Recruitment of a Star

Group O1, Section 3

Problem Statement
RSH has an urgent need to find a suitable replacement after the parting of its Star Analyst Peter
Thompson.

SWOT
STRENGTHS

Low turnover rate

Fostered Team work
Mentoring Culture
Strong employee development
program
High ratings in the institutional
investor magazine
Well trained junior staff

WEAKNESSES

Part of compensation tied to teams

overall performance

No ready replacement for Peter

OPPORTUNITIES

Current growth in semiconductor

industry
Availability of a few strong candidates
for senior analyst position

THREATS

People constantly shifting firms

Cyclical growth of semiconductor
industry
Rival companies poaching talent pool
of RSH

Analysis of the individual candidates

1. Rina Shea
Strengths:

Knowledge about industry

Knows and fits well with the culture of the organization

Weakness:

Lacks assertiveness

Dependent on other senior analysts for decision making

2. David Hughes
Strengths:

Second teamer in Institutional Investor

Well respected in the industry and acknowledged

Large client base with 15 years of experience in industry

Weakness:

Has gone past his peak period of working efficiently

Guaranteed compensation for two years

3. Gerald Baums
Strengths:

Very fast rise in ranking in the industry

Client service is exceptional

Great industry knowledge

Weakness:

Negative attitude

Not concern about his staff and do not treat them well

Changed jobs frequently

Not worked in collaborative environment

4. Seth Horkum
Strengths:

Great stock picker

Good contacts in PowerChip company

Runner up in Institutional investor

Weakness:

He is very desperate

Reason not known yet why he suddenly wants to quit his current job

5. Sonia Meetha
Strengths:

Consistent growth over past 3 years

Responsive to clients

Very active in networking with good clients

Recognized as Up and Comer

Weakness:

Could not travel much due to responsibility as a mother of 2 children

Did not work in a large firm previously

PESTLE

Economic:
The American economy faced a severe recession in 2000-2002 because of the Dot Com bubble
burst, hence people belonging to the Investment Banking Industry rapidly shuffled due to the rise
in demand for analysts who could forecast future performance of the companies.
The case states that the semiconductor industry was cyclical from its inception. Since currently it
was at its peak, it was expected to declining in 12 to 18 months time. Hence, while RHS was on
the lookout for a star performer who would subsequently have high remunerations, it could not
bring in someone who wanted a guaranteed compensation since the high growth part of the
industry, which would generate maximum revenue would be over before the contract expired.
Sell-side Investment Banks wanted to get a larger chunk of the semiconductor Industry since it
was expected to give back larger returns.
Social:
The culture of RSH thrived on team building, where all the employees supported each other
unlike some of the firms which the potential candidates belonged too. As illustrated in the case,
Gotz and Loeb had an individualistic culture where teamwork was rare. Most candidates has
spent a considerable amount of time in their previous organizations, which could cause a
hindrance in them being able to adjust to the culture at RSH.
Sell side analysts generally depended on the traders as well as the sales force for tips and as well
as to market their ideas to a wider audience. Hence, their performance was not simply a function
of their own individual performance but those of their associates as well.
Technological:
Semiconductor technology was at a boom at that time and was recognized as a key growth driver.
Large firms use advance technology to assess contribution of analyst in the revenue and the
analysis of the stocks.

FACTORS

Stephen was not ready to promote Rina Shea who was a junior analyst under Peter
because she was dependent on other senior analysts in the technology group and she was
not assertive at times while presenting reports.

Stephen Connor had to hire a third party like Triple S to filter out possible candidates
since he could not risk leaking the news of them losing out their star performer in the
market which would make most of his other analysts vulnerable to poaching attempts by
other firms.

CRITICAL FACTORS

The industry was rampant with people rapidly shuffling companies in search of other
companies hence hiring star performer was not going to be easy since most people had
only recently changed firms and were not available for a new job hire.

RSH has an inherently strong culture of team building; hence it required someone who
could smoothly transition to the culture and also perform on par with Peters performance.

The Semiconductor Industry was cyclical in nature and was currently at its peak, which
implied that it would decline in the coming 12-18 months; hence RSH currently needed a
candidate who would stick long term with the firm and also didnt expect guaranteed
compensation. This would ensure that the employee contributes to the firms profit and
doesnt simply benefit from his pay package.

The ratings of the candidates in the Institutional Investor (II) magazine mattered because
it added transparency and efficiency to the system making it one of important factors to
consider while recruiting. It also provided a benchmark while deciding the compensation.

Since RSH needed a strong coverage of the upcoming deal with the Power chip Company,
it would always be an added advantage to RSH to hire someone who had very close
contacts with Powerchip for networking.

The potential new hire would be expected to have extensive industry knowledge, ability
to establish and maintain contacts, flexibility in working hours and travel and the ability
to write good reports would be an added advantage.

RSH also had an inhouse training facility for new recruits to be mentored by senior
employees, however Jon was of the opinion that only people who inherently had the
required qualities should be hired as some things could not be taught.

Options Available
1. Replace with another start analyst
This analyst might or might not be of the star category as Peter was and will have to be
paid the same amount of compensation Peter was paid.

2. Promote Rina as a senior semiconductor analyst

Rina can take up the job on a temporary basis and take control of the situation till a new
analyst is hired but she cannot be given the job permanently as she is less experienced
and has contacts with small industries only. Furthermore, she has an image of being less
assertive when presenting reports which the clients would less approve of in the long
term.

3. Hire a senior person from a regional firm.

This meant that this would mean relocation which would take a longer time than RHS
had. It also meant taking the risk of giving the job to someone whom one can never be
sure that they can succeed in a large firm. As this job required travelling atleast once a
week, the analyst has to be of a pleasing nature required more than that of a small firm.
Seth was working at Jefferson Brothers, a small firm.
Sonia Meetha was working at WSH but had conditions of travelling less often and as
wished.

4. Bring an analyst from the buy-side firm.

They follow the same stock as of the analyst as well as they perform details analysis and
write detailed internal research reports.

Alternative Recommendations
1. Rina Shea could be offered the position permanently, since she has prior
experience working with Peter and hence is the closest to knowing how to
emulate his work.
However it is advised that her salary compensation not be increased largely, since
this would give her a chance to prove herself and earn the added bonuses.
Also the fact that she an existing employee of the firm would mean that no
additional time is wasted on her transition into blending with the culture of the
firm.
2. Seth Horkum could be hired because his dedication is un matched, he is eager to
prove himself , not really concerned about compensation and hence it would not
be difficult recruit him for the company. As opposed to candidates like Gerald
Baum who was driven by money and appeared very negative about his previous
firm, Seth was more assertive in his approach and did not mention the issues with
his existing firm. On the flipside Seth seems to be a bit desperate since he
orchestrated his achievements by showing off his testimonials and also created
situations wherein people misused him. However, hiring Seth would mean
rejecting Craigs suggestions, which could hamper their long existing relationship.
3. Sonia Meetha would have been an ideal candidate except for some reservations
she had against travelling. She was a consistent and upcoming performer in her
firm and was noticed in spite of not having many resources at her disposal.
During her second interview she was appreciated for her poise and remarkable
fund of knowledge about technology stocks. However some had reservations
against her stating that she had not faced the pace at which Wall Street firms work,
and globalization was not possible by working in a box. Sonia was not only
younger than David Hughes, but was pegged to be a rising star, whereas Hughes
was feared to have worn out and lost his charm. Also the fact that she was not
really bothered about compensation as opposed to Hughes who wanted a
guaranteed pay made her a better choice over him.

Plan of Action
We recommend that , Stephen Connor should go ahead with hiring Seth Horkum since he has
proven his skills as a great stock picker, has strong contacts at Power Chip , more experienced
than Sonia and also belongs to a bigger boutique firm than hers and hence might be able to
manage the pace well.
However certain steps need to be taken in order to mitigate some of the disadvantages of taking
this decision

Hiring Seth might put off Craig Robertson, since his recommendations were rejected by
Stephen. This could be mitigated by putting Craig in the loop and maybe diverting his
attention towards other positions in the company that needed to be filled.

Seth has relevant contacts at PowerChip , but needs to build his contacts in other
companies for which RSH could prove as a great platform

Seth also needs to write more reports and express himself more clearly, which can be
solved with the existing training program at RSH.

The Semiconductor industry is expected to decline in around 12-18 months, hence it

would be recommended to bind him with a 3 year contract which would ensure he stays
with the firm till the cycle reverts.

The commission with Anita can be negotiated to a lower costs or they can be inducted as
a future recruiting partner for RSH.