Discussion: AP Moller-Maersk Group Case (10/24)

What happened in the AP Moller-Maersk case?

HR leaders reassessed the firm’s lifelong-employment, internally grown talent model as rising competition, globalization, and employee attrition made it insufficient for a modern, global conglomerate. Maersk began strategically hiring experienced outsiders and reconsidering re-hiring former employees (“boomerangs”) to fill capability gaps and diversify leadership, while struggling with integration, inclusion, and balancing external talent with its traditional culture and internal development pipeline.

What proportion of job openings are currently filled through internal hiring?

A third or less of all job openings are filled through internal hiring.

What are the considerations in choosing to build or buy talent?

Strategy: How important are new ideas and perspectives to the business strategy?

Position Characteristics: Performance variability of the job; Grade ratio of junior to senior workers in the job

Financial: Research has found that hiring externally incurs an average wage premium of 18-20% when compared to promoting internally.

What are “boomerangs” in the context of hiring?

Former employees who leave the organization and are later rehired.

How common are rehires compared to other recruitment sources?

Rehires account for a relatively small percentage of hires compared to referrals, career sites, and job boards.

What are the reasons for leaving for boomerangs vs alumni

Boomerangs are five times more likely to leave due to negative personal shocks (e.g., partner’s transfer, taking care of a sick parent)

Boomerangs twice as likely to leave due to alternate job offers

Alumni 50% more likely to leave due to dissatisfaction

When do Boomerangs leave compared to alum

A majority of Boomerangs leave within first three years, and slightly earlier than Alumni

What destinations do boomerangs go to

Boomerangs more than twice as likely to move to a similar industry or take a break from work rather than moving to a different industry

How did boomerangs perform compared to new hires in their first job spell?

Boomerangs received:

• higher performance evaluations (about +7% of a standard deviation)

• were more likely to be promoted

• less likely to turnover

When does the performance advantage for boomerangs widen?

When jobs require greater internal coordination and when there is greater internal resistance to external hires.