Tag Archives: executive leadership

The MBA: It’s Your Ticket to the Middle

You’ve put a lot of time and effort into your job.  Yet, year after year, your performance reviews provide little insight into what you need to do to gain some upward mobility.  No raises. No promotions.  Eventually, you begin to realize that with little movement after 5 years or more, it’s unlikely that any real movement will be coming in the near future.  You’ve got to change your outlook and the MBA seems like the perfect credential to boost your career.  If you want to get into management, it seems like the ideal tool.  But can it really get you to the top?

When I was working on my MBA, I was just as optimistic as every other student.  I thought the MBA would propel me into management quickly.  I earned my MBA while working full time.  The managers around me didn’t have a lot of credentials themselves, so I felt that my MBA would have a huge impact on my growth in the company.  The only MBA in the company was a Harvard graduate and he was the CFO.  When he came in the company, he came in at the top.  He had considerable management experience at the top level and a MBA from Harvard.  This was my introduction to the two things that get you into top management.

Many believe that the possession of the MBA will push you to the top of any organization.  I wish it were true.  The challenge for MBAs entering the workforce is that there are too many MBAs for too few positions.  According to Statistics Canada data, 10.4 percent of all jobs were management jobs in 1995, but that has reduced to 7.8 percent today.  The recession has brought about change that will greatly impact your ability to climb higher in your career.  About 1 in 10 management jobs that existed in 2008 are gone.  Wal-Mart Canada cut costs by targeting more than 200 head-office jobs. After Tim Hortons merged with Burger King, the coffee chain cut 40 per cent of its middle managers. When Rogers Communications restructured its business under CEO Guy Laurence, it let go of several hundred middle managers and up to 15 per cent of its executives.  While the rate of MBA enrollment has not increased in recent years, it still remains high.  About 52 percent of students around the globe are exclusively interested in the MBA, indicating that the supply of MBAs is unlikely to decrease anytime soon.

If the reduction of management jobs and the large numbers of MBAs doesn’t deter you, then you’ll need to create value for employers to convince them that you’re ready for top management.  There are two things you must have to create that influence: a recognizable value and desired work experience.

The MBA is a faster ride to top management positions if you get it from a top program.  It’s not because they are considerably smarter than everyone else, it’s because they bring a perceived value that the company needs.  For example, if a company is preparing itself to be sold or seeking investment funds, bringing in top program alumni creates the perception that the company is well managed.  This makes investors feel more comfortable about the risk of investing in the company.  It’s little more than managing perception. It’s similar to reasons why professional athletes earn so much money playing a game.  They bring an inherent value to the organization, which for sports athletes lie in their ability to sell apparel with their name on it.  Do you think an MBA from an unknown university would create such perception?  If not, then it’s likely that the MBA won’t carry you to the upper echelons.  Even the ivy leaguers who start out with the Fortune 500 companies don’t start at the top.  Andrew Ainslie, dean of the Rochester University Simon School of Business, said “You’re reporting two to four levels below the CEO. That’s middle management, and that’s where most MBA students go and it doesn’t matter which university they came from.”

Another factor that will slow your rise to the top is work experience.  Companies looking for top level professionals will focus on the experience of the individual in the areas they need support in.  That could be mergers, acquisitions, startup, restructuring or dressing up the company for sale.  Company needs are often very specific and without such experience, you don’t have a chance.  Is experience more valuable than the MBA? I would say it certainly is.  Lynn Lee, managing director at Atlantic Research Technologies, a global executive search firm, says “Corporations typically call us in to help them identify people who are already in the upper management or middle management ranks. When recruiting these candidates, most companies, large and small, Singaporean and international, usually look first and foremost at the candidate’s employment experience, and at his or her achievements and management style. A person with a truly outstanding employment record can get a great senior management job without an MBA or other advanced degrees.”   How do you know what experience they want?  That’s a great topic for another post.  That’s coming soon!

After I earned my MBA and spent many years in middle management, I learned about another extremely important factor that can greatly decrease your chances in reaching the corner office.  It’s self-preservation.  Most managers at the top are focused on growing their own career, not limiting their employment by promoting someone else to take their job.  This mindset creates an environment that I call the “dark side of management” and I have an upcoming ebook that will dive into this topic in detail by providing real examples of situations that often happen that can limit your middle management career because someone at the top was trying to preserve their own career from poor organizational performance or create some organizational change that has great potential for personal financial gain.   I was really unsure about creating this ebook since the world wants to focus on all the happy stuff in life but it’s these unpleasant situations that damage and limit your ability to grow your career.  You will run into them at some point.

No matter where you earn your MBA, it’s all about value (i.e. perceived or real).  If you earned your MBA from a lower tier program, don’t expect it to have high perceived value that executives look for when they want to manage perception.  This will limit your upward mobility.  Therefore, you’ll be forced to develop specific experience that executives and boards are looking for if you want to draw their attention for any opportunities at the top.  Experience has value.  Otherwise, you’ll be stuck in middle management.  While that may sound exciting, especially when you consider where you are now, it comes with a big set of problems (which are covered in my upcoming ebook).  Then, when you consider the sheer quantity of competition for an ever shrinking pool of opportunities, you might just find middle management to be one of the toughest places in business.

Your Credentials Don’t Matter

We help a lot of young go-getters build strategies to move into executive positions. Here’s an experience you’ll need to be on the lookout for as we’ve seen this scenario increase over the last few years. It’s a situation where your credentials don’t matter to anyone in the management ranks.

Venture capitalists (VCs) buy companies. They do this in order to resell it later for a profit. Most of us think they only invest in startups but this isn’t the only financial support they provide. They also buy failing companies where they have an expertise and feel they can turn it around for a profit. Often the life cycle between buy and sell is around 5 years or so. The VCs will take an active role in the company, often being the board, and by putting certain high level executives in place to run the company. With small companies, this usually means they will only put one or two people at the top.

Here’s where the excitement comes in. Once the new leader is in place, he’ll have to figure out how to fill the remaining positions in his leadership team. Sometimes this leader will bring in some friends to establish a circle of trust. Other times, the remaining leadership positions are filled with previous leaders from the company (before it was sold). But before we talk about the process for filling these positions, it’s important to understand the value of these positions. Remember, a VC owns the company and it’s likely the company will be sold again in several years. High level management positions are contract positions and are usually well compensated when the company is purchased. Some managers will stay and continue with the new owners, while others will have their contract “bought out” by the new owners. Money is the driver in this situation.

Before the new leader assigns his new team, those individuals who want to lead will begin to push themselves into higher positions. If these individuals were managers in the old company, they’ll “assume” a higher role. I say assume because they aren’t necessarily appointed yet but they will act in this role in the hopes that once assignments are made, they’ll own that position officially. We’ve watched quite a few companies over the years go through this scenario. The dominant personalities usually win out, especially if the new leader isn’t a strong leader. Some companies have allowed individuals to assume management roles with no experience or credentials for such a position. For example, a high tech company had put an English major into a product development management position. The key to earning these positions is to exert your influence. You have to be pushy. Most individuals miss out on this type of opportunity because they wait to be identified as worthy of such a position. In this situation, waiting to be recognized might only keep you in your existing position.

It’s important to note that this type of transition in a company is highly political. Building alliances with other managers is difficult as the environment becomes one of “survival of the fittest.” It’s unlikely that other managers will help you move into a higher position. Why? Because they want a higher position and they aren’t interested in giving away opportunities to someone else, regardless of how qualified you are.   Yes, I know this goes against the advice that you usually hear, but we’ve seen this in numerous situations.

Now, if you happen to be one of those managers who gets pushed out, you’ll have options too. One of the most obvious and most likely to work is to seek employment with your competition. Of course, you’ll have to ensure a non-complete clause doesn’t get in the way. To make this type of move, you need to find a competitor who looked at your company as a real threat to their business. They’ll hire you to understand how your company operated their business. It’s often an inexpensive way for companies to capture competitive intelligence.

I understand that this type of transformation in companies isn’t pretty and isn’t what we would expect it to be. Common sense might suggest that companies would seek out the best people to put in the leadership roles, but this isn’t what we see happening. Those with less impressive qualifications are aware of their shortcomings, which drives them to push themselves into these positions. Why? It’s the only option they have and….it works.

This scenario is more common during economic downturns where organizations experience more volatility. While organizational change is painful, it is also the land of opportunity for those who seek to gain from the transformation. Organization change is NOT a time for you to sit back and wait for your name to be called out in the draft as the next member of the management team. It’s a time where you push yourself into a position that will propel you into the ranks of an Executive. Why? From what we’ve seen, the payouts are worth it. Sure, it’s a side of business that colleges don’t tell you about, nor will your company. It isn’t pretty and isn’t always the best path for the long term viability of the company, but it can make you into an executive and provide a big bump in your salary. Yes….it’s a short term mentality but that’s usually what happens in tough economies.

The Future for Executive Recruitment

Have you ever wondered how organizations find their next leaders? In the June Harvard Business Review, Claudio Fernandez-Araoz discusses what he calls the new era of talent spotting. In this article, he provides his insight into how organizations need to be seeking top talent based on today’s amorphous nature of business.   In this post, we’ll provide a look at what companies are looking for today, which you’ll certainly want to know if you have plans to become an organizational leader. We’ll take a look at the various eras of development of talent spotting and make some predictions on what the future holds for you.

The Physical Era. The first era of talent spotting, according to Claudio, was purely visual. For thousands of years, work was comprised of tasks that required a lot of physical labor. Therefore, if you wanted to get it done faster, you would choose people who appeared to be big and strong. Even though these physical attributes aren’t as critical to the work we do today, some attributes are still considered to be valuable. For example, height is apparently important as the Fortune 500 leaders, as well as military leaders, are 2.5 inches taller than the average American.

The Intellectual Era. The next era of finding talent is the era that I’ve grown up in; that is, an era where education, experience and performance are important. These filters were required because work had become standardized and professionalized. Work was broken down into tasks that required certain skills. These skills were easily identified and could be assessed on a resume and during an interview. For up and coming leaders, it was easy to identify a career path and the credentials needed. You had to go to college and earn your degree. You had to engage in professional organizations and extracurricular activities to show you were well rounded. Then, you had to put your expertise to work and create some major accomplishments that organizations could verify. Your past performance was a predictor of future performance. Fortunately for professionals in this era, their credentials and accomplishments were valued in similar roles across a wide range of organizations, allowing a flexibility of movement from company to company. According to Claudio, this era is gone.

The Potential Era. Here’s where we are today. Corporations are amorphous, which is an intentional lack of structure that supposedly allows the company to change to meet market needs. The structure we knew in the previous era no longer exists. Claudio refers to this new environment as VUCA (volatile, uncertain, complex and ambiguous). Corporate strategy, once defined in a five year plan, now changes so frequently that such plans aren’t even created.  In this kind of environment, employees with fixed skill sets and expertise are useful for a short period of time. Employee value comes from an ability to move from one skill to the next in an efficient and effective manner. Today, companies will be looking for those superstar all-purpose players; that is, anyone who can do anything, anywhere, at any given time in and in any manner required (which explains the shortage in such talent).

So how do organizations go about finding such potential candidates? They measure ‘potential.’ Claudio suggests managers must learn to assess prospective employees on five factors. These factors are the right motivation, curiosity, insight, engagement, and determination. While Claudio admits to a method with 85% predictive accuracy, organizations are going to struggle with it, especially with new college graduates. But first, let’s consider the working professional.

Most companies don’t have any “high potential” programs to identify such talent in their existing workforce. Sure, the big companies do but the world isn’t full of big companies. It’s mostly small and medium enterprises (SME), who can’t afford to create such formal programs. (Personally I think SMEs will have more of these high potential people anyhow as you have to wear many hats in a small company). But, for entertainment purposes, let’s just consider the big companies.

Now, we know most of the big companies only hire the top talent from the best universities. My first question would be “do these top programs teach motivation, curiosity, insight, engagement and determination?” My initial thought is probably not. I didn’t want to ask any programs to respond to this question for fear of getting a canned response, so I thought it might be interesting to see what graduates and students of top programs would suggest.

Every couple of years, Business week surveys the best schools and invites students to provide open comments on their experiences. Here are some interesting comments from the class of 2012. At Columbia Business School, students complained about the lack of outreach by career services, the lack of university resources dedicated to the business school and the acceptance of too many ‘connected’ applicants. “Too many students are ‘sons of,’” claimed one MBA graduate. “They are plain dumb but got in because dad or mom wrote a big check to the school. This is not acceptable.”

At Duke, an MBA student asserted that the students could be “a little too party-oriented and immature” which sometimes led to mediocre classroom discussions. “Faculty and staff could hold students even more accountable for not taking the academic portion of school seriously enough,” stated another. “We should stop babying people and start really pushing people to be great.”

At the University of Michigan’s Ross School of Business, graduates thought that lax grading policies in classes led to a less-than-ideal learning environment.

In talking with a friend who graduated from Stanford, the grading policies were not very motivating for students. In short, the top 10% of the class got an ‘A’ and the bottom 10% got the door. So, everyone aimed for being better than the bottom 10% in what this graduate called a “quest for mediocrity.”

On and on this goes….NYU’s alumni network isn’t involved in the school, Wharton has poor quality in teaching, and INSEAD students felt the professors should take their own classes to see how bad things really are. Now, we must realize this was an open forum for complaining, but it still creates enough concern that even the top programs aren’t going to create potential leaders with the 5 great ingredients. I’m not just picking on the top programs but they do have a tendency to create many of the graduates that take top positions in big companies. So, do we really think these companies are selecting ‘potential’ employees based on these ingredients? No, but this might be part of Claudio’s strategy.

Ok, I took too long to say that I don’t think MBA programs will create a talent pool with such ‘potential.’ To make the situation even more difficult, I don’t think companies will be able to develop these ingredients either. Having spent many years working with MBAs, I haven’t seen anyone turn an underachiever into an overachiever. I’m not saying it doesn’t happen but it certainly isn’t the norm.

The Aura Era. This era is yet to arrive and is a prediction based on the current trends in finding top talent. The executive of the future will possess such extraordinary abilities that they can be detected only by those sensitive to such emanations. There have been many movies in the past and even in the present that have alluded to these abilities. More recently, the movie ‘Divergent’ depicted a society where people are divided into factions based on virtues, as determined by a unique serum-based aptitude test. The ‘divergents’ has values of all the factions, think independently and aren’t easily controlled by the government. One of my favorite movies that addresses the detection of extraordinary abilities in others is Star Wars. I imagine one day you’ll go into a job interview with Darth Vader. He’ll raise his hand towards you and will sense your JETI abilities. You know his famous words “The force is strong in this one.” For my UK fans, I imagine your future will be determined by a Harry Potter style sorting hat. You’ll simply walk in the room and they’ll place the hat on your head, which will declare you a leader or a follower. The interesting thing about these techniques is that they don’t consider any of the things we currently consider to be important. Is there a leader gene we can test for? The challenge for the professional is that we see organizations moving away from parameters that can be measured and verified easily, which can lead to many of the issues we see today (e.g. nepotism, favoritism). The good news is that your interviews won’t require any preparation time. In the future, you’ll either have it or you won’t.

At this point, I really hope that organizations don’t attempt to start hiring talent based on potential, as I think it will add an undue level of complexity to an already challenged process. In the end, it’s likely to do little to change how things really work. Potential isn’t something you just pick up at the grocery store. You probably have a history of indicators that show you can do great things. Seems like that should be sufficient, right? But if it isn’t, I’m in the running for big promotion as my skills are untapped! I suggest that organizations be a little more stringent on the performance of the people they hire. If you aren’t doing a good job, then you should be given an opportunity to improve before being released. If companies want to hire like professional sports programs, then they should also fire the same way. If a leader isn’t working, there’s no need to punish everyone for their shortcomings.

So what do you think? Will hiring managers adopt this practice? Will ‘potential’ become the new currency for career success?