Talent Hoarding in Organizations

Abstract: Most organizations rely on managers to identify talented workers, but worker departures can be costly and managers are typically not rewarded for developing talent. Consequently, managers may have incentives to hoard talented workers, jeopardizing the efficient allocation of talent within firms. This study demonstrates the existence of talent hoarding by using the universe of application and hiring decisions at a large manufacturing firm. When managers rotate to a new position and temporarily stop hoarding talent, workers’ applications for promotions increase by 128%, suggesting that managers deter a large group of workers from applying. Talent hoarding leads to misallocation of talent within the firm and is particularly consequential for women. Marginal female applicants, who would not have applied in the absence of manager rotations, are almost twice as likely to land a promotion, and ultimately outperform their male counterparts in their new positions. These findings demonstrate the importance of applications as a mediating mechanism for talent hoarding: the gender gap in career progression among marginal applicants is 91% smaller than in the counterfactual in which they do not apply.