KEY CONCEPT
Although there are many paths to senior roles, and many types of leader that take those paths, the route to the highest level of management, CEO level, appears to be the most clearly defined. And it tends to be established early on in a career. This research gives fresh insights into how people get to the top of the 21st century corporation.
IDEA SUMMARY
The profile of leaders has changed over the decades, with a significant shift away from the notion of lifetime employment. The employee of the mid-twentieth century who climbed the ladder of progression to reach the top is a rare beast nowadays. Recent research shows how over the last 30 years the executive profile has evolved further, with this move away from the ‘lifer’ leader to those who advance more quickly but spend less time with any one employer.
The recession of 2008 has had significant effects on ‘tempering’ this profile somewhat, with more people – not surprisingly – staying in jobs for longer periods, and more organizations – also not surprisingly – hanging on to executives to maintain stability in uncertain times.
The research, which initially compared leaders in the top 10 roles at each of the Fortune 100 companies in 1980 against the same in 2001, has more recently extended the analysis to 2011. A snapshot of the latest research findings points up some interesting observations since the previous study ended:
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Sharp decline in ‘lifers’, those who have spent their entire career with one company.
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Large increase in rapidly progressing young executives who spend less time with any one employer.
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More diversity – some 11% of the leading executives with US organizations have a first degree from outside the US, although the companies with the highest proportions of such executives are disproportionately based on the East and West coasts of the US.
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More women working in executive roles, although they are usually in the second tier positions, as opposed to the very top jobs. There are still 17 of the Fortune 100 that have no women in their top 10 roles.
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Financial institutions recruiting more top executives from outside than they did in 2001, an obvious legacy of the 2008 recession. Having been hit the hardest, they needed to restructure, and external CEOs made sense, while more stable businesses (Procter & Gamble or UPS, for example) continued to promote leaders from within their ranks.
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As already mentioned, leaders have been reluctant to seek new opportunities and companies have held on to executives for longer to retain a sense of equilibrium and continuity following the recession.
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Career growth has also been affected by the recession, with the age of leaders and the amount of time they take to reach the top increasing. The 2011 executives took longer to get to senior level than their 2001 predecessors, spending on average almost a year longer in each role.
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The profile of organizations has changed, with fewer heavy industry and energy companies, and a profileration of healthcare and retail companies.
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Leaders’ educational levels have risen over the past three decades, with around 65% holding graduate degrees (62% in 2001 and 46% in 1980). And the Ivy League colleges dominate, with 36% of C-suite executives holding MBAs from likes of Columbia, Harvard, Yale and Wharton.
BUSINESS APPLICATION
What you need to be aware of in the race to the top:
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Getting to the very top tier takes you along a different path to those settling at lower executive roles such as divisional or functional heads, or VPs. Patience is required – the study found that for top tier executives time to the top increased, because although they had been on a faster track from the start, they held more jobs on their way up, acquiring essential skills in general management and leadership, as opposed to working in functional silos. In other words, the total time the generalist executives took to reach the top was longer, even though they spent a shorter time in each individual role along the way.
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Specialists get there quicker. As report co-author Monika Hamori explains: “Managers with a narrow specialist background in law, HR, or finance get to the top quicker, but if you want to get to the very top you still need to be a generalist”.
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Top tier education for top tier jobs. The research illustrates how education counts, with top executives in the Fortune 100 coming predominantly from Ivy League universities. An interesting observation is that such candidates are more likely to be recruited from outside the organization than promoted from within.
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Look at the characteristics of your target corporation. Hamori expands: “For your career advancement, it matters a great deal what type of organization you join. For example, you may have a faster ascent at younger companies where you’ll grab the top post at a younger age. Google executives are the youngest in the dataset. At the same time, older companies may have more established promotion ladders and it may therefore take longer to ascend those.” Hewlett Packard’s executive team in 2011 had an average age of 58 while for Google that figure was 46.
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More established organizations make for not only a lengthier climb to the top, but also a difficult nut to crack if you are an outsider, as Hamori explains: “Corporations that were already among the largest ones in the 1970s (the era of the company-led ‘organization man’), still tend to promote a large number of their senior executives from the inside. They are much less likely to take outsider executives than organizations that did not have established talent management systems in the organization man era”.
REFERENCES
Who’s Got Those Top Jobs? Peter Cappelli, Monika Hamori & Rocio Bonet. Harvard Business Review (March 2014).
