This study examines systematic upward rigidity in labor markets, highlighting a counterintuitive dynamic in which low-performing employees can be more attractive to external employers than higher-performing ones. Despite their strong track records, high performers face external discounting due to uncertainty about whether their performance will transfer to a new firm, making them less appealing to outside employers (and thus more likely to remain with their current organizations). By contrast, lower performers may appeal to rival firms that are eager to learn from, and compete with, their current firms because these recruits, despite their low individual performance, still carry valuable organizational knowledge and networks, yet cost less to hire. Using mobility data from sell-side analysts in Korean securities firms, we find that lower-performing analysts show higher movement from their employers—primarily moving “down” to lower-performing firms—compared to their high-performing counterparts. We discuss multi-level implications for both individuals and organizations, emphasizing early-career “lock-in” for employees and the importance of carefully managing not just high- but also low-performing individuals’ exits to prevent valuable know-how and competitive insights from flowing to rival firms.
