Sunday, August 1, 2010

Don't Be Too Specialized If You Want a Top Level Management Job

Generalists, men and women who have amassed experience with a broad spectrum of management areas, stand a better chance of making it to top management positions than those with more specialized resumes, says economist Ed Lazear of the Stanford Graduate School of Business.

STANFORD GRADUATE SCHOOL OF BUSINESS—Aiming for the C-suite? You're more likely to get there if you're a generalist.

Researching the question of just who is likely to land a C-level job (CEO, COO, CFO) and why, Stanford Graduate School of Business labor economist Edward P. Lazear has found that generalists, who have knowledge in a broad range of areas, hold a higher chance of reaching the corner office than do specialists. "The higher you get in an organization, the more likely you are to encounter problems from a variety of different areas," he says. Because CEOs in particular encounter so many different kinds of issues, "those people have to be generalists."

A CEO with strengths in only one or two narrow areas can tackle a problem in those fields, but "the difficulty is, if you get a problem in an area outside your expertise and have no knowledge there, then you totally blow it," says Lazear, the Jack Steele Parker Professor of Human Resources Management and Economics and Morris Arnold Cox Senior Fellow at the Hoover Institution. "A good CEO is someone who's very good, possibly not excellent, but very good, at almost everything," he says.

To determine the extent to which individuals are generalists, Lazear analyzed the number of prior jobs held by 5,000 respondents in a 1997 survey of 12,500 GSB alumni. Among those with at least 15 years of work experience, respondents who have had 2 or fewer roles had only a 2% chance of eventually becoming a C-level leader, while those who have held at least 5 positions had an 18% chance of reaching the top.

"People who are most likely to end up in leadership positions are ones who have had many different roles throughout their career," thereby gaining broad experience, says Lazear. In practice, becoming a generalist could entail making the rounds through various areas of a single company. Many types of organizations, ranging from the military to General Electric to small family-owned businesses, groom future leaders in that way, Lazear says.

Lazear also writes that the broader the organization an individual leads, the broader the skills he or she holds. For example, the chairs of academic departments within colleges or universities likely have a wider range of knowledge than do their colleagues, but their skills still aren't as broad as those of corporate CEOs. Analogously, the skills of political leaders tend to be the least specialized and the broadest of all, because political leaders confront the entire spectrum of possible decisions, Lazear writes.

But don't C-level leaders just hire other executives and managers to oversee individual areas of the company? Yes, but hiring someone requires that you understand enough about each area so you're able to identify the right person for the job. "Putting together a team is a generalist's skill. 'Just hiring someone' is not so easy," Lazear says.

Lazear's research also suggests that certain jobs, including those in banking, senior-level finance, and marketing, are more likely to lead to the corner office because they are, in a word, visible. Higher-profile jobs that put you in what Lazear calls "publicly observed decision-making situations" let you frequently interact with many others who can see your results and recognize your abilities, and who ultimately become followers. Hence, you're becoming a leader.

Of course, merely working in marketing isn't a guarantee of reaching the C-suite. Nor is hopping through a half-dozen positions. But by developing strengths in as many areas as you can, Lazear says, "you can enhance your probability of going into leadership."