With the 2022 FIFA World Cup tournament underway as the world’s most widely viewed and followed sporting event, it’s also an opportunity for players to impress scouts from major clubs with holes in their rosters. Relatedly, recent research co-authored by management professor Gilad Chen at the University of Maryland’s Robert H. Smith School of Business reveals how and when teams can make the most of new talent they pick up after the tournament. The findings also translate to the corporate world, where companies looking to win the war for talent often pay a premium to attract superstar employees.
In “When New Talent Scores: The Impact of Human Capital and the Team Socialization Context on Newcomer Performance in Professional Football Teams,” in the Journal of Applied Psychology, Chen and his co-authors studied several thousand newcomers to the top football/soccer leagues in Europe. Their findings show that talented players who join teams mid-season as newcomers have the most impact when the team they join is struggling and when they are the sole new player brought in. Otherwise, newcomers do best when they join high-performing teams – alone or as part of a group of new players – before the beginning of a season, when the whole team has time to gel before games start.
Chen and his co-researchers – Marvin Schuth and Nicholas Folger of Technical University of Munich, Prisca Brosi of Kühne Logistics University, and Robert E. Ployhart of the University of South Carolina – subsequently asked: Does it pay off to hire more expensive talent?
“Companies are always interested in hiring new talent, particularly high-end talent,” Chen says. “They are willing to pay a premium for higher human capital. When those people join firms, they have to work with others.”
“Of course, we were expecting that more talented newcomers would perform better,” he says. “But the more interesting aspect is under what conditions new talent performed better as newcomers.”
They looked at European soccer leagues, where player stats are analyzed in online databases to determine an individual player’s worth. They looked at whether the team was already doing well or struggling before the newcomer joined, if the newcomer was the sole new player or joined with a cohort of new players, and how long the existing team members and the new ones had to adjust to each other.
“When you pay a premium for high talent, there’s an expectation that the extra money pays off right off the bat,” Chen says. But that’s not always the case.
“We found that whether prior team performance and the number of newcomers would be a resource or demand depends on how long the team and newcomers have to adjust.”
If you’re going to add talent mid-season, adding one new superstar is better than adding more, Chen says. But the number of newcomers joining the team didn’t affect newcomer performance when the team had time to adjust.
“There may be some benefit from the social support players get when they join together, and some harm from the disruption to the whole team, but they cancel each other out when the team had time to co-adjust,” Chen says. “When they didn’t have time to co-adjust, when a newcomer joined midway through the season, it harmed newcomer performance.”
The researchers also found lower-performing teams saw a bigger performance boost from a talented new play than high-performing teams.
“It’s almost like you’re bringing a saver in,” Chen says. “Regardless of when they joined, the effect of newcomer human capital was more positive when they joined a lower performing team because the team really needed them.”
Here’s where it gets a little complicated in soccer: Lower performing teams often have less money to spend on top talent. In European football leagues, there are no salary caps and top teams have huge budgets to attract top players. “The teams in the bottom part of the league must budget more. But if they can hire somebody good, it benefits them more relative to the top teams,” says Chen.
If you’re a better performing team, if you’re thinking of hiring more expensive players, do it at the beginning of the season, he says. You’ll get bigger benefits versus hiring them in the middle of the season, where you may hurt the team.
But in both sports and business, teams benefit when they invest in talent, he says. “You don’t want to overpay for talent, but in contexts where the market value of a newcomer is linked to a higher level of human capital, it’s a good investment. And that investment is especially beneficial to lower performing teams.”
The other big implication is how many newcomers you add at once. “Be very careful when hiring a large cohort of newcomers if you don’t have sufficient time for the team to adjust,” says Chen. “If your team needs more of an overhaul in terms of new members, plan to do it during a time when the team and the newcomers have time to adjust. Don’t create another big shock to the team halfway through the season – or nearing the end of a big project – when you are crunched for time.”
At that point, investing in one superstar is better than trying to bring on several.
“There’s a lot we can learn from professional sports teams about business,” Chen says. “A team is a large business in itself, and it’s also an organization. There are implications for organizational-level performance with these factors of adding newcomers. These are people at the top of their game.”
About the University of Maryland’s Robert H. Smith School of Business
The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and flex MBA, executive MBA, online MBA, business master’s, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.