Moving frequently from job to job, ideally within the same company, is the best way to make progress up the corporate career ladder, according to research by Anders Frederiksen and Takao Kato, published in the August 2018 issue of the Economic Journal.
Their analysis of the work histories of the entire labour force in Denmark indicates that generalists, who experience a variety of jobs, are better placed than specialists, who spend years on a few specific jobs, to reach the ‘C-Suite’ of a big company. Among the study’s other findings:
• It is beneficial to experience different jobs across firms, but experiencing different jobs in the same company is clearly better.
• The benefit of experiencing diverse jobs is significantly greater for more highly educated workers.
• Having a Master’s degree is particularly beneficial for women’s career advancement.
You have been in your current position in the firm for some time; you have acquired useful knowledge and skills on the job; and you love the people you work with. Now you are offered an opportunity to move to another job in the same firm. The job is quite different from what you have been doing, and it is a lateral move with no pay raise. It is clearly not a promotion. Should you take it?
The authors of the new study will tell you that if your ultimate career goal is to become a top manager, you should. For example, your odds of reaching the C-Suite of a large company will double by having three additional lateral moves like this. This is based not on anecdote or case study but on a rigorous statistical analysis of detailed work history data for the entire labour force in Denmark.
Why is it more advantageous to become a generalist through experiencing a variety of jobs rather than becoming a specialist by spending years on a few specific jobs intensely?
Corporate leaders need to solve a diverse set of problems, and it is highly uncertain which problem they will face. It is, therefore, generalists with a full set of competent skills (rather than specialists with a limited set of extraordinarily high skills) who are better suited for such leadership tasks. Hence, individuals who have experienced more jobs in the labour market are more likely to become successful corporate leaders.
The authors’ analysis yields a number of additional findings that are of significant interest.
First, it is beneficial to experience different jobs across firms, but experiencing different jobs in the same company is clearly better. The best strategy to pursue to move up the promotion ladder is therefore to broaden your knowledge and skills by experiencing a variety of jobs within the same company rather than across firms.
Why is internally obtained broad experience more beneficial than externally obtained broad experience? It is because of what economists call ‘firm-specific human capital’: some of what you learn on the job is useful only if you stay at the same firm.
This strategy is consistent with job rotation programmes used by many large firms for the development of future corporate leaders. Such firms hire people fresh from university and place them in job rotation programmes during the first years of employment in which they are rotated among diverse jobs every six to 12 months.
Second, the benefit of experiencing diverse jobs is significantly greater for more highly educated workers. What you learn at school may not be immediately useful for your job, but it will help you to become a better learner who can accumulate knowledge and skills on the job more effectively.
Third, having a Master’s degree is particularly beneficial for women’s career advancement. While among college graduates women are 65% less likely than their male counterparts to reach the C-Suite, among those with Master’s degrees women are 40% less likely. If you are a woman trying to move up the promotion ladder and reach top management, you may want to consider enrolling in a Master’s degree programme at a reputable graduate school.
Last, broad experience is more beneficial for R&D (research and development) directorships than for other functional area directorships. If you are aiming for an R&D directorship, you should be particularly seeking out opportunities to experience diverse jobs.
‘Human Capital and Career Success: Evidence from Linked Employer-Employee Data’ by Anders Frederiksen and Takao Kato is published in the August 2018 issue of the Economic Journal.