You have been in your current job for some time. You have learned a lot, acquiring valuable knowledge and skills as well as getting to know people in your workplace. You enjoy what you do. Now there is an opportunity to move to another job within the organisation. The job is quite different from what you have been doing, and it is a lateral move with no pay raise. It is not a promotion. Should you take it?
Our recent study provides compelling evidence that if your ultimate career goal is to become a top manager, you should take it. For instance, your odds of reaching the C-Suite of a large corporation will double by having three additional lateral moves like this. Our evidence is based not on anecdote or case study but on a rigorous statistical analysis of detailed work history data for the entire workforce of Denmark.
Specifically we use registry data from Denmark that provide detailed information on employment histories for the population of workers in the private sector in Denmark since 1992. The employment history data allowed us to find out who became a top manager, and perhaps more importantly, the data enabled us to construct a variable to gauge the breadth of past experiences for all workers, including both top management appointees and the other workers. As such, we were able to estimate the effect of the breadth of past experiences on the odds of top management appointments, after controlling for a variety of characteristics of individual workers and firms for which they worked.
Why is it more beneficial to become a jack of all trades through experiencing many different jobs rather than becoming a master of a few trades by spending years on a few specific jobs intensely? Corporations face a broad set of problems, and it is highly uncertain which problem they will face at any given time. Who would be better suited as a corporate leader to deal with the diversity of problems and their uncertain nature? It is the jack of all trades with a full set of competent skills rather than the master of a few trades with a limited set of extraordinarily high skills. It is true that the master of a few trades will excel if a problem happens to be in one of those few trades but he/she will fail otherwise. The odds of facing a problem that happens to match his/her skills are generally small. We find additional evidence to support our story. The benefit of becoming a jack of all trades is found to be smaller when the firm’s underlying technology is relatively new. In such new technical fields, the main issues that top management is required to solve are likely to be about the new technology per se. In other more established fields, the issues that top management needs to solve will come from anywhere, making the value of having a jack of all trades as top management greater.
We further explore the relationship between the breadth of experiences and the odds of top management appointments. First, while the breadth of past experiences in different firms helps increase the odds of top management appointments, it is definitely better to get the breadth of past experiences in the same firm. Why? It is because not all of what you learn on the job is useful if you move to a different company. For example, when facing a problem, a corporate leader who has worked in a variety of jobs within the organisation is more likely to know which colleagues are apt to have helpful information. Such knowledge will be useless if he/she becomes a top manager for a different firm. Your broad experiences within the organisation are thus more valuable if you stay in the organisation.
The strategy of obtaining diverse experiences in one firm is consistent with job rotation programmes used by many large firms for the development of future corporate leaders. Such firms hire people fresh from university and place them in job rotation programmes during the first years of employment in which they are rotated among diverse jobs every six to 12 months.
Second, the benefit of experiencing diverse jobs is significantly greater for more highly educated workers. What you learn at school may not be immediately useful for your job, but it will help you to become a better learner who can accumulate knowledge and skills on the job more effectively when placed in different roles.
Third, having a master’s degree is particularly beneficial for women’s career advancement. The odds of reaching the C-Suite for female college graduates are only one-third of those for their male counterparts. The gender gap in the odds of top management appointments narrows substantially among those with master’s degrees — the odds for women with master’s degrees are 60 per cent of those for their male counterparts. If you are a woman with ambition to move up the promotion ladder and reach top management, you may want to consider enrolling in a master’s degree programme at a reputable university.
Why is schooling more beneficial for women than for men? Suppose you are an aspiring female worker with high ability. Your boss observes you on the job and learns that you are indeed a high-ability worker. However, your boss hesitates to promote you to a higher position, fearing that other firms observe your promotion, learn of your high ability, and try to steal you. Your boss’s fear would be less acute if you were a man, for your boss might think that your ability has been already revealed to the other firms through the old-boy network. It follows that you are less likely to be promoted than your male counterparts. You may be able to overcome this gender gap in promotion by obtaining a substitute for the old-boy network. A graduate degree at a reputable school may serve this purpose for you.
- This blog post is based on the authors’ paper Human Capital and Career Success: Evidence from Linked Employer‐Employee Data, The Economic Journal, 2018, Volume128, Issue 613.
- The post gives the views of its authors, not the position of LSE Business Review or the London School of Economics.
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Anders Frederiksen is professor in business economics and econometrics at Aarhus University (AU), Denmark. He has served as head of department at department of business development and technology (AU) since 2015, and is the director of the Center for Corporate Performance (domiciled at Copenhagen Business School). He obtained his PhD in economics from AU (2005). His main research area is personnel economics and more broadly labour economics, and he teaches within these fields. He has received the Tuborg and Tietgen prizes for academic excellence.
Takao Kato is W.S. Schupf Professor in Far Eastern Studies and professor of economics at Colgate University. He pioneered the econometric analysis of employee participation and innovative work practices of Japanese and Korean firms. While continuing to work in this area, he has also been studying corporate governance, executive compensation, and promotion tournament in Japan, Korea, China, and Denmark. Kato is research fellow, IZA-Bonn; research associate, CJEB (Columbia Business School) and CCP (Copenhagen Business School and Aarhus University); faculty fellow and mentor, SMLR (Rutgers); research fellow, TCER-Tokyo; and senior fellow, ETLA (Helsinki). He received his Ph.D. in economics from Queen’s University, Canada in 1986.