How Women Succeed on Wall Street

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In his book "chasing stars," about what happens to Wall Street analysts when they get anointed as the next big thing and are lured to a new firm, Harvard Business School professor Boris Groysberg finds that switching shops generally leads to a drop in performance. But there are at least two groups of people who are far less likely to avoid this fate: analysts who are hired as part of a lift-out of a larger research team, and women, who tend to remain successful whether they move with a team or not.

It turns out that the men, who might thrive in a particular culture or do well at playing the politics of a specific firm, have trouble replicating their success when they put themselves in a new environment. (This explains why lift-outs often work out better, because the "star" remains part of a familiar team.)

As for star women, Groysberg suspects that they may just be more talented in the first place, because they probably had to work harder and achieve more than their male counterparts in order to reach the same level of recognition. They also are more selective when given the chance to switch firms, taking more time to make the decision to go elsewhere and weighing a multitude of factors that ultimately can help them maintain their star status, whereas men routinely base the decision to jump ship on one overriding factor: compensation.

And there's something else Groysberg has observed in star women that may account for some of their ability to remain stars when they go to new firms: because they often lack the informal, intra-firm relationships that so often pave the path to power for men, women tend to invest more in relationships outside of their firms, building networks with clients or vendors, for example. So when men unplug from their firms, they lose their edge, but when women switch firms, the external relationships they've cultivated tend to stay intact.

"Women rely more on themselves and their outside contacts, and those are the skills that make them portable from one bank to another," says Groysberg, who teaches an HBS Executive Education program on running financial institutions.

His findings are the basis for a new course Groysberg will teach at HBS starting in January, How Star Women Succeed: Leading Effective Careers and Organizations, examining the skills and partnerships that have been developed by leading women in business. The course offering coincides with the 50th anniversary of women being admitted to the full-time MBA program at HBS.

It wasn't until "Chasing Stars," which was published in 2010 (a paperback version was released last year), that Groysberg got interested in the arc of Wall Street careers of women specifically.

Why did he examine Wall Street to begin with, as opposed to technology or the energy sector or the medical profession? Data. Few industries offer as much of it as financial services, where everything from Institutional Investor's analyst rankings to the performance of an analyst's specific stock recommendations can be observed and measured, allowing a researcher to determine which analysts can truly be called stars.

After researching his book, Groysberg attended a gathering of 160 female managing directors at a bulge-bracket investment bank. He was the only man to attend the two-day conference, where one of the women in the group pointed out to him that he would now know what it felt like to be a woman on Wall Street. This piqued his curiosity even more.

His new course syllabus relies in part on interviews with 25 CEOs (male and female) who have successfully leveraged female talent, and interviews with 250 successful women (40 percent of whom have been a CEO, chair or president).

Groysberg cautions that while outsider status has conferred some benefits on women, it is useful only to a point.

"Eventually you have to find a way to develop internal relationships, because that's how you get things done—through people," he says. But accomplishing that gets a lot easier, he says, once you're identified as a star.  —Heather Landy

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