One of the most disruptive changes we’ve seen in business over the last decade is the end of the traditional “career.”
People used to join companies for life: We would look for a great company when we got out of school, join the new-hire development program, pay our dues working up the ranks, and look forward to a nice retirement program 30-40 years later.
While many think the solution to this problem is to build a flexible, meaningful workplace, and give people benefits like free food, unlimited vacation, and lavish bonuses — in reality the problem is much more fundamental. We have to change the entire design of our organizations, which is a topic highlighted in The New Organization: Different by Design (Deloitte Human Capital Trends 2016).
In this article I will explore this problem in a little more detail, to give you a sense of how complex and important it is to rethink what a career means in your company.
The Traditional Model Of A Career
Before we discuss careers, let’s start with a brief discussion of economics. Why do we have companies at all?
The reason we have firms (described in the HBR article “Why Companies Exist“) is that organizing people in specialized roles creates economies of scale. Instead of each person in a business trying to do manufacturing, marketing, sales and finance (what happens when you go into consulting for yourself), we create teams of functional specialists, driving down cost. These specialists can do more for less, enabling the business to grow at an ever increasing profit (supposedly).
When I went to work for IBM in the early 1980s, the company had a large and highly specialized sales force, one that had deep sales skills and relationships with businesses and IT departments around the world. This functional organization, which had a career model all its own, enabled IBM to aggressively sell hundreds of new IBM technologies around the world in a very short period of time.
These specialized functions (marketing, sales, engineering, manufacturing, logistics, distribution, finance, HR) grew into the careers we have today. Most of us spend decades in one functional area, moving up the path to become senior professionals or leaders in that function.
Managerial Vs. Professional Careers
The traditional model of a career, driven by this functional specialization, consisted of two basic paths: managerial and professional.
Managerial careers involved leading people; professional careers involved deepening your functional expertise. Most companies “slot” you into one of these paths, based on your nature, skills, and interests.
The Leadership Or Managerial Path
As the chart below illustrates, the managerial path (on the right) takes you into the role of senior management. It typically pays more (our research shows it pays 30% more in most companies) and people often feel pressured to go into management because it’s considered the more powerful or prestigious path.
In reality, of course, this is not always true. Many of us become leaders because of our technical expertise (that was certainly my career) and over time the role of “general managers” is becoming less and less important.
Unfortunately, because of the history of the functional organization, the “up or out” model of management often forces technical experts to leave. So at a bare minimum, I urge all companies to honor and reward people for taking the technical path.
This dual path career model, which is still dominant in most large companies, attempts to create a steady supply of leaders. It builds on the concept of a ”HIPO” (High Potential person), someone who is identified early in their career as someone “who could move up two levels in the organization.” We identify future leaders early and we “slot” them into the right side of the pyramid.
I believe HIPO programs are important but often over-emphasized. Typically HIPO pools become sacrosanct lists and people are secretly identified, put on special lists, and they get oversized opportunities for development and growth. In many companies they become the “new elite” or the “new leaders” of the company over time, even if their skills or abilities become out of date.
We have done research on this topic for many years, and the process behind all this (succession management, a 100-year-old concept), is somewhat out of date. Originally developed in World War I, when people were dying in trenches, succession management implies that people have “successors,” and we can create plans to replace key people throughout the organization. This is clearly important at the senior levels of the company, but our research shows it rarely works, and fewer than one-third of executives have successors even identified. HR teams work hard to build senior succession programs, but as we move down the organization the practice tends to fall away. (Fewer than 10% of first and second line leaders have successors identified.)
Behind the concept of succession is the idea of “readiness.” Books like The Leadership Pipeline teach HR people how to prepare people for the next level of leadership, and most companies have multi-year programs to build ready leaders throughout the company. Such programs continue to exist throughout business, even though more than 88% of all senior leaders tell us that one of their top problems is “gaps in the leadership pipeline.” So while this process continues to be institutionalized within HR, I believe we have to reinvent it for the years ahead.
The Professional Career Path
On the professional side of the pyramid (left side of the picture), the architecture of a career is less clear. My experience with “professional career models” is that they are multi-faceted and far more difficult to understand. I am regularly asked “how do I build professional career solutions?”
My experience in this domain shows that professional careers require two additional paths: technical expertise (and experience), and team or project management.
As an engineer, for example, you have to learn more and more about your engineering discipline, gain experience with larger and more complex projects, and expand your expertise in new technologies. You simultaneously learn “management” skills by learning how projects are managed, what makes a project succeed, and how to make a project successful. And in the case of engineering, this means understanding project management, agile methodologies and other managerial skills which do not fall into the domain of “leadership development.”
One way to think about it is to look at the competency framework shown below. (We developed this model years ago.) We have core values of the company, technical or functional competencies, “career path competencies” like project or program management, and then top leadership competencies above these. “Leadership competencies” include things like running a P&L, mergers and acquisitions, and other business roles. Career path competencies might include managing a major new engineering project or leading an IT transformation.
My old company had levels like Advisory Engineer, Senior Engineer, Engineering Director, Engineering VP, Chief Engineer, and then Consulting Engineer. In some of these roles you did manage people, and over time you were expected to be able to lead or manage very large engineering programs. The “professional management” skills fall into what I call “career path competencies.”
While every company has most of its staff in professional positions (typically there are 10-15 “workers” for one “supervisor”), few have build professional career solutions. I know, for example, that if you want to become a senior HR professional you must understand competency modelling, assessment, learning design, compensation, and many other technical domains. I also know that you must know how to consult with business leaders, design global processes, select technology, and manage change. Each of these “competencies” is highly complex, and it takes decades to become good at all these things.
Our companies are built on the backs of these professional roles, yet in today’s career models if you aren’t moving “up” the pyramid you’re often considered unimportant. So one of the key strengths of high performing companies is that they take professional careers seriously. Great companies pay senior professionals very well (often more than leaders), they lavish them with development, and they continuously move them around to balance and expand their expertise. (I know one software company, for example, that pays its top engineers 1.5-3 times more money than their senior executives.)
Succession Management: How To Make It Work
Succession management, as I described above, requires some rethinking today. Our research on this part of HR (shown below) shows that while almost two-thirds of companies have some form of succession management in place, far fewer have an open, transparent way of moving people from place to place. All our research shows that the highest performing companies openly discuss jobs and candidates, let many people apply for open positions, and try not to overly focus on “HIPO” programs because they limit people’s opportunity for growth.
When we really look at how well succession management is implemented, the data illustrates the problem. Look at the chart below: While most companies believe succession management is important, very few companies do it well. So I suggest the problem is not to create more replacement charts and spend more time on 9-box grids, but rather think about the problem differently.
Careers And Talent Mobility Today: A New World
Today, as I discussed above, today the world is quite different.
Companies are very dynamic and new research shows that 92% of senior leaders want to redesign the organization to drive agility and speed to market. New business units, customer opportunities, and product teams are constantly formed. Young employees want to move around and accelerate their development. And business leaders simply cannot find enough “ready” leaders early enough, so we have to promote people before they’re ready and let them “learn in place.”
All this is happening in a working world where jobs, careers, and new opportunities are transparent. If your company does not offer interesting developmental opportunities for your people, they just might leave (or even worse, check out in place).
And as our new research shows, the highest performing companies are moving people around from team to team on a much more regular basis. Sure many of us will be in the same job or career for many years, but when the company needs a change, we want people to “jump at the opportunity” and feel supported in their new role as they transform themselves.
Simultaneously we are “hollowing out” middle management as well. We need team leaders and functional experts, but we need fewer “general managers” every day.
Today U.S. companies today have an average span of control—the number of people reporting to a supervisor—of 9.7, rising as high as 11.4 at large companies. This has grown by 30% over the last five years.1
Companies are looking more and more like the picture on the right, even though the org chart looks like that on the left.
Teams are everywhere: sales teams, client support teams, IT service teams, HR business partner teams, marketing teams, and so on. And they include special project teams, task forces, and implementation teams.
While teams have always existed, what’s new is that today teams inter-operate without the need for hierarchy. The sales team interacts with the client service team, which in turn talks with the consulting team. This highly flexible operating structure, which is just emerging as a new practice in organization design, facilitates innovation, rapid response to customer needs, and agility. People enjoy working in small groups, so teams also improve employee engagement and retention.
One business in India I met with put it clearly: “I don’t need many middle managers any more — I can stay current on the state of my business through our information systems. I need team leaders who know the business, who can dive into detail, and who know how to drive results.” He is essentially making the case for hollowing out middle management.
What this implies for careers is that while upward mobility is important, our careers now develop through varied and challenging assignments, team leadership, mentoring, and opportunities to learn. Organizations don’t need as managers, so we have to throw away the idea of “up or out” and “HIPO” pools, moving toward a career model of growth in many directions.
Think about it this way: Today high performing companies today operate like Hollywood movies — skilled people come together, share their expertise, work on a project led by a “producer” and “director,” and then a year or so later they move on to the next project. Peoples’ careers advance by working on great movies, honing their skills, and continuously taking on greater challenges.
(For a great discussion of this issue, look at the U.S. Military’s Force of the Future plans, which involve major changes to the way careers progress in the armed forces, shifting toward a more developmental, flexible model.)
The New Career In Your Company: A Tapestry Of Experiences
So what should organizations do? How can we facilitate this new career model in companies?
As we start our work on a major industry study in this topic, let me give you five basic principles that will help you “Hack the Career” in your company.
1. Make Talent Mobility Part Of Your Culture
If you look at how people really move around in companies, it hardly resembles the triangle above. It looks more like the following:
• Open posting of positions internally so people can find, register interest, and apply for internal positions. You have to put in place programs, support systems, rewards, and tools to help people move from job to job. This includes lots of things which may not be in place today:
• Tools to help people assess themselves and ready themselves for the job they want next
• Reward systems that incent managers to hire internally, even though an external candidate may be more qualified
• Recognition and social rewards that motivate people to take lateral, but developmental jobs, that help the company and their own career
• Managers who think about their jobs as “developing talent” not “hoarding talent,” and are rewarded for moving people out of their groups
• Story telling, open communications, and executive dialogue about how important it is to move around and contribute across the company.
I talked with a large European bank a few weeks ago and they told me that in their culture almost nobody ever leaves their function, department, or city. Each of these groups has its own culture and its own legacy leaders. Their business is rapidly being de-regulated and they are in a panic about how to evolve. Lack of talent mobility came out as one of their biggest risks for the future.
2. Build And Invest In Career Transition, Learning And Coaching
If you agree that internal team and departmental mobility is important, you have to build an organization that supports people as they move. I worked in a company years ago that took the risk on moving me from business development to product management. My new boss had no patience or sense of responsibility for helping me learn my new role. Needless to say, it was one of the most difficult (and ultimately valuable) career transitions I ever made. But I wish I had received more help.
High-performing companies create lots of development programs, they give people time to mentor others, and they reward leaders who act as coach, not just task master. Of course it takes time to help someone develop in a new job, and it might seem easier to hire an expert from the outside to do a job. But remember when you take on an internal person, you gain institutional expertise, hopefully you have someone who fits the culture, and you learn much more about the company as a result.
One problem you have to watch out for is the pattern of people “moving from place to place” and never being held accountable for their work. Every company has people like this, so you have to establish guidelines and measurements for people throughout their transition, and make sure managers evaluate them well before they let them leave. Exporting your “problem people” is a well known management trick — you have to put programs and rewards in place that prevent such “hiding” to occur.
3. Provide Career Coaches Independent Of Line Leaders
Line managers are notoriously poor at helping people develop their career. This is not because they don’t have the best of intentions: rather they simply do not know where other opportunities may be.
In a large company people should really have two managers: a line or team leader, and a separate “career coach.” The career coach role, which is an important one in big companies, is to help people find the next best job with everyone’s interest at heart. In a sense this “career manager” is responsible for making the chart below work for both sides.
Many of us have been lucky enough to have such a manager at some point in your career. We advise companies to have career managers who may be different from your line or team leader, so these people can be more senior and take more time seriously helping you find the next best job. (And these individuals get great satisfaction from this role as well.)
4. Develop Reward Systems Which Support Internal Mobility
If we are going to let people move around in the company, we have to reward managers and employees for changing jobs.
Remember that moving people internally comes with risk. Sometimes they don’t work out, the job isn’t a good fit, or they just aren’t ready for the new role. Should you let them go, even if they may have been with the company a long time? This comes down to managerial rewards and culture. Consider two issues:
First, managers have to feel comfortable training an internal candidate who may have little or no experience in the position. Ultimately it may reduce the performance of their team in the short term, but ultimately pays off. Internal candidates trade internal company knowledge for technical skill you may be able to hire from the outside.
Second, the organization must have support and reward systems that let people move from a position of competence (what you’re doing today) to one of incompetence (something new). This means managers and HR must provide onboarding, coaching, and transition training tools for most positions.
Third, people can’t be punished for a single role failure. Some moves will not work out. If you take a new position and it doesn’t work, can you “return” to your prior group? Are you labelled a low performer and asked to leave? Ideally in a company with lots of internal career management people who change roles are rewarded for risk and effort.
I recently met with the Chief Learning Officer of a global fast food company who told me their company prides itself on moving people every two years. It was quite shocking to her when she joined, but as she became familiar with the culture she found that this rapid mobility process creates a huge amount of trust, relationships, and common knowledge throughout the business that drives agility, innovation, and growth.
Think about the problem of innovation and new product development. Wouldn’t you want people throughout the company that understand different parts of the business so they can best understand new ways to solve problems? Of course — this is a hallmark of a high performing organization.
5. Post Jobs Internally And Provide Tools For Internal Candidates
How many of you know what jobs are open in your company? I’d guess you have no real idea. Companies with strong career strategies make sure all internal jobs are posted, people get referral bonuses for internal candidates, and there are tools to help you assess yourself against a new position.
One of our clients, a large healthcare insurance company, actually spent 2+ years developing competency models and assessments for every major position in the company, just so internal employees could find new jobs. The CHRO told me that within three months of opening this system up employee engagement started to skyrocket.
And today, technology is helping this problem like never before. Most of the new HR systems (Workday, SuccessFactors, Oracle, and many innovative startups) give employees total transparency into other jobs in the company. Through these tools employees can browse career ladders, look at competencies, register their interest in a job, and even take assessments to understand their fit. I urge HR departments to invest in these new career tools, they have a tremendously positive impact on employee engagement, talent mobility, and business performance.
Summary: Career Management Takes Investment
All these programs, reward systems, and cultural values take time and money to build. You’ll have to measure internal candidate flow (percent of employees who change jobs each year, percent of jobs filled internally), you’ll have to spend money on internal hiring and assessment tools, and you’ll have to train and encourage managers to coach and hire internal people.
Even more importantly, you should promote stories and case studies of successful individuals at all levels who have moved around the company, grown in a professional or managerial way, and added value through their loyalty and experience.
We are in the middle of a major industry study on this topic, which will include case studies, examples, and a set of best practices. In the meantime, I encourage you to look at the chart below and think about your organization and where you fit in each of these areas.
Finally, remember that focusing on career management will give your company endurance and agility. When the time comes to reorganize, shut down a business, or move into a new area, a company with a strong culture of internal mobility can respond quickly and with strength.
I can guarantee you that in today’s workplace, focusing on 21st century career management should be one of your top priorities for the years ahead.
This article was written by Josh Bersin from Forbes. This reprint is supplied by BNY Mellon under license from NewsCred, Inc.
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Josh Bersin, Contributor