N

ew hires often seek professional advice from colleagues of the same nationality or background as a means of settling into a new environment. But this reliance on compatriots can work against you.

“Birds of a feather flock together” is often used to describe the concept of “homophily”, a term coined by sociologists Robert Merton and Paul Lazarsfeld at Columbia University. It describes how people tend to associate with those who share similar characteristics with them, ranging from ethnicity to gender, religion etc.

 This commonly observed behavior has been the subject of extensive studies, but for INSEAD Professor of Organizational Behavior, Martin Gargiulo, one aspect of homophily has not been adequately addressed: how it affects work performance.

In a working paper entitled Does Homophily Affect Performance? Gargiulo and Assistant Professor of Strategic Management at Singapore Management University Gokhan Ertug (INSEAD Ph.D. in Management, 2008) focused on nationality as a shared characteristic, and how it affects job performance on investment bankers.

 “If you are new, you’ve just been hired at an investment bank or consulting firm, it’s a difficult environment, you are likely to look for people who could be more helpful,” Gargiulo explains.

“You don’t know it, but you would expect people of the same nationality as you, especially if you’re a minority, will be more naturally inclined to help. That’s why we chose nationality.”

Gargiulo continues, “We chose investment bankers because we wanted a context in which informal relationships of knowledge transfers are very consequential for the performance of the individual. I mean, this is true of any organization today, but in this knowledge-based organization such as investment banking and consulting, it is particularly the case.”

The money

The paper studied 1,746 investment bankers at a major international bank, with their performance measured by the bonuses they earned. These bankers were classified into four ranks, from most junior to most senior: associate director; director (vice-president); executive director (senior vice president); and managing director.

After controlling for factors that might affect how much bonus a banker earns e.g. tenure, rank, age, function, etc, Gargiulo came to one main conclusion: homophily helps a new hire, but hinders an experienced banker gunning for a promotion into senior management.

“For new hires, the accessibility of others is more important probably than the quality of the knowledge that they have. They’d better get something rather than nothing,” says Gargiulo.

“But once you have gone through your first promotion, now you’re a player. We have hopes that you may continue to become a managing director, partner, depending on the particular system. Now we’re taking you seriously. You don’t need to go around relying on people like you anymore.”

Gargiulo elaborates, “At the same time, if I rely on people like me, almost by definition, I restrict the pool of potential suppliers, if you will. There may be some good people that could be providing advice and help to me that I don’t seek.”

Office friends

This is consistent with another finding of the research: a junior banker is likely to approach a senior banker of the same nationality for advice even if he knows of a senior banker with superior knowledge of a different nationality.

Such behavior might not hurt a new hire much, and can actually help his prospects, but it can be limiting as time goes on and the new-hire’s network should have expanded... So how does one avoid falling into the trap of relying exclusively on one’s countrymen?

“There are two reasons for which you may get trapped. Number one is that you just don’t shed ties as you move up,” Gargiulo explains. “These are mutual relationships and obligations, you feel comfortable with these people. But also, you may learn the wrong lesson: you may think that this is what really works, and you continue to do the same.

“So I think one of the implications of this paper is that managers – and this is what I do for most of my teaching – should actively manage their networks and realize that there are different networks for different stages of their careers. If they don’t manage their networks, their networks manage them.”

While the findings apply to investment bankers, Gargiulo says workers in jobs that require a high amount of information sharing – knowledge workers, for example – would likely find themselves in similar positions.

“The first thing that they should be aware of is that they may be making a tradeoff between access and quality. They should try, as much as possible, to seek out people that can provide them with the best advice and support within the same nationality as themselves,” he says.

“And they should also be aware that those relationships can easily become too comfortable and difficult to change later on in time – they may become a trap. But by all means, when you are trying to survive, you should reach for any resource that is available to you.

“So it’s OK to be homophilous provided that you realize that this is something for you in this stage of your career and later on you need to renew your network.”

Article provide courtesy of INSEAD Knowledge (knowledge.insead.edu/home)