact of high-level analyst turnover on the personal performance of the remaining analysts.

Research Has Proven That Imbalanced Resource Allocation AffectS Ordinary Employees

In this context, the research team collected data from CSMAR and New Fortune magazine to examine the impact of high-status employee turnover on the performance of other remaining employees. Through empirical design, they identified a total of 973 resignations in the Chinese sales analyst industry between 2010 and 2017, including 190 resignations of high-status analysts.

After a detailed empirical analysis, the research team found that existing scholars believe that the spillover effect of high-level employees in the sales analyst industry is not significant in the sample. On the contrary, the empirical results suggest that the presence of high-level employees has a "cost" to other employees, i.e. when high-level analysts leave the organization, the performance of the remaining analysts improves significantly compared to the departure of low-level analysts.

To further explore the possible mechanisms of the impact of high-level analyst turnover on the remaining analysts, the research team conducted additional tests and came to further conclusions.


Resource allocation bias will have an impact on the performance of ordinary employees

The research team found that when high-level analysts leave, the members who work more with the departing analysts receive more performance improvements. This discovery can indirectly suggest that the phenomenon of focusing resources within an organization on high-level analysts can suppress the performance of other employees.


The difference in the number of high-level employees in an organization can influence the degree of dilution of resource propensity

Secondly, the research team found that the performance improvement of remaining employees is relatively less significant when the terminations of high-level analysts occur in organizations or companies with more high-level employees.

According to the speculation of LIU Jingjiang and his team, the reason for this phenomenon is that in organizations with more high-ranking employees, the phenomenon of resource shifting towards higher-ranking employees is attenuated. In organizations with fewer high-ranking employees, on the other hand, the phenomenon of resource shifting towards high-ranking employees is intensified.


There is still a phenomenon of resource imbalance in the process of resource redistribution

The research team looked at employees with different statuses and found that people who maintained a high position experienced a significant improvement in performance after resigning from a high position, while people who maintained a low position showed a relatively small change in performance. This suggests that the allocation model based on high-ranking employees still exists in the redistribution of resources.


Unequal resource allocation can have a negative impact on employees

By observing the changes in the status of the remaining employees after the occurrence of termination events, the team found that the performance of the remaining employees improved significantly after they stepped out of the "shadow" of the high status employees.

The above results show that the distribution of resources within an organization can have a negative impact on high-ranking employees compared to ordinary employees.

Research challenges existing theories and extends field research

1. Research highlights peer effects on high-status employee turnover

Although there is literature available related to examining the effects of turnover of high-status employees, previous research has not disentangled the peer effects of high-status employees (peers who are similar to them in age, status, interests, etc.) from overall organizational outcomes).

LIU Jingjiang’s team not only elaborated on the peer effect of high-status employees, but also further investigated the underlying mechanism. The study shows that existing theories overestimate the role of status spillovers.

2. Research broadens academic research on employee turnover

Although management scholars have studied employee turnover for decades, research on the remaining workforce during turnover events has not received enough attention. LIU Jingjiang’s team has found and emphasized that managers and scholars should not ignore the status characteristics of departing employees when researching the impact of turnover events on the remaining workforce.

In addition, previous turnover research has paid more attention to the changes in organizational human resources and social capital caused by employee turnover. This study offers a new perspective on the changes in resource allocation within the organization due to employee turnover.

3. The research provides inspiration for status sociology research

The research team believes that building relationships with high-status members is not cost-free. The research suggests that we should look at connections with high-status members from a more balanced and rational perspective. While we care about the spillover effects of high-status members, we should also be mindful of the negative effects they bring.

In practice, research provides suggestions for human resource management and resource allocation for similar industries.

The research by LIU Jingjiang’s team provides practical guidance for companies with a similar working environment to sell-side analysts, e.g. law firms. The study points out that managers should be both strategic and tactical when it comes to the human resource management of high- and low-status employees and the allocation of company resources.

■ In human resource management, while hiring high-status employees can bring immediate results for the company, as it not only helps to expand the social network and improve the overall status of the company, but at the same time, company managers should also pay attention to the impact that this behavior has on other people. the "loss" due to employee performance.

■ In the allocation of corporate resources, companies need to make the best use of high-level employees through reasonable resource allocation, give full play to their advantages, and reduce the negative effects of unreasonable resource allocation on ordinary employees.

■ The research provides managers with a more comprehensive understanding of the turnover of high-status employees and gives them practical guidance on how to respond to the turnover of high-status employees reasonably.

It is worth noting that while this study highlights the risks of hiring and retaining high status employees, it does not mean that organizations should fire high status employees. Decisions should be made based on comprehensive assessments in different time dimensions.

As an important part of corporate innovation management, human resource management is crucial for the sustainable development of companies. Business leaders have explored how to ensure employee satisfaction while playing to their strengths.

Taking the analyst industry as an example, this study breaks the conventional thinking and proves that ordinary employees have to pay a "price" for working with high-level employees, and further explores the impact of inappropriate resource allocation on employee performance.


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 scholars from Zhejiang University School of Management have the courage to break through existing theories, put forward innovative ideas, support enterprise management with scientific research, and put forward strategic suggestions for human resource management and resource allocation in enterprises by considering the actual needs of enterprises. 加油!

- You can read the original article in Chinese  here