Understanding Executive Jobs1
Running head: Understanding Executive Jobs
EXECUTIVE JOBS ARE NOT CREATED EQUAL: HOW JOBS SHAPE THE COMPETENCIES DISPLAYED BY OUTSTANDING EXECUTIVES
Guorong Zhu
Hay Group
116 Huntington Ave.
Boston, MA 02116
Phone: 617-425-4519
E-mail:
Steven B. Wolff
Hay Group
116 Huntington Ave.
Boston, MA 02116
Phone: 617-425-4525
E-mail:
Signe Spencer
Hay Group
116 Huntington Ave.
Boston, MA 02116
Phone: 617-425-4508
E-mail:
Understanding Executive Jobs1
ABSTRACT
This study sheds light on one cause of executive failures by looking at executive jobs through the lens of Person-Job fit theory. We examine two dimensions of executive jobs –degree ofaccountability for organizational results and complexity of problem solving. We show, with an international sample of 360 individualsthat effective executivesdisplay different competencies depending on the degree of accountability and the complexity of problem solving that are characteristic of the job. We explore implications of this research for creating a better match between an executive and the job – increasing the likelihood that executives will be successful in their roles.
ACKNOWLEDGEMENTS
We would like to thank Vanessa Druskat, Elizabeth Craig, Tim Hall, and Ruth Wageman for their insightful and helpful feedback on earlier drafts of this paper. We also thank the expert coders who helped us characterize executive jobs and code interview transcripts.
EXECUTIVE JOBS ARE NOT CREATED EQUAL: HOW JOBS SHAPE THE COMPETENCIES DISPLAYED BY OUTSTANDING EXECUTIVES
One of the top challenges faced by leaders at the top of organizations is finding the right executives to fill vacancies in the organization’s leadership(e.g., Barrington & Silvert, 2004). Increasingly high turnover rates among corporate executives are making headline news (e.g., Gerdes, 2007; Mogel, 2006). This challenge seems to be growing as the current generation of leadersbegins to retire, and organizations frequently fail to find executives who excel in leadership jobs (Economist, 2003a, 2003b). Increasing numbers of organizations are reporting serious issues with leadership succession, as their current selection practices result in unsuccessful placements eitherbecause the manager fails to deliver results (Ulrich, Zenger & Smallwood, 1999) or he or she is unhappy in the job and leaves(Pomeroy, 2005). Because executive failures can be very costly for a company(Fernandez-Araoz, 2005), the need to find the right executives is imperative.
In this study we use Person-Job fit theory as a lens through which to examine the problem of matching executives to the job. The Person-Job fit perspective states that successful job performance requires a person’s abilitiesto be matched to the demands of the job(Kristof, 1996). Doing so, however, presumes that we adequately understand the demands of the job and the matching characteristics of the person that lead to successful performance. Research on matching people to jobs is extensive (see Kristof-Brown, Zimmerman & Johnson, 2005; Kristof), however, the understanding of executive jobs as compared with frontline task-performing roles or lower supervisory jobs is seriously under-nuanced and often ineffective (Economist, 2003a, 2003b; Fernandez-Araoz, 1999). As Finkelstein & Hambrick(1996)state in their book on strategic leadership, research on executive leadership often assumes that the difficulty of the job is relatively constant across a variety of roles. The early derailments of several previously successful leaders at high-profile companies, e.g., Xerox, P&G, Lucent(Conger & Nadler, 2004),illustrates the potentially costly consequences of not understanding differences in executive jobs.
To avoid failures related to a mismatch of job demands with the executive’s capabilities, we must first gain a more nuanced perspective of how executive jobs vary. The field study presented here examines two dimensions of executive jobs that create varying demands on executives but have typically not been considered when trying to match an executive to the job: (1) the degree of accountability of the job for the organization’s financial results, i.e., the extent to which an executive has direct control over the factors affecting profitability, such as type and price of products, efficiency of production, sales strategies, etc.; and (2) the degree of overall complexity in problem solving associated with the job. We will argue that differences in these dimensions create different job demandson persons,and thus require different abilities for success.
This study proceedsfrom the assumption that the success of outstanding performers in different jobs occurs because those executives have and demonstrate specific abilities that fulfill the demands of their jobs. We study 360outstanding performers in a range of executive jobs from 7 regions of the world, including 42 organizations in 12 industries. We test whether abilities displayed by outstanding performers, defined as those nominated in the top 10% of executives in the company,vary with the characteristics of their specific jobs.
Person-Job Fit
Person-Job fit theory offers one lens through which we can understand the relation of competencies displayed by outstanding performers and job characteristics. According to the theory, job performance is related to how well a person is matched to the job (Kristof, 1996). Thus, if we assume outstanding performers are matched to their jobs, then Person-Job fit theory leads to the conclusion that executives in jobs with different demands will display different competencies. When executives are moved to new jobs, new demands are placed on the executive. Thus, failure when making a transition from one role to another can be ascribed, in part, to a mismatch between the demands of the new job and the characteristics of the executive.
When examining fit between a person and their job it is important to keep in mind that there are many kinds of fit. Person-Job fit is a subset of the broader Person-Organization fit; and within Person-Job fit one can look at matches between the demands of the job and the abilities of the person (demands-abilities fit) as discussed above. However, other perspectives on fit are also possible, e.g., matching what the person needs from the job with what the job supplies (needs-supplies fit)(Kristof, 1996). At the executive level, various types of fit have been examined; however none of the research looks at specific characteristics of the executive’s job and the abilities required by those jobs. In fact,the only study we found that uses a framework that includes specific characteristics of the job to classify an executive’s role was done by Drazin and Rao (1999) but they study succession rather than fit with capabilities. They classify executive roles based on two characteristics of the job: distance from the top of the organization and degree of job specialization.
The lack of Person-Job fit research examining specific characteristics of executive jobs is somewhat surprising given the importance of the job and the potential of such a fit to explain differences in performance. For example, a comprehensive meta-analysis of Person-Job fit research by Kristof-Brown, Zimmerman, and Johnson (2005) found that matching the demands of a job to a person’s abilities explains 30.6% of the variance in job performance and 40.9% of the variance in job satisfaction. Very little of the research identified in the meta-analysis, however, was focused on executives.
At the executive level, research has examined various types of fit but little of it focuses specifically on the demands-abilities form of Person-Job fit. For example, studies have examined the fit between an executive’s industry, business, and functional experience/expertise and the organization’s context such as stage in the life-cycle (Gupta & Govindarajan, 1984), characteristics of the business cycle (Bassett, 1969; Dess & Picken, 2000), and organizational strategy (Beal & Yasai-Ardekani, 2000; Guthrie & Datta, 1997; Thomas & Ramaswamy, 1996). These are important forms of Person-Jobmatching but they do not identify abilities required to meet the unique demands of a particular job.
Other studies examine required abilities that are common to all leadership positions without analyzing the specific job. Common leadership skills identified include: communication, managing change, networking (Raelin, 1997), conflict management, team building, integrity (Jordan & Schraeder, 2003), self-awareness, adaptability, and learning (Hall & Moss, 1998). Similarly, the fact that executives need specialized skills related to their area of technical expertise is widely acknowledged (Castanias & Helfat, 1991; Fernandez-Araoz, 2005; Jordan & Schraeder, 2003), but there is little recognition that all jobs requiring the application of these specialized skills are not the same (Hayes, Rose-Quirie & Allinson, 2000). There are also studies that examine specific positions but do not examine the job in a way that can be generalized beyond the role being studied, e.g., project managers (Dainty & Cheng, 2005), sports managers (Horch, 2003), or safety managers (Blair, 1999).
When the specific job is considered at the executive level, a match is often made by placing the job into a general category, e.g., level in the organization(O'Roark, 2002), functional area(Pavett & Lau, 1983), or execution of similar strategies (Beal & Yasai-Ardekani, 2000)and then looking for abilities that are commonly displayed by people with jobs in those categories. This approach can lead to mismatches between the job and an executive because all jobs in the same general category are not, in fact, the same. The CEO of a small company faces very different challenges than a CEO of a Fortune 500 company. An IT manager in a bank has a very different job than an IT manager in a consulting firm. Although there is value to matching an executive’s abilities to a job based on factors common across jobs, this approach needs to be supplemented by matching the executive’s abilities to the specific characteristics of the particular job.
Characteristics of Executive Jobs
Although there are potentially many characteristics that could be considered when defining executive jobs, the purpose of our research is not to define all important characteristics of the executive job but to demonstrate that there are indeed job characteristics that lead to differences in the competencies displayed by outstanding performers. Because of the limited research on demands-abilities Person-Job fit for executives and specific characteristics that can be used to classify executive jobs, we see this study as a first step toward demonstrating the need to better understand specific characteristics of executive roles and thus spark additional research that can help us more fully characterize important aspects of the executive’s job and ultimately reduce executive failures.
In choosing job characteristics to examine for this study we sought a set of characteristics that were neither so specific that they could not be generalized across executive positions nor so general that they would not adequately differentiate among executive roles. We also were interested in aspects of the executive job that have been treated in the research literature, albeit not necessarily as a means of matching an executive’s abilities with the demands of the job. To define the dimensions of the executive job we took advantage of the existing methodology called the “Guide Chart Profile,” which is one of the most commonly used job evaluation methodin practice (Armstrong, 2006; Gomez-Mejia, Balkin & Cardy, 2007). It includestwo characteristics that can be used to define any executive job: the degree of complexity of problem solving required by the job and the degree of accountability for bottom-line organizational results (Hay, 1958). Problem-solving is the “use of the know-how required by the job, to identify, define, and resolve problems” (Bellak, 1984, p. 15/2). Accountability represents the “measured effect of the job on the end results of the organization,” usually the financial or bottom-line results(Bellak, p. 15/4).Because problem-solving complexity and degree of accountability are aspects of work common to all jobs, but which also vary systematically across jobs, they can be used to analyze any executive job independent of the job title or organization (Skenes & Kleiner, 2003). In the next sections, we discuss these dimensions in more detail. Both dimensions are theoretically continuous and are discussed as such in the following sections; however, as we explain in the methods section, in practice the dimensions are divided into discrete categories.
Problem solving complexity.Complexityin the use of data is a characteristic commonly used to distinguish one job from another. For example, the Dictionary of Occupational Titles(U.S. Department of Labor, 1991) classifies jobs into seven levels of complexity based on the use of data. Executives use data and knowledge to identify and solve organizational problems and make strategic decisions (Mumford, Zaccaro, Harding, Jacobs & Fleishman, 2000). Executive jobs, therefore, can be arrayed along a dimension that characterizes the degree of complexity in problem solving required by the job. Some executive jobs are routine with clearly defined problems. For example, an executive running a large manufacturing operation where the company is in a relatively stable environment, not engaged in a turnaround, and has already adopted efficiency measures such as six sigma needs to make relatively routine and non-complex decisions. Other executives operate in an environment that is new and uncharted with few guidelines for solving problems and making decisions (Bellak, 1984). For example, the head of human resources in a company that is expanding into three new countries on different continents must make some complex and difficult decisions as policy is formulated for the organization. A number of factors affect the degree of complexity in problem solving, e.g., the size and scope of the job as well as the length of time that the executive must look ahead in making strategic decisions. The degree of complexity in problem solving is a characteristic of the job itself and can be estimated independent of job title, organization, industry, or the person holding the job.
Accountability for organizational results.The degree to which a person in a given job is accountable for organizational results is a second characteristic that can be used to distinguish one job from another. It identifies the relevant andimportant differences between jobs in terms of how each job impacts the end results of business performance (Church & Waclawski, 2001). A 2003 survey of job evaluation practices found that accountability is one of the most frequently used factors to analyze and evaluate jobs across companies (Armstrong, 2006).
The conceptualization of jobs as having varying degrees of accountability for organizational results has a long history dating back to classic organization theory. The line-staffform of organization structurewas developed to reconcile the need for specialized expertise in the managerial decision making process with the need to maintain clarity, responsibility, and accountability for organizational results (Galbraith, 1977). At one end of the accountability dimension are jobs with direct responsibility for organizational results, e.g., typical operations roles such as a manufacturing executive in a company whose business is the production of goods. Such jobs are typically referred to as “line” jobs (Browne & Golembiewski, 1974; Pfeffer, 1977). At the other end of the accountability dimension are those jobs that provide expertise to the line manager, e.g., support or advisory roles such as Human Resources director or Legal Counsel in a manufacturing organization. These jobs are often referred to as “staff” jobs (Browne & Golembiewski; Pfeffer) and are only indirectly accountable for organizational results by increasing the effectiveness of line managers and by providing services the business needs to operate but which line managers do not have the expertise to provide.
Executive Abilities
We now turn to identifying a set of executive abilities that we hypothesize will be elicited differentially depending on the combination of job characteristics described above.We focus onabilities that have been shown to be related to outstanding executive performance in general. At the same time, we sought characteristics fine-grained enough in their definitions and measurements that they wouldbe likely to show differences in outstanding performers in different executive roles. Although there are numerous abilities that could fit these criteria, we chose to use the leadership competencies identified by Boyatzis (1982) and further refined by Spencer and Spencer (1993). We draw on an archival database of this set of competencies.A large number of individual executive assessments against these competencies were available, along with associated data on the executives’ jobs and the adequacy of their performance.
Competencies represent abilities and personal characteristics that are relatively enduring, “anunderlying characteristic of an individualwhich is causally related to effective or superiorperformance in a job(Briscoe & Hall, 1999, p. 37).” Spencer and Spencer (1993)identified levels of sophistication or intensity for each competency they identified and McClelland (1998) showed that these competency levels are indeed associated with performance of executives in general. Throughout this paper, when competencies from Spencer and Spencer are used, they will be indicated by italics and capitalization to indicate that the Spencer and Spencer definitions of these characteristics and their levels of sophistication are being used.
Study Hypotheses
To this point we have identified a set of job characteristics and competencies that allow for a demands-abilities assessment when matching executives to their jobs. In this section we identify specific hypotheses that link the job characteristics and competencies.
Competencies expected to vary with accountability for organizational results.Accountability for organizational results increases with the degree of direct control the executive has on organizational outcomes (Bellak, 1984). Thus, although an executive in a support roleaffects the ability of others to achieve results, his or her job is not rated as high in accountability for organizational results asan executive directly responsible for bottom-line results. When executives are more directly accountable for organizational results they must be constantly looking for new ways to improve performance, set standards, and measure them (Boyatzis, 1982; Ulrich et al., 1999). Thus, one competency that we expect to be associated with the increased accountability for organizational resultsisAchievement Orientation,which is defined as the sophistication andcompleteness with which one thinks about meeting and/or surpassing performance standards. This includes a concern for surpassing a standard of excellence. The standard may be one’s own past performance (striving for improvement); an objective measure (results orientation); outperforming others (competitiveness); challenging goals one has set, or even what anyone has ever done (innovation)(Spencer & Spencer, 1993). Although all executives need a baseline level of achievement orientation, as evidenced by its relation to management performance in general (Boyatzis; McClelland, 1998), we expect that as accountability for the organization’s financial results increases, outstandingperformancewillrequire greater levels of Achievement Orientation. Thus we hypothesize: