The highlights of the LUISS BS Competence Centre & Lab for People Management
Do external careers pay off for both managers and professionals?
Greater inter-organizational mobility is one of the most evident drivers for career transformation. The traditional model – characterized by a full-time permanent job with a single employer – is now increasingly rare and organizational careers are progressively being replaced by temporary contracting arrangements. This implies a fundamental shift in the psychological contract because both parties become aware that the employing relationship is unlikely to last forever. The reasons for such transformations lie both in environmental factors, such as globalization, rapid technological advances, expanding use of outsourcing and delayering, and individual changes in work attitudes and behaviours linked to increasing life span and changing family structures.
Contemporary careers are much more fragmented than they used to be, so much so that it is generally claimed that they follow ‘boundaryless career’ arrangements (Arthur and Rousseau, 1996), involving “opportunities that go beyond any single employer”.
A key question is weather inter-organizational mobility increases or not career success for both managers and professionals.
We recently conducted a study on a sample of 303 fully employed LUISS BS’s alumni. We asked respondents to provide us information on their occupational changes, from the oldest to the actual position. 31% of respondents did not move from their first organization and 69% experienced one or more employer changes. Among these, 37% of job movers were employed in five different organizations or more; 18% in four, 26% in three. Only 19% have been employed by two organizations.
Our results show that inter-organizational mobility is associated to significantly higher wages for professionals but not for managers. Among the possible explanations of this difference, there is the tendency to consider managers strategically more important than professionals and more difficult to replace. Consequently, the fear to lose key resources on the managerial ladder may spur organizations to apply aggressive retention plans, generally aligning managers’ salary levels to the market. Beside this justification, our result could indicate that firm-specific knowledge and skills (e.g. knowledge about people, organizational procedures, organizational culture, company history, business and products specificity) that are not transferrable across organizations are more relevant for managers than for professionals. In this regard, our findings echo those of scholars who have emphasized the importance of organizational stability for managers’ career success. Hamori and Kakarika’s (2009) study on CEOs found that insiders, who can rely on firm-specific knowledge, progress in their career more rapidly than outsiders who have only general human capital. Our study confirms this view also with regard to salary attainments of middle managers, for whom the value of firm-specific knowledge is likely to be even more relevant given that they perform more specific tasks as compared to top executive roles.
This finding provides interesting implications for managers in planning their own career as it invites them to consider with caution the suggestion – increasingly popular in the business press – that advises them to move between employers frequently in order to achieve greater career success. In contradiction to this popular suggestion, our study suggests that organizational stability does not penalize, at least in terms of salary attainments, those managers that stay with their organization, choosing an internal career path. Managerial roles maintain a firm specific component in terms of internalization of firm’s values, leadership model and organizational culture.
With regards to professionals, employer changes provide them the opportunity to apply skills and competencies in different industries and organizations, while keeping professional specialization because they greatly depend on occupation-specific knowledge rather than firm-specific knowledge. This is likely to increase individuals’ employability in the external labour market and the value employers are willing to recognize to outsiders for professional roles. This result confirms King et al.’s (2005) view that mobility per se does not increase human capital and employability. As the authors say, “the quality of career capital matters” (p. 986). External careers are successful if employees choose a coherent job mobility that makes it possible to capitalize on subsequent experiences and maintain a clear occupational identity, while job mobility may not increase employability and salary when it leads to the accumulation of a generic body of knowledge at the expenses of depth of expertise.
This result also offers interesting implications for organizations as it concerns the management of professionals’ labour relationships. Our study demonstrates that the enactment of external careers pay off for professionals, making this segment of the employee population particularly difficult to retain. This suggests the opportunity for firms to pay more attention to human resources policies specifically targeted towards professionals that may encourage their loyalty to the organization.
*This article is an excerpt from:
References:
- Arthur, M. B., & Rousseau, D. M. (1996). The boundaryless career. Oxford University Press.
- Hamori, M., & Kakarika, M. (2009). External labor market strategy and career success: CEO careers in Europe and the United States. Human Resource Management, 48(3), 355-378.
- King, Z., Burke, S., & Pemberton, J. (2005). The ‘bounded’career: An empirical study of human capital, career mobility and employment outcomes in a mediated labour market. Human Relations, 58(8), 981-1007.
