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Getting to the Top

When it came out in the Harvard Business Review in 2005, “The New Road to the Top” by Peter Cappelli and Monika Hamori revealed dramatic new career realities. Now, Cappelli, Hamori and Rocio Bonet have carried out more research. The results — published this month — shed new and intriguing light on the twenty-first century careers. Monika Hamori, a professor at Madrid’s IE Business School, provides exclusive insights into the new research to Des Dearlove.

The original Harvard Business Review article you wrote with Peter Cappelli based on that research was called the New Road to the Top. What were the big findings?

In this piece of research, Peter and I compared the top ten executives in Fortune 100 companies, the largest 100 companies in the United States, and we compared the careers of these executives across two time points. The first time point was 1980, the year before a recession in the United States, and the second time point was 2001. We identified three major changes.

First, we found that across 1980 and 2001, there was increasing diversity in the top executive ranks. In 1980, zero percent of top executive positions were filled by women but by 2001 this percentage had jumped to 11 percent. However, most of the female executives still filled the so-called second tier positions. In other words, they were a lot less likely than their male counterparts to become CEOs or even to become the chairperson of a company and they were more likely to be senior vice president or executive vice president.

The second trend we found was the higher educational level of the executives. Compared to 1980, 2001 executives had more years of education and they were a lot more likely to have graduate degrees. In 1980, 46 percent of these executives had graduate degrees, which had jumped to 62 percent by 2001.

We also found changes in the educational institutions. Between 1980 and 2001, we saw a drop in the proportion of private, non-Ivy League universities and a corresponding jump in the proportion of public universities.

Finally, the third big trend that we saw across the two time periods was really different career patterns. As could probably be expected, we saw a change in the level of attachment of these executives to their organization. By 2001, there were fewer executives who were so-called lifers, executives who started their career at the company that they were now leading. We also found that executives had shorter tenures with their current organizations. In 1980, this was about 20 years and it dropped to 15 years — which is a considerable drop in 21 years’ time.

Now you have revisited and updated that study in a new Harvard Business Review article written with Peter Cappelli and Rocio Bonet. What prompted you to want to do that?

Post 2001 there was a landmark event and that was the 2008 financial crisis, which was the biggest crisis in the past 70 years — since the Great Depression of the 1930s, and also one of the longest crises as well. So we really wanted to see how executive careers have changed since this crisis.

What did you find? Are the three trends continuing?

Some of these trends definitely continued. We see even greater diversity in the top executive ranks. In 2001, we had 11 percent women and now close to 18 percent of the top executive ranks in the largest US companies are occupied by women. So that’s a considerable jump. You still see most of the female executives in the second-tier executive positions, that is, holding executive vice president, senior vice president or chief financial officer, chief diversity officer, etc. roles. You are less likely to see them in the tier one positions.

What about the other significant findings from the new research?

The other one is that the diversity isn’t only coming from an increase in female executives, we also see more executives who were educated outside the United States. Some 11 percent of our executives said they received their first degree from a university that was outside the United States. But don’t expect too much national diversity among top executives because almost 80 percent of these foreigners are English speakers. In other words, they come from the UK, from Canada or from Australia.

Diversity continued to increase between 2001 and 2011. At the same time, other trends that we observed between 1980 and 2001 reversed. In particular, the attachment of the executives to their current corporation. Between 2001 and 2011, we found that, first of all, executives took a longer time to reach their current position. So their time to the top increased, while their promotion velocity decreased.

Second, executives have a longer tenure with their current corporation than they did in 2001. Their career path slowed down a little bit as a result of the crisis and, once again, we saw increasing attachment to corporations. This may sound counter intuitive, but this finding is consistent with what other research had found — that in crisis times, companies are more likely to promote their own employees internally rather than going to the external labor market.

Presumably, too, people are more inclined to stay put — and less inclined to jump ship — in a recession?

Yes, that’s also part of the story. So during a crisis, probably, executives are less likely to risk a career move. On the other hand, in terms of the demand side, corporations are also less likely to hire from the outside. There was a survey published by CareerXroads that shows that the proportion of external hires decreased during crisis years. It decreased during the 2001, 2002 crisis in the United States and, again, between 2008 and 2011.

What about education? What did you find there?

The trend continued. So we saw higher education levels and more graduate degrees. We see the same type of democratization of educational institutions that we observed between 1980 and 2001. No major changes. The trends that started between 1980 and 2001 pretty much continued to 2011 as well.

If you had to step back and characterize the career landscape that we now see, how would you describe it compared to what you were finding in 2001?

There are two characteristics that jump to my mind. One of them is that it is increasingly uncertain. In the past decade or so, we’ve had two financial crises: the 2001 recession and the 2008 crisis. The second one shattered the labor market prospects for Generation Y employees (those born after 1980).

Research on earlier crises shows that if you start your career in a crisis year, you will have a considerable disadvantage in the labor market in terms of job opportunities, but also in terms of starting pay or pay levels and you will have a really hard time making up for these disadvantages.

The second characteristic is that the labor market is increasingly mediated — and by mediated, I mean that we see an increasing number of labor market intermediaries. In the new career landscape, these intermediaries mediate the job matches between individuals and hiring organizations. 15 years ago sending your resumé and your application to a printed job ad was the most common way to apply for a job. It is really a thing of the past now.

Today, people increasingly find jobs through social networks, such as LinkedIn or maybe, to a lesser extent, through Facebook. And employers also use these social networks to attract and to screen candidates.

And how does the advent of social media impact on careers?

This is a very interesting new development in the career landscape because social media sites, such as LinkedIn bring new biases to how individuals are matched with hiring organizations. If you do a search on LinkedIn for the individuals who would be available for a job opening, you see that LinkedIn ranks search results. The individuals who end up at the beginning of that search results list have a lot higher visibility towards employers and will get the most job opportunities. So it will be interesting to see what this all means for their career prospects.

This research was in the Fortune 100 companies, but can you generalize to other parts of the world?

This particular research study is confined to the US, but in another study I did take a look at the very top jobs in Europe and the US — at the CEO level. I researched the 500 CEOs of the Financial Times Europe 500 and the Standard and Poor 500 in the United States. Interestingly, you would think, maybe, that there are big differences in the career path of these CEOs, but I didn’t find any marked differences.

Most interestingly, I didn’t find any differences in terms of job hopping patterns. It turns out that European CEOs are even less loyal to their corporations than US CEOs. This trend is probably mostly due to the representation of Eastern European companies in the Financial Times Europe 500 Some Russian CEOs were just over 30 years old in the dataset. European CEOs are somewhat more mobile than their US counterparts. It’s very much counter to what people expect.

Another important trend was that European executives have amassed more international experience than their US counterparts. The US executives are still a lot more likely to have spent their entire career in America and were a lot less exposed to other countries than European counterparts.

Does your research allow you to make judgements about which companies manage careers well?

The companies that manage careers well will be those that offer more geographically diverse positions and can also rotate individuals across job functions. So large multinational, multidivisional companies, like General Electric, can provide those sorts of career development opportunities.

The second characteristic that companies that manage careers very well should provide is exposing individuals to jobs with a high degree of responsibility. About three years ago, I conducted a survey among young, highly skilled employees, and I asked them what career development opportunities they found the most important for their career. The top spot was occupied by jobs that provided high stakes — these are jobs or tasks that provide a high degree of responsibility and jobs that have very clear accountability.

When managers read your HBR article and your forthcoming book, what lessons can they take away in terms of their own careers?

I think there are three things that may be important for them. The first piece of advice is to invest in your own education and find the best educational institution you can. Do your best to go to the Ivy League or to other institutions of high prestige, because, despite the democratization of education that I have just talked about, affiliation with reputable universities makes a difference. Our research shows that the top executives in the Fortune 100 still, disproportionately, come from the so-called Ivy League universities in the United States — the eight most prestigious universities. Very interestingly, too, that is especially true of tier one positions. So the current CEOs and chairs of the Fortune 100 companies are even more disproportionately likely to come from Ivy League institutions.

So what does this mean? Interestingly, at the moment that you graduate from university, your career path is partly decided for you. If you come from an Ivy League university, your chances of becoming a CEO 20 or 30 years later are much greater than if you come from another type of university. By the way, this is even more true for executives who don’t climb the internal career ladder, but are recruited for the top tier position from the outside.

So my first piece of advice would be: invest in education at a reputable institution. Second, we found that executives who embark on a narrow functional career path — as accounting or human resource management experts, for example — ascend to the top executive ranks faster. But, they are unlikely to get to a tier one position. For the tier one positions, you need general managerial experience. Executives in a general managerial career track normally take longer to reach the top echelon. But general managerial experience is needed to ascend to a tier one position.

So, the second piece of advice is to be patient and invest time in gaining general management experience.

We found that both in 2001 and also in 2011, the executives at the helm of Fortune 100 companies don’t have a lot of different employers, they have worked for fewer than three organizations. So the third piece of advice is to have a balance between external and internal career moves. Internal career moves are just as important as external ones. Don’t build your career exclusively by jumping from one employer to another.

Are you saying that the top tier people are on a different career trajectory, a different career path, from the very beginning?

Exactly — often people have a head start that is determined by the type of education that they get. The Ivy League graduates are disproportionately represented in the top tier positions of the Fortune 100 companies. Definitely, your education matters a great deal. Second, the executives who end up in tier one positions receive their general management training early on: they are rotated across functions, product divisions or geographies at an early career stage. They are less likely to embark on a narrow functional career path.

Do you think they self manage that or do you think the organization has already identified them as high potential? Are they put in a different career hopper from the start?

The organizations definitely manage that. The largest companies identify the high potentials and those high potential employees get disproportionately more opportunities.

Is this the Ivy League choosing the people most similar to them or is this, actually, any kind of an indicator of performance that they’ll do a better job?

I cannot tell you whether by personality or by ability they are better or worse leaders. One thing is for sure: throughout their career they were affiliated with the right institutions: top universities, but also, top organizations. Where you studied and where you work can, for the most part, be a significant force in propelling you into the elite.

In the new career landscape, I don’t think that this is going to be less important. In fact, it seems that this is going to be even more important than today.

I talked earlier about labor market institutions. Think about LinkedIn. LinkedIn allows hiring organizations to select on the basis of individuals’ employer being a Fortune 100 or a Fortune 500 company. Increasingly, more searches or job matches are done by LinkedIn. Professionals affiliated with the largest companies may therefore get even more visibility than in the pre-LinkedIn era.

Des Dearlove is co-founder of the Thinkers50.

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