Changing jobs is commonplace, but how many people consider the move as a strategic management decision?
Joe Raffiee does. The USC Marshall assistant professor of management and organization is an expert in employee mobility. His particular interest?
“When employees leave firms and when they start their own,” he said. “I’m looking broadly at the drivers of employee mobility between organizations and employee entrepreneurship. What are the strategic implications of these choices for organizations and individual careers?”
Last year, Raffiee published a paper in Strategic Management Journal that evaluates when employee turnover means client turnover too. In “Employee Mobility and Interfirm Relationship Transfer: Evidence from the Mobility and Client Attachments of United States Federal Lobbyists, 1998-2014,” Raffiee found that one way firms can retain clients when employees move is to structure relationships around teams rather than between clients and specific individuals.
“I have always been interested in the client loyalty tension in professional service firms,” Raffiee said, “What factors influence where client loyalty resides?”
But studying this question empirically has been challenging because firms rarely publish rosters of their employees, let alone lists of the specific clients these employees serve. To overcome this hurdle, Raffiee turned to a unique context: U.S. federal lobbying. “The Lobbying Disclosure Act of 1995 mandated that these details be recorded, filed, and disclosed in publicly available lobbying reports,” Raffiee said. “This allowed me to use these reports to construct a database tracking individual lobbyists and their clients over time.”
Working with this data, Raffiee documented that client loyalty to employees tends to increase with repeated interactions that facilitate the development of trust and client-specific knowledge. “On average, the probability that a client follows an employee who switches firms increases by nearly two percent for each six-month period that the client works with the individual,” he said. “The probability that a client follows someone doubles after about three-and-a-half years.”
But, Raffiee said, “teams disrupt the allegiance.” The more employees a client interacts with within a firm and views as important to its success, the less likely the client is to follow an individual who chooses to exit.
“We are thrilled. The grant will be instrumental in our ability to carry out [a] project, which we believe has the potential to inform policy and the ongoing immigration debate.” --Joe Raffiee, on winning, with collaborators, a Kauffman Foundation Knowledge Challenge grant to study factors shaping entrepreneurship for immigrants in science and engineering careers in the U.S.
“For an employee to convince a client to move, the benefits must outweigh the collective contributions of other team members,” Raffiee said. “Making this case becomes more difficult as the size of the team serving that client grows, and when the team is comprised of employees who have more specialized and difficult to replicate expertise.”
Inaugural Kauffman Knowledge Challenge Grant
Raffiee began studying employee mobility and entrepreneurship in graduate school at the University of Wisconsin-Madison. His dissertation examined the impact of clients moving from existing organizations to spin-out firms on competition within an industry.
This early project reflected his long-term interest in entrepreneurship, a theme that has persisted in Raffiee’s work. In late 2018, he and collaborators Rajshree Agarwal of the University of Maryland and Martin Ganco of the University of Wisconsin-Madison were awarded nearly $400,000 Kauffman Foundation Knowledge Challenge grant to study factors shaping entrepreneurship for immigrants in science and engineering careers in the U.S.
“We are thrilled,” he said. “The grant will be instrumental in our ability to carry out this project, which we believe has the potential to inform policy and the ongoing immigration debate.” The award to Raffiee and colleagues will run until 2021.
The team’s project is motivated by empirical evidence indicating that immigrants in the U.S. contribute disproportionately to innovative output and the founding of high-growth firms. “Immigrants are key contributors to the U.S. economy,” Raffiee said. “They also face more constraints in terms of labor market options due to the current immigration system.”
The project will focus on how these constraints influence the development of human capital, wage trajectories, and opportunity costs associated with entrepreneurship, factors Raffiee suggested have long-term implications for whether an immigrant starts a company and the types of companies that are ultimately formed.
Women in Law
Up next on Raffiee’s docket will be expanding his work with a database of lawyers dating from 1870 to 1962. Its expanse will eventually allow him to track individual lawyers across time, observing promotions, movement across firms, and the formation of new law firms. “There’s lots of detail in the data,” Raffiee said. “We are still in the early stage process of constructing the database, but we are excited by the possibilities.”
Among the topics he’s eager to explore is the emergence of gender equality in law firms: What are the characteristics of firms who first started hiring women? What is the role of entrepreneurship? What are the characteristics of women who broke through?
“The first female attorney in the U.S. was admitted to the bar in 1869,” Raffiee said. “We have a unique opportunity to study the evolution of gender equality within an industry starting at a point in time when female participation was effectively zero.”
With nearly 100 years of data to explore, Raffiee expects to be busy for a while. “There’s a lot of unpacking to do,” he said.