Saturday Extra

It seems that being career orientated, or having the determination to climb that corporate ladder, or aspire to something higher in your job role, is being redefined in workplaces across America.

Technological advancements have definitely broken down the barriers between work and non-work hours, but strategic decisions like restructuring, downsizing and out sourcing have added to job uncertainty as well as the reduction of promotions available in mid to upper level management across the corporate world.

These factors have contributed to this phenomenon experts in the US are calling 'plateauing'.

Transcript

Geraldine Doogue: It seems that being career-orientated, or having the determination to climb that corporate ladder or aspire to something higher in your job role, that's being redefined in workplaces across America. Technological advancements have definitely broken down the barriers between work and non-work hours, but strategic decisions like restructuring and downsizing and outsourcing, have added to job uncertainty, as well as the reduction of promotions available in mid to upper level management across the corporate world. And all of these factors have contributed to a phenomenon experts in the US are calling plateauing.

So why is it happening, might it come to Australia? We spoke earlier to Professor Peter Cappelli. He's Director of Human Resources from the Wharton School at the University of Pennsylvania. Why are some people deciding there's more to life than an aspirational career?

Peter Cappelli: The first issue is that there's just not that many promotions around and the second one is how do companies decide who gets those promotions. And there it seems to have changed a little bit as well, in that it is much more a kind of just open competition among the people in terms of figuring out who should get the promotion. And the open competition is frankly based not so much on sort of the potential, that is, who might be the best manager going forward, but who has achieved the most in the job that they're currently in. And that has really increased the pressure on people.

Geraldine Doogue: So you're talking about a fundamental change in the way we discuss career paths, orderly career paths in these big organisations?

Peter Cappelli: I think that's right. There's a big change in what the career paths look like, and also there's an increased willingness on the part of employers to promote people, based on a kind of just free-for-all of competition in the next level down, and that's basically increasing the level of work intensity you have to achieve if you want to get promoted.

Geraldine Doogue: How do you decide who's achieved what?

Peter Cappelli: Well in the best cases, objective measures of performance on something like sales or something like that. But I think in cases where performance is not easy to measure, they rely on proxies, and that's where we often have problems; the proxies are things like who seems to stay the latest, who seems to be working the hardest? I certainly hear this from my students in their last job, that everybody's afraid to go home, or unwilling to go home until the last person in their group leaves, because nobody wants to be seen as the first person to leave the office.

Geraldine Doogue: I thought that had all started to shift. Like what you're telling me now is reverting to something that was, well certainly in Australia, there was a tremendous effort to change that culture. I'm not suggesting it was all successful, but the discussion around it had altered in the last five years.

Peter Cappelli: Well I think here when the labour market got very tight at the end of the 1990s, a lot of companies became worried about how do we get and keep the best people and that really boiled down to how do we be nicer to our employees or to our potential hires than our competitors are. So there was an awful lot of talk about work-life balance and I think frankly, most of what work-life balance came down to was flexibility. It wasn't reducing the total amount of work, it was simply trying to make it easier for you to fit the work into your schedule. When the economy here softened after 2001, a lot of that went away, that is a lot of the employers concerned about work-life balance, it was just difficult for them to do. But in some ways, it never really changed. It was not that they were ever cutting back on the demands on employees, they were just trying to make it easier for the employees to do the work.

Geraldine Doogue: OK. So let's get back to this whole notion of plateauing. Are you saying that this type of environment has produced a new response, a rational response by the sound of you, from the people who are caught in it?

Peter Cappelli: I think so. I'm not a big believer that the important issue in the workplace is that the generations coming along necessarily are different in some sort of fundamental level. I'm much more persuaded that the environment in which they operate in, is much more different. At least in this country, if you think about the baby boomers, for example, when we entered the workforce, we were apparently, so our senior peers told us, the laziest, the least ambitious, the most immediate gratification oriented group that had ever come along, and then a few years later we turn out to be the workaholics who are working so hard we have to be saved from ourselves. So I think it's almost entirely driven by the context of what companies are offering and demanding of employees.

Geraldine Doogue: And at what level of management are you seeing this at then?

Peter Cappelli: I'd say it's for the most part it's - well the other interesting thing that's happening I think, just to preface this, is that our top managers appear to be getting younger and younger, and I did some research on this a few years ago, and if you compare the top executives of the biggest companies in 1980 to the top executives of equivalent companies in 2001, they're about four years younger in 2001 than they were in 1980. And so I think we're seeing it among people who are maybe just below age 40, or around 40, something like that. And a lot of it has to do with also perhaps being the age where they have important family demands. So you're reaching a point where you're really heavily in competition with other folks, to get promoted, you have lots of family demands, the odds on being promoted are less than they used to be, the demands to get promoted appear to be greater than they used to be. And maybe there's one other thing playing a role too, and that is it used to be the case that if you wanted to make more money in the organisation you had to get promoted. That is, the compensation was almost entirely driven by your job title. And that's not the case any more that there are bonuses there are stock options, there are broadly-defined broadbands for pay, and so that's I think maybe another thing too, that you could stay in your current job and maybe still make more money if you're doing better at it, or if the company's doing better.

Geraldine Doogue: Some of your colleagues at the Wharton Business School are suggesting that this plateauing trend doesn't necessarily mean people don't actually have aspirations to climb the corporate ladder, but they're redefining what their jobs mean to them. I wonder if you think this is true, and whether this is a temporary phenomenon, whether this is part of just what you've described then, a 40-year-old man saying 'I can't do it now, but I would like to do it when I'm 54'.

Peter Cappelli: I think it is true that they would like to get ahead. I think there is some change in society, partly I think in the sense that you can make more money and not necessarily have a higher title. It's not completely linked, and I think in our society anyway, having a more important title matters, but making a lot more money sort of matters a lot too. So maybe that's part of it. I think the complication for people is that frankly, because top executives are getting younger, you're not going to be able to come back at age 54 and say 'Now I want to play the game'. The one situation where this might change, and maybe you're saying this in Australia, is when the labour market really tightens up, the demand for talent is bigger than the available supply, it's possible they might let people come back later on, it's possible that they may reduce the demands on people in order to get promoted, it's possible some of those things would change a little bit with the ups and downs of the economy. But I think it's kind of marginal.

Geraldine Doogue: How much of all of this is to do with technology? With people not so much choosing not to climb, but forced into that position really, because of the way in which technology has flattened the company.

Peter Cappelli: Well I think the fact that the companies are flat and has reduced the opportunities, just makes it much more costly, and more difficult to climb. And I think the other thing which has changed is that companies are much more inclined to hire people from outside to fill vacancies at the senior rank. So they don't obviously promote from within all the time, the way they used to a generation ago. And that could also make your climb up the ladder much less certain. You know, you really work hard, you really invest in this particular organisation and then a new CEO comes in and decides to reorganise the place and bring in his own or her own people from some place else, and poof! Suddenly your promotion prospects just collapse.

Geraldine Doogue: I wonder whether this is fundamentally altering people's aspirations, which would fly in the face of all the propaganda from corporate America for the last 30 years. Like there's some very interesting debate I know even within your own business school about this, as to whether people are hitting a certain level of a pyramid, and as you say, accepting lowered expectations, or whether there is a conscious swing in your culture that's more focused on other definitions of success. Now where do you stand in this debate?

Peter Cappelli: I don't see a big change in the culture. There are some people who have families who are perhaps less willing to make their families pay the price. But the US is not becoming a kind of aesthetic culture that suddenly cares about community and that sort of stuff, this is a very materialistic culture and continuing to be where people care a lot about material success and business is as important to the culture as it's ever been and we've got even more shows on TV talking about business and investing and all that sort of stuff. So I don't see business is becoming less important in the US, I don't see any evidence of that.

Geraldine Doogue: What about the environment, the corporate environment then? Can it cope with these changes?

Peter Cappelli: Yes, I think so. As long as there are people willing to step up and spend the longer hours, I think the interesting thing will be if we get a really tight labour market, in the US, and there is something like a real scramble for talent, what will the employers do then, and I think what we'll see the employers do is they will pay people more. Now the interesting question will be whether the employers will ever agree to allow people to work less. I think what we see in the US is so far none of that. That basically what's happening is people who don't want to get promoted, or don't want to work quite so hard, don't get promoted, people who want to work even less hard, frankly have to quit, and go do something else, because the level of effort required in these jobs is extraordinarily high even for those who just want to hang around.

Geraldine Doogue: Is there any evidence that even within this environment you're describing, the cleverer people are setting boundaries, like will they turn their Blackberries off at 6pm and not turn them till 6am, or something like that?

Peter Cappelli: Yes, well that's an interesting question, and here's my evidence base for that, and that is that I've been teaching and working for 20 years and I've been giving the same mid-term exam for 20 years, which is to ask people to write about their last job, how they were managed, and pay to work intensity, that stuff. Twenty years or so ago, and as late as maybe ten years ago, it was the case that investment bankers, finance people and consultants were working pretty crazy hours. But people in the corporate world generally were not, and actually the smart ones were complaining that they were kind of bored. What I hear now is that virtually everybody is working crazy hours, even people in non-profit, even people who are working in the arts, I mean everybody's working crazy hours because they're given interesting projects, they're in competition with other people, they're highly motivated people around peers who are doing the same thing. So I think the only thing I'm saying is that we're sort of hitting a wall in terms of work effort where it's just not physically sustainable for people to keep working that hard for that long. So it isn't so much that people have suddenly had an epiphany and are saying, 'You know what? I don't want to work that hard any more'. The extent to which they're drawing a line, it seems to be a line where they're almost at physical limits. So I'm not so sure that that indicates that people are re-thinking in any fundamental way the nature of work and their relations to it, they're just sort of at the point of physical exhaustion almost. And are saying, 'I just can't do this any more'.

Geraldine Doogue: Peter Cappelli from the University of Pennsylvania.

Guests

Professor Peter Cappelli

Director Center for Human Resources
George W. Taylor Professor of Management, The Wharton School - University of Pennsylvania

Presenter

Geraldine Doogue

Producer

Scott Wales

Story Researcher and Producer

Dai Le