Leadership Spotlight

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Plateauing: Redefining Success at Work

Why some talented managers are choosing balance over the boardroom

As an executive coach who works with corporations, Monica McGrath has her ear to the ground. And what she is hearing is this: A number of men and women in middle management are increasingly reluctant to take the next step in their careers because the corporate ladder is not as appealing as it used to be, and the price to climb it is too high. "These people are still ambitious, and they are still driving. They just aren't driving for the same things they were driving for 15 years ago," she says.

What may be happening, suggest McGrath and others, is that people are setting career paths based on their own values and definitions of success. They are not burned out or dropping out; they are not going back to school and changing careers; they are not having a mid-life crisis. Instead, they are redefining how they can keep contributing to their organizations, but on their own terms. Rather than subscribe to the "onward and upward" motto, they are more interested in "plateauing," unhooking from the pressure to follow an upward path that someone else has set.

A number of oft-cited trends in the workplace contribute to this phenomenon: Technological advancements are breaking down the barriers between work and non-work hours, adding to the pressure to constantly be on the job or on call. Strategic decisions like restructuring, downsizing, and outsourcing are adding to job uncertainty at all levels and reducing the number of promotions available to mid- and upper-level managers. The continuing influx of women into the workforce keeps raising the level of stress when it comes to work/life balance issues.

Lois Backon, a vice president at Families and Work Institute (FWI), a New York-based non-profit research organization, points to a report FWI does every five years entitled, "National Study of the Changing Work Force." The latest one was released in 2003. One of their areas of research relates to what the organization calls "reduced aspirations" among various sectors of the workforce. "This is an incredibly important issue, and it offers some of the most troubling data out there for corporate America," she notes.

For example, in one of its latest reports, "Generation & Gender (2004)," which uses data from the national study to determine differences among generations, FWI found that fewer employees aspired to positions of greater responsibility than in the past. Among college- educated men of Gen-Y, Gen-X, and boomer ages, 68% wanted to move into jobs with more responsibility in 1992, versus only 52% in 2002. Among college- educated women of Gen-Y, Gen-X, and boomer ages, the decrease was even higher: 57% wanted to move into jobs with more responsibility in 1992 versus 36% in 2002. (Generation Y is typically defined as those born between 1980 and 1995, Generation X as those born between 1965 and 1980.)

"We then did a more focused look at leaders in the global economy," Backon says. "We took the top 10 multinational companies—such as Citicorp and IBM—and conducted in-depth interviews with the top 100 men and top 100 women. Of those leaders, 34% of the women and 21% of the men said they have reduced their career aspirations."

This plateauing is part of a bigger phenomenon in the workforce—one that also includes people putting higher priorities on activities outside their jobs, from family to volunteer work to hobbies. For example, in the FWI study, the reason that the majority (67%) of these leaders gave for their response was "not that they couldn't do the work, but that the sacrifices they would have to make in their personal lives were too great," says Backon.

"We call it 'negative spillover from their jobs to their homes,'" Backon adds. "The whole issue of overwork, of needing to multitask, of having to deal with numerous interruptions during their work day" affects employee attitude, not just toward their jobs but also their free time. "Based on our research, we know that 54% of employees are less than fully satisfied with their jobs, 38% are likely to actively look for new employment in the next year and 39% of employees feel they are not engaged in the work they are doing." Most employees "do want to feel engaged by their jobs. The term 'reduced aspirations' does not mean they are not talented or not good at what they do. They are. But in focus groups, they also say things like, 'I need to make these choices because my family is a priority,' or 'I need to make these choices to make my life work.'"

One way to look at this phenomenon, adds Wharton's Nancy Rothbard, an assistant professor of management, is that some employees "still derive some sense of identity from their jobs but they have, or are seeking, other ways to get that fulfillment." They are no longer pushing for the bigger raise, the larger staff, the more prestigious title; "they are taking energy that had been focused primarily on goals defined by the corporation and focusing it elsewhere."

Fewer promotions, Fewer pensions

Peter Cappelli, director of Wharton's Center for Human Resources and George W. Taylor Professor of Management, has done extensive research into the changing nature of the workplace. As he and others have noted, companies no longer promise job security, generous benefits packages, or even pensions, and employees no longer feel loyal to their employers or obligated to stay for long periods of time. Employees are responsible for managing their own career track and seeking out the mentors and training they need to move on in their current company or, just as likely, in a new company.

Cappelli agrees that organizations "don't have quite as much influence over people as they used to in terms of shaping their goals and aspirations, in part because people come to these jobs at an older age and change jobs more frequently than in the past. Does that necessarily mean people are on their own career path? It depends what you mean by that. I'm not sure it means they are eschewing corporate success. But they are looking outside their current employer's definition of success, more so than in the past."

Cappelli cautions, however, that it's unlikely employees can go on cruise control and still hope to be retained and valued by their employers. "It used to be you could just lie low and wait for the pension. That doesn't happen much any more." And while some employees may not pay as much attention to the goals that their companies want them to pursue, they "continue to work hard because they are afraid of being laid off.... Companies systematically go through and fire people who are not pulling their weight. The ability to punish people into appropriate behavior is one of the great and unpleasant lessons of the 1980s. Employee morale sank and productivity stayed up because people were afraid of being fired," Cappelli notes, adding, however, that this dynamic changes in a tight labor market.

Wharton's Sara Kaplan, an assistant professor of management, "could imagine a scenario where people have discovered that there is not too much point being loyal to their employers, and then go on to say, 'Okay, I have gotten where I am going to get, and I am going to focus on the other part of my life. I will keep working but won't invest all my energy in my job.'"

But Kaplan also thinks "everyone needs something to be passionate about, so it would be hard for me to imagine that people would simply ramp down on their job without having a crisis or without having found something else" to interest them. Indeed, in today's economy, she adds, "you can't keep your job unless you are engaged, to a certain extent. Corporations don't want people who don't want to go higher. They don't want people who won't strive. You can't plateau; there are always people biting at your heels."

Directly related to the issue of job satisfaction is the question of job design. "Management scholars have been studying this for a long time," says Sigal Barsade, Wharton associate professor of management. "Whenever a company designs a job, it must take into account how employees view that job, whether their goal is to get ahead, whether work is central to their lives, and so forth. A company can make a real error trying to redesign a job to be more enriched if the employee doesn't want that," especially if the new job definition requires them to work harder.

What is crucial, Barsade says, "is good job fit. Is the person doing what the company needs done? If the answer is 'yes' and the person also is good at what they do but simply doesn't want to do more, then that could actually be a good situation, especially for jobs that don't include room for promotion." This is applicable in particular to customer service positions where people need to be engaged while they are providing the service, but are not expected to be thinking of ways to redesign the whole customer service system. "So the fit needs to be between what the organization needs and what the employee wants and values. If that fit isn't there, that's when you are going to have a problem."

Making Tradeoffs

Kathleen Christensen, who directs The Program on The Workplace, Work Force, and Working Families at the Alfred P. Sloan Foundation, suggests that plateauing in one's job "is a completely natural part of a career, but we ignore it because we have this notion of a steep trajectory." Psychologists, she says, "talk about different stages of human development. One stage may be that as people reach middle age, there is the idea of generativity—a willingness at this point to start giving back, perhaps start cultivating others rather than just" focusing on your own achievements. Plateauing can be desirable, she says, in that employees "are likely to have a great deal of institutional knowledge. They can be the ones who know the processes, can share them and guide others. If everyone is always out for themselves, it goes counter to developing the team culture that every company wants."

No matter how people define their jobs, Christensen adds, "they still must have performance goals, and be evaluated in terms of how well they meet those goals. But we should also recognize that at different points in people's lives, they may define their performance goals in slightly different ways—they may move at different tempos—and still be well within what the company needs in order to achieve its business goals."

Plateauing cuts across all boundaries, Christensen suggests, and it could be the result of certain events in people's lives—like the birth of a child or the need to care for a sick parent—which lead an employee to decide, "I'm going to hold my own but not try to climb." But it would be "a mistake to assume that all the factors that lead to different tempos are due only to outside forces. It could just be an employees' own decision not to try to climb" in the organization. It doesn't mean they are slacking off. "Someone can be working hard and still be plateauing in a career," Christensen says.

At Deloitte & Touche USA LLP, senior advisor Anne Weisberg is involved with a pilot program called mass career customization, which allows employer and employee together to customize an individual's career "along a defined set of options." It's a realization, she says, that "the 'one size fits all' approach no longer works." In the pilot program, which started in June with a practice group of 400 people and will run for a year, "we have unbundled the career into four dimensions: role, pace, location and schedule, and work load." Under the role dimension, employees can specify, for example, whether they want an external role involving significant client interaction, an internal role without that client service aspect, or a role somewhere between the two. Under pace, the issue is how quickly an employee wants to move up. Under location and schedule, issues such as part-time hours, working at home, and willingness to travel are included, while work load looks at variables like the number of projects an employee is wiling to undertake at any one time.

"There are tradeoffs to these choices," Weisberg emphasizes. "A totally internal role has a different compensation structure and advancement route. But the tradeoffs are articulated and an employee can move from one set of options to another. It's a recognition that people need to fit their work into their life and their life into their work over the course of their career, which is 40 years. No one solution will work" for all that time. (Interestingly, she notes, the pilot program so far has found that "rather than dialing down on their careers, most of the practice group is choosing to dial up," reflecting, in part, the fact that 65% of Deloitte's employees are under the age of 35.)

Companies can't redefine the corporate ladder "with a different model that is just as rigid," Weisberg adds. "We need to replace the corporate ladder with a corporate lattice"—a term implying a more adaptive kind of framework which allows an individual to move in many different directions, not just upward or downward. "I know in many companies, employees are evaluated on the basis of how much time they spend on the job or how many sacrifices they make. That paradigm has to shift so that you look at performance and contribution separate from sacrifice."

Weisberg, senior advisor to Deloitte's Women's Initiative, says that when the initiative was started in 1993, it was concerned primarily with women's career paths, which are very different from men's. (For example, the vast majority of women, about 80%, do not work fulltime continuously throughout their career, whereas the vast majority of men do, she notes.) "But we quickly realized these issues affect many groups other than women, including men, members of Gen X and Gen Y who perhaps want to accelerate early and then decelerate later, and the baby boomers" who are trying to adjust their workloads to accommodate interests or responsibilities outside of work. What's been missing, she says, "is a way to approach all these different people with a consistent set of options." On the micro level, she adds, "it is fundamentally a negotiation between the employer and employee," which is why it is so important to develop "the right kind of negotiation framework."

In scanning the 2006 employment landscape, Weisberg says she sees a "heating up of the war for talent. If you look at the demographics, there is a huge shortage in many of the knowledge- based industries. That is going to be with us for a long time." She cites a recent statistic that women now make up 58% of college graduates, a trend that should affect even more how jobs and careers are structured. "Smart employers don't want to drive their employees so hard that they burn out. That is very expensive."

In the past, she says, "we used 150% of salary as the cost of turnover. We are now using 200% of salary." Some experts say that for knowledge-based companies, that figure is 500%. "Turnover is a huge cost. One of the major reasons for doing mass career customization is to improve retention."

Weisberg, too, suggests the need for transparency in any decisions related to the work environment. When both employer and employee are clear about the choices being made, "then both sides are more satisfied with the arrangement. If choices are never discussed, you can end up with mismatched expectations, which can lead to stress on both sides."

Wharton management professor Stewart Friedman, who teaches Wharton Executive MBA students, among others, agrees that "people are struggling with this issue of, 'What do I really care about and how do I measure success?' My sense is that more people, not just middle-aged employees but younger people as well, are raising this question in ways they didn't 20 years ago. If so, is it because more people are hitting the pyramid and accepting the reality of lowered expectations caused by less upward mobility, or is it that they are part of a larger swing in our culture that is more focused on other definitions of success besides economics? I think it is probably both."

Disappearing Flex Time

It's not clear how managers in organizations might react to employees who redefine their positions as jobs rather than as vocations or callings. "They could worry that people simply decide to 'work to rule,'—i.e., do exactly what is specified and nothing more," says Rothbard. "Companies are terrified of that happening: They know things will break down at that point because you can't specify everything that has to be done in a particular job. But I think if employees' identities are still tied up in their jobs, this won't happen."

Another consideration is how to continue to motivate people if none of the traditional rewards are available—such as a promotion or a bigger office. "A company may, in fact, want employees to have other sources of fulfillment, and so will try to build in things that matter to them," says Rothbard. That could include flex time, job sharing, job sabbaticals, or the sponsorship of charity events that are meaningful to employees.

Rothbard continues to find it ironic that employees who want to "opt out" of their jobs for a short time get less pushback than women who want flex time "so that they can pick up their children from school at 4:30 instead of 5:30 every day." Rothbard cites Arlie Hochschild's book The Time Bind, which notes the exceptions available to high-potential men who want to take a sabbatical and travel around the world. In one chapter, Hochschild relates how two men had asked their supervisor for time off to do underwater photography of coral reefs. The supervisor granted them an educational leave to pursue their project. Why, the author asks, can't the company offer flexible schedules to parents who want to pick up their children early from daycare?

Rothbard also points to research on the phenomenon of "multiple roles, and the fact that there are physical as well as psychological benefits to people" who have more than one area in their lives that engages them and requires their attention. An example would be a woman who has responsibilities both at her job and with her family at home. The research discusses "the buffer hypothesis, which says that if something goes wrong in one area, you then have another area that buffers you," says Rothbard. "In other words, work/family roles enrich, rather than deplete, each other."

Originally published October 04, 2006 in Knowledge@Wharton

Wal-Mart, Posed for Expansion in china, is learning to be More chinese

Wal-mart, the largest retailer in the world, may be at the top of the Fortune 500, but it is ranked number 20 in the Chinese retail industry whereas Carrefour, its long-time rival, ranks number 5 on the list. However, following its withdrawal from Germany and South korea this spring, Wal-mart is taking significant steps to reshape itself in China.

"Wal-mart has finally used the acquisition weapon, which indicates it will be entering into a period of fast expansion," says Yurong ai, a partner in accuWin, a marketing consulting firm based in Guangzhou, a major city in south China.

Read more in English or Chinese at www.knowledgeatwharton.com.cn

Quo vadis, Spanish Stock Exchange?

In barely nine months, up to September, the Spanish stock market has handled 22 takeover bids, moving over 100,361 million euros ($128 million), according to data published by the Spanish media. There have been a dozen public stock offerings by medium-sized Spanish companies, mainly related to the construction sector.

Where is all this activity coming from? Juan mascarenas, professor at the Complutense university of madrid and an expert on mergers and acquisitions, points to various factors: "¡¦ future changes in Spanish and/or Eu legislation relating to takeovers is a phenomenon which particularly affects the operations we are seeing these days in the electricity sector and drives companies to buy now as they can gain control of a company more cheaply. There are also defensive motives, basically to avoid other bidders appearing on the scene."

Read more in English, Spanish, or Portuguese at: www.wharton.universia.net/

What Hewlett-Packard's Spying crisis tells us About the limitations of corporate Boards

The crisis at Hewlett-Packard over allegations that its chairwoman, Patricia Dunn, authorized illegal surveillance of HP board members in order to find out who leaked sensitive company information to the press, is dragging on, perhaps longer than most people first expected. and it has raised a number of important issues about corporate governance, privacy protection and surveillance of employees. Tom Donaldson, professor of legal studies and business ethics at Wharton, joined knowledge@Wharton to talk about HP's woes as they relate to business practices both in the u.S. and abroad. Donaldson's research areas include business ethics, leadership, risk management and corporate compliance. He has consulted with companies ranging from Goldman Sachs and Wachovia to Exelon and kPmG, and is currently working on articles about corporate risk management programs and cash management practices at non-profit organizations.

Listen online, download, subscribe via iTunes, or read the transcript at: http://knowledge.wharton.upenn.edu/article.cfm?articleid=1522

Despite Growing debt, the indian consumer Banks on tomorrow

Reserve Bank of india (RBi) governor Yaga Venugopal Reddy has been sermonizing from his financial pulpit these days. Reddy, the indian equivalent of Federal Reserve chairman Ben Bernanke, though with a trifle less independence, has focused on the dangers of the new credit culture. While corporate borrowers can watch out for themselves, he says, individuals are at risk.

"Rapid economic growth, coupled with demographic dynamics, has led to a significant change in consumers' perceptions in our country," Reddy said at the Foundation Day meeting of the Bank of india in September. "With a burgeoning middle class and changing lifestyle aspirations, more and more people are resorting to debt to finance their consumption and asset creation. at some stage in some cases, this could potentially lead to excesses, precipitating defaults."

Read in English at http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4105