KARL MOORE – This is Karl Moore of the Desautels Faculty of Management at McGill University, Talking Management for the Globe & Mail. Today I am delighted to be speaking with Peter Cappelli who is a senior professor at the Wharton School at the University of Pennsylvania.
Good morning, Peter.
PETER CAPPELLI – Good morning, Karl.
KM – I look back at my career – I started at IBM and spent a number of years there and had a very definite career path, but career paths are very different today. How do you see careers unfolding today as opposed to the past?
PC – That’s a great question, how are careers unfolding, and the surprising thing is that we have almost no idea – really! We know, for example, that in the U.S. tenure has declined a lot. We know that executive search firms are booming. We know that compared to the 1950’s through to the 1970’s companies filled virtually all of their vacancies from within - I think the figures are about 90 per cent. At the moment, they are only filling a third of their vacancies from within so they are hiring from the outside to fill about two thirds of all their vacancies. When you go around the world you see, this may be a complicated story about that, that in the center of Europe (in Germany) it looks like things are pretty stable. In the U.K. there is a debate as to how things are playing out but it appears now that tenure is declining there as well. When you go to India it looks like things are pretty internalized and that may be a continuation. In China I don’t think anybody has a good idea yet so there is a variety of arrangements around the world now and maybe that’s the best story about this is that things are quite different now – depending where you are. That didn’t use to be the case, at least in the corporate world: there was a kind of U.S. organizational man model - it was translated by the multinational companies, more or less around the world. Labour laws, particularly in Europe, made it difficult to hire and fire. So we have this internalized model.
The question of what the alternative looks like is quite complicated, and I am not sure we exactly know. There does seem to be evidence that, for example, people use kinds of companies for different ways in their careers - which people would like to start, if they had their choice, with high brand value companies. Those are the ones like IBM, or GE that have a lot of credence in the market, and they tend to move from there, after they get that stamp on their resume or that training, to other sorts of companies and they cash in the brand value. One of the things that is most intriguing which has been done by a former student of mine, Monika Hamori at Empresa in Madrid, is to find that people who make the biggest moves up when they change jobs are those that are moving down in prestige at the company. They are cashing in the value of their IBM experience to work for a smaller company and they become a more senior person with a big step up in pay as they do that.