Editor's note: A recent historical study of the paths taken by executives who make it to the top sheds much light not only on what personal attributes are needed, but also on how organizational dynamics contribute. Are you more likely to charge into the executive suite by working in a small company or large? Does it help to have handled many responsibilities or just a few?
The report, presented in a recent issue of Harvard Business Review, was called "The New Road to the Top." It compared Fortune 100 executives in 1980 with their counterparts in 2001. We excerpt a section on how the changing face of corporations and corporate life over the last few decades has impacted career movement.
Some of the most important lessons from our study and related work by other researchers derive from the finding that different types of firms offer different prospects for advancement. It's clear, for instance, that there are huge advantages to working in a growing firm. Executives are much more likely to be promoted in firms with healthy growth rates than in stagnating companies. Further evidence from the data suggests that, other things being equal, younger firms offer faster advancement, perhaps because of their tendency to have flatter hierarchies.
The firms that have been big for a long time—those in the Fortune 100 in 1980 and again in 2001—seem to handle career advancement and development differently from others. General Electric, Procter & Gamble, and the like provide extensive training and development opportunities. They also offer relatively long promotion ladders—hence the common notion that these "academy companies" are great to have been from. They are faster moving and leaner than they were in 1980, but they still offer greater stability and predictability than other large corporations and so are very attractive for some people, not only as a place to begin a career but as a place to complete one. Younger companies and restructuring firms may offer great opportunities for rapid advancement, but those opportunities come with uncertainty—you could be in line for a top job and see your career derailed by a reorganization.
| The results here suggest that finance now offers by far the best path into the executive suite. |
The irony is that while the academy companies remain the gold standard for career management, fewer and fewer corporations appear to be following that model. We wonder whether academy companies are simply the last to change or whether in twenty years, the Fortune 100 will still include companies that make extensive investments in their managers and executives.
Inside strategies
Another set of lessons concerns what happens to executives inside companies. Prior research suggested that through the 1970s, marketing was the preferred track into the executive suite, but the results here suggest that finance now offers by far the best path (it offered the best path in 1980, too, but consulting and—surprisingly—human resources were closer behind). The finance track will remain the dominant path to the C suite as long as the investor community wields a powerful influence on corporations.
Career research also offers insights about when it's best to move on. An individual's advancement may slow for reasons beyond his or her control, such as problems with immediate supervisors and changes in company strategies that reward different backgrounds. As the average age of executives in the highest jobs decreases, delays in promotions become more damaging to a manager's odds of getting to the top. An objective look at the company's prospects can help a manager decide whether to sit tight and hope the situation improves or move to a different company or division. Take a zero-based budgeting approach, as an investor would: If you were not already an employee, would you invest your human capital in this company, given its plans and current situation?
Another approach is to look around and ask, "Have I been here longer than others in this job?" If the answer is yes, this may be a good time to move on. Research suggests that the odds of advancement fall as a person's tenure in a job grows. Individuals who advance to the top tend to be among the youngest in their cohorts—possibly because talent and ability get spotted early, possibly because of "halo" or reputation effects.
We think the most important finding in this study is that executives in 2001 got to the top faster than their 1980 counterparts and did so by holding fewer jobs along the way. But it may not necessarily follow that working for a company with few levels is the way to move up quickly. Anecdotal evidence suggests that such firms tend not to promote from within because they believe there's too great a gap in required competencies from rung to rung. So they hire from outside. Therefore, it may be easiest to move toward the top by doing well in a small company—as CFO, say—then taking the same job in a larger one. Another important point is that holding a general manager job with profit-and-loss responsibility seems to be a prerequisite for the highest positions, perhaps because the ability to run a business is considered transferable; success in running a $10 million organization is a powerful recommendation for a job running a $100 million organization.
But the data are not clear on whether people should jump from company to company to get ahead. Our 2001 findings show that executives who stayed in the same corporations for their entire careers got to the top as quickly as their firm-hopping colleagues—a change from the situation a generation ago—but far fewer executives are spending their careers in one company. So perhaps only those who are advancing quickly choose to stay put. 
Young firm, old firm
by Peter Cappelli and Monika Hamori
We wondered whether the changes in company practices and executive attributes—reduced organizational tenure, faster promotions, lower executive age, and so on—represented new approaches to corporate operations that were more likely to be characteristics of younger firms.
We compared younger firms in the 2001 Fortune 100—that is, corporations that had been in existence thirty years and less—with older firms on the list. Younger companies did have younger executives, perhaps not surprisingly, but they didn't have more women than the older corporations. And although we found slightly more public and fewer Ivy grads at younger firms, the education differences were not statistically significant. Executives in younger firms were far less likely to have begun their careers there, and their average organizational tenure was about half that of executives in older firms. Executives from younger companies also got to the top faster, apparently because they moved more frequently from company to company and because there were fewer steps in their promotion ladders. Although they spent about the same amount of time in each job as the executives in older firms, they held fewer positions before being promoted into the executive ranks. These results reinforce the prevalent perception that company age has an important influence on executive experiences and that the youngest firms—presumably the fastest growing—do the most recruiting of outside talent.
Excerpted with permission from "The New Road to the Top," Harvard Business Review, Vol. 83, No. 1, January 2005.