The spotlight effect: How hiring and losing star employees affects business performance

By J. N. Halm

I asked the Mrs why she was not ordering her favourite shawarma that evening. Her response brought a smile to my face. Why? She said the one who originally prepared the shawarma at that particular eatery had left the establishment. She added that this had caused the taste to decline, and so she was no longer interested in the shawarma from that particular restaurant. I smiled for two reasons. First of all, how did she know the one had left? Secondly, why should someone leaving an eatery affect the quality of their offering? I did not muster the courage to ask both questions, but the second question, in particular, got me thinking.

You see, in every industry, there are also those employees who stand in the spotlight. They are the ones the public sees, the ones customers interact with directly, and the ones whose performance can make or break the entire organisation’s reputation. In professional sports, they are the players on the field. In television, they are the actors on screen.  In theatre, they are the performers on stage. However, in fine dining, they are the chefs in the kitchen.

These “spotlight personnel,” as they have come to be called, are the face of the service being delivered. They are essential to the organisation’s success, but also incredibly expensive to acquire and retain. A single star player can command millions in transfer fees and salary. A celebrated actor can demand fees that consume a significant portion of a production’s budget. In much the same way, a renowned chef can negotiate compensation packages that dwarf those of other employees.

Without a doubt, there is an obvious importance and cost of spotlight personnel to organisational performance. But this also brings up some important questions. For instance, when organisations hire new spotlight personnel, does it improve service delivery? When star employees leave, does performance suffer? And perhaps more intriguingly, how do these personnel changes affect customer demand for the service?

These questions were at the heart of a fascinating study published in the August 2022 edition of the Journal of Marketing Research. The article was titled “Spotlight Personnel: How Hiring and Turnover Drive Service Performance Versus Demand.” The researchers used unique data from professional German soccer—tracking both the quantity and quality of player transfers, team performance, and ticket sales across four decades.

The choice of professional soccer as the research context was particularly apt. Soccer teams regularly buy and sell players, with transfer windows twice a year providing natural experiments in personnel change. The quality of players is relatively easy to quantify through transfer prices—better players command higher fees. Performance is measured objectively through winning percentages. And demand is tracked through ticket sales. Few industries offer such clear metrics across all these dimensions.

What the researchers discovered challenges some commonly held assumptions about spotlight personnel management. The most striking finding is that service performance and demand are primarily affected by spotlight personnel hiring rather than by turnover. In other words, bringing new people in matters more than losing existing ones.

This finding might surprise those who have witnessed the panic that often accompanies the departure of a star employee. When a top performer announces their exit, organisations frequently go into crisis mode. Management scrambles to find a replacement. Colleagues worry about increased workloads. Customers express concern about whether quality will suffer. The assumption is that losing a star will devastate performance.

However, the data suggests that organisations may be focusing their anxiety on the wrong thing. While turnover certainly has effects, it is the quality and quantity of incoming spotlight personnel that truly drives outcomes. This makes intuitive sense when you think about it. The departure of one employee creates a gap, but that gap only becomes a problem if it is not filled adequately. Conversely, bringing in new talent—especially high-quality talent—can elevate performance regardless of who left.

The study revealed some nuanced findings about hiring that are worth unpacking. First, hiring quantity—bringing in more spotlight personnel—actually decreases service performance yet increases demand. At first glance, this seems contradictory. How can something that hurts performance increase demand?

The explanation lies in the psychology of customer perception. When organisations make splashy hires, bringing in multiple new faces, it creates buzz and excitement. Customers see the organisation as active, ambitious, and committed to improvement. This perception drives demand even if the reality is that integrating multiple new employees simultaneously creates coordination challenges that temporarily hurt performance.

I have witnessed this phenomenon in my years observing various service industries. When a restaurant brings in several new chefs at once, or when a company hires multiple new salespeople, there is an initial period of adjustment. These individuals must learn to work together, understand the organisation’s culture and systems, and coordinate their efforts. During this integration period, performance often dips. Yet customers, seeing the investment and energy, become more interested in the service.

In contrast, hiring quality—bringing in higher-calibre spotlight personnel—benefits both service performance and demand. This is the win-win scenario that all organisations hope for. High-quality hires improve the actual delivery of the service while simultaneously attracting more customers who want to experience that elevated quality.

Think of a soccer team that acquires a world-class striker. That player’s skills immediately improve the team’s ability to score goals, directly enhancing performance. At the same time, fans flock to the stadium to watch this star player in action, driving up ticket sales. The same dynamic plays out in other industries. A Michelin-starred chef joining a restaurant improves the food while attracting diners eager to experience that chef’s creations.

The researchers also uncovered that these effects are subject to dynamic interactions and nonlinearities. In simpler terms, the relationships between hiring, turnover, performance, and demand are not straightforward. The impact of hiring five players is not simply five times the impact of hiring one player. The effect of hiring in one period influences outcomes in subsequent periods. Previous performance levels affect how much impact new hires will have.

These complexities make spotlight personnel management far more challenging than many organisations realise. It is not enough to simply hire the best people available whenever positions open. Organisations must consider the timing of hires, the optimal number of new personnel to bring in at once, and how current performance levels might moderate the effects of personnel changes.

The study’s findings have profound implications for how organisations should approach spotlight personnel management. For starters, it suggests that organisations should worry less about turnover and focus more energy on hiring strategically. This is not to say that retention is unimportant—keeping good employees truly matters. However, the obsessive focus on preventing any departures may be misplaced. Sometimes, turnover creates opportunities to upgrade talent and inject fresh energy into the organisation.

Second, the findings highlight the danger of hiring too many spotlight personnel at once. While it might seem logical that more talent equals better outcomes, the reality is more complicated. Large quantities of new hires, even talented ones, create integration challenges that can temporarily hamper performance. Organisations would be better served by pacing their hires, allowing time for new employees to integrate before bringing in the next wave.

Third, the research underscores the critical importance of hiring quality. This seems obvious, but many organisations compromise on quality in the name of filling positions quickly or staying within budget constraints. The data suggests that this is a false economy. High-quality spotlight personnel deliver returns on both the performance and demand sides of the equation. Skimping on quality to save money in the short term often costs more in the long term through lost performance and reduced customer interest.

Practically, these findings should influence how organisations allocate their budgets. Rather than spreading resources across many average hires, organisations might be better served by concentrating their investment in fewer, higher-quality spotlight personnel. This concentration strategy maximises the dual benefits of improved performance and increased demand.

In my experience, one of the biggest mistakes organisations make is treating all employees as interchangeable. They develop policies and procedures that assume any qualified person can step into a role and deliver comparable results. This might be true for many positions, but it is categorically false for spotlight personnel. These are the employees whose individual qualities—their skills, charisma, reputation—directly affect customer perceptions and organisational outcomes.

I believe that firms need to develop distinct strategies for managing spotlight personnel versus other employees. Spotlight personnel need different recruitment approaches, different compensation structures, different integration processes, and different performance management systems. Treating them like other employees is a recipe for suboptimal outcomes.

The truth is that in many service industries, a handful of spotlight personnel account for a disproportionate share of both costs and value creation. Understanding how changes in these critical employees affect organisational performance and customer demand is not just an academic exercise—it is essential for effective management. Organisations that grasp these dynamics and manage their spotlight personnel strategically will find themselves with a significant competitive advantage over those that continue to approach hiring and turnover reactively, without understanding the complex effects these personnel changes create throughout the organisation and in the marketplace.

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