The Clean Slate Effect 1
An examination of the effects of early and late entry on career attainment:
The clean slate effect?
Amy E. Hurley
Chapman University
1 University Dr.
Orange, CA 92866
(714) 628-7312 (Phone)(714) 628-7350 (Fax)
Stefan Wally
Chapman University
School of Business and Economics
1 University Dr.
Orange, CA 92866
(714) 997-6822 (Phone) (714) 532-0861 (Fax)
Sharon L. Segrest * Please address all correspondence to this author*
California State University, Fullerton
College of Business and Economics
Department of Management
800 N. State College Blvd.
Fullerton, CA 92834-6848
(714) 278-4555 (Phone) (714) 278-2645 (Fax)
Terri Scandura
University of Miami
School of Business Administration
Department of Management
414 Jenkins Building
Coral Gables, FL 33124-9145
(305)284-3746 (Phone) (305)284-1878 (Fax)
Jeffrey A. Sonnenfeld
Yale School of Management
135 Prospect St.
New Haven, CT 06520-8200
(203) 432-5955 (Phone) (203) 432-8466 (Fax)
An examination of the effects of early and late entry on career attainment:
The clean slate effect?
Abstract
Literature on tournament mobility in Internal Labor Markets (ILMs) is reviewed revealing a paucity of studies examining the promotion patterns of late entrants into internal promotion systems. An investigation of N=502 managers in a large corporation indicated that late entry into the ILM organization was significantly and positively related to career attainment, supporting the "clean slate effect”. In addition, experience in the corporate office was positively related to managerial career attainment, while being female was negatively related to career attainment. In contrast to the tournament model theory, the number of years to reach middle management was positively related to career success. While no effect for race was found, this may be due to the relatively low representation of minorities in the firm studied. We did not find moderating effects of late entry on gender, race, or corporate experience.
Key Words: Tournament Model, Career Mobility, Career Attainment, Minorities, Gender
An examination of the effects of early and late entry on career attainment:
The clean slate effect?
To select and retain the best employees, managers must be aware of the determinants of career attainment in their firm (Rosenbaum, 1989). In order to better understand the determinants of career success, many different models and variables have been used (Judge, Cable, Boudreau, and Bretz, 1995; Kirchmeyer, 1998; Rosenbaum, 1989; Seibert, Crant, and Kraimer, 1999; Seibert, Kraimer, and Liden, 2001). Career attainment has been defined in various ways in previous research. Both external and internal variables have been used to represent career attainment. Extrinsic variables have included salary (Seibert, Kraimer, and Liden, 2001), promotions (Wayne, Liden, Kraimer, and Graf, 1999), and hierarchical level (Hurley and Sonnenfeld, 1999), while intrinsic variables have included feelings of accomplishment, job satisfaction and career satisfaction (London and Stumpf, 1982; Judge and Bretz, 1994). In this paper we define career attainment as hierarchical level attained in organization.
The tournament model of career mobility is frequently used to describe managerial career attainment determinants in internal labor market firms (ILM). Within ILM firms potential employees encounter barriers to entry into the firms' workforce and are restricted to a number of low-level positions from which they must work their way up (Scott, 1987). The tournament model of careers contends that organizations operate similarly to sports tournaments with a set number of rounds and only the winners of each round are allowed to compete at the next level. In organizations employees must win each round and earn the promotion in order to move into higher levels of management (Rosenbaum, 1989). Rosenbaum (1989) used signaling theory to describe the process surrounding decisions about who wins the tournament round. Signaling theory posits that because of the difficulty of getting information about a person's ability, employers will use indicators of employee ability to make promotion decisions. Studies have suggested that managers have often used organizational experience factors as signals of an employee’s abilities (Hurley and Sonnenfeld, 1998; Rosenbaum, 1989). Within an ILM firm, these signals are derived from an employee’s work history within the firm.
Research indicates that in order to remain competitive, ILMs should hire some high-level managers from the external labor market. Some researchers suggest that hiring external labor market managers is important in order for the organizations to avoid becoming “dinosaurs” (Lawler and Galbraith, 1994). Dinosaur organizations are unable to respond quickly to their changing environments. Managers are advised to hire specialists from outside their organizations to remain competitive.
When external hires are made into managerial levels in an ILM organization, the tournament model may have to be modified. External hires do not provide the work history signals that managers may use when making promotion decisions. This may be beneficial for the external management hires. These external hires enter the firm with a “clean slate.” Information may only be available on their past career successes while internal candidates have information on both their past career successes and mistakes available to those making promotion decisions.
The purpose of this paper is to contribute to tournament mobility research on careers by examining the promotion patterns of employees within an ILM organization, in comparison to "late entrants", those entering managerial levels from the external labor market. An ILM organization provides the ideal research site within which to study management selection. However, few organizations are willing to open up their records regarding management promotions, limiting research on ILM organizations (Powell and Butterfield, 1994). Also, because of firms' reluctance to share internal organizational records, those studies that have focused on or included top managers often find it necessary to use self-reported surveys (Tharenou, Latimer and Conroy, 1994). This study examines the career attainment of both late entrants into an organization and those who entered the organization at entry-level positions. Data collected from the human resource information system of a large US based corporation enabled us to research the effects of various factors on external and internal managerial career attainment in an internal labor market.
Internal Versus External Labor Markets
Organizations have always been faced with the dilemma of using an external or internal labor market (Brett and Stroh, 1997; Sonnenfeld, 1989). Hiring and promotion practices vary depending upon whether firms use internal or external labor markets. External labor market organizations will concentrate on recruiting from the outside, while internal labor market firms will concentrate on promotions from within (Brett and Stroh, 1997; Sonnenfeld, 1989).
Organizations that depend on an internal labor market may make hiring with the assumption that the new hires will stay with the company for a long time. Internal labor market organizations will focus on recruiting internally in order to reduce turnover and keep the transaction costs associated with turnover to a minimum while at the same time helping the firm to obtain greater employee loyalty (Cappelli and Cascio, 1991; Sonnenfeld, 1989). Firms limited to an ILM may not be getting the best talent available (Osterman, 1984). ILM organizations primarily rely on existing employees and when possible do not look to the external market to replace employees with the most talented individuals available in the market.
Firms primarily relying on external labor markets are often perceived as making hiring decisions with a short-term outlook and hiring individuals with the idea that they can be easily replaced. Economists and social theorists have argued for the use of external labor markets, because when external labor markets are used, labor can be used until its marginal contribution no longer exceeds its marginal cost (Sonnenfeld, 1989). Organizations may use different labor markets depending on the degree of professionalism or specialization a firm requires. If a worker's skills are highly portable, that employee is generally more easily replaced. If a firm requires a high degree of specialization, employees with these skills are not easily replaced and the organization must attempt to retain such employees. However, in a tight labor market no one is easily replaced.
Literature Review And Hypotheses
Late Entrants as Clean Slates
Even in an internal labor market organization, some managers will be hired externally. When this happens, the basic premise of the ILM organization does not hold. In effect, these individuals enter the organizations later in their careers and have no history with the company. They may be seen by their superiors as "clean slates" in that only recruiting information is available on their career histories. In contrast, those who have been with the company throughout their careers are well known to those making promotion decisions. Hence, their earlier career mistakes may be known to upper level management. Also, those who enter late into an ILM organization at managerial ranks are often hired as the result of informal recommendations or through headhunters, and upper level managers may have a higher set of performance expectations for the late entry managers. The "clean slate" effect suggests that those entering late into an ILM organization will have accelerated promotions, due to their hire from outside being viewed as a signal of their potential for upper level management.
H1:Being a late (external) entrant will be positively related to career attainment (measured by managerial rank) in the organization.
Rosenbaum (1984) found that early career success was related to promotions of managers within ILM organizations, which he referred to as the "tournament mobility" model of career attainment. Early career losses in terms of promotion preclude managers from playing in the next round; they are not eligible for higher promotions. Early career attainment has been found to be a key predictor of management success in the careers literature (Forbes, 1987; Kirchmeyer, 1998; Rosenbaum, 1989). Based upon the tournament mobility model, it is expected that less time to reach middle management in the ILM organization studied is associated with higher levels of career attainment.
H2:The number of years before reaching middle management will be negatively related to career attainment in the organization.
Gender and Race Effects on Career Attainment
Many studies of tournament mobility in ILM organizations have been limited to white male employees due to characteristics of the study samples available (Forbes, 1987; Rosenbaum, 1984). However, the managerial sample for the present study of tournament mobility in an ILM organization included males, females, whites and non-whites, allowing effects of gender and race to be investigated. Gender and race may be used by managers as signals when making promotion decisions (Martin, Harrison and Dinitto, 1983). Research has found that gender and race are criteria commonly used either directly or indirectly to make managerial promotion decisions (Powell and Butterfield, 1997; Stumpf and London, 1981; Tharenou, 2001).
One study utilizing actual promotion decision records did not find the expected discrimination against women (Powell and Butterfield, 1994). The authors attributed this surprising finding to the fact that the study took place in a federal government department that may have had a special commitment to equal employment opportunity. A recent study did find that women indicated that gender discrimination was the most frequent barrier to promotion at all managerial levels (Metz and Tharenou, 2001).
It has also been found that male executives often prefer to promote other men to leadership positions, because they prefer peers who are similar to themselves (Ibarra, 1992). Further, selective advancement patterns based on gender have been demonstrated in the literature, suggesting that organizational promotion policies favor men over women (Brett and Stroh, 1999; Baron, Davis-Blake and Bielby, 1986). Female managers still are often at a disadvantage with regards to income, relocation opportunities, and work and family balance (Brett and Stroh, 1999).
H3:Males will have higher career attainment than females in the organization.
Race is also often highly correlated with organizational positions (Ibarra, 1992). Despite the recent emphasis on valuing diversity, minorities in top management are still underrepresented. The proportion of minorities in top management positions in U. S. organizations is less than 1 percent (Korn/Ferry International, 1990). This may be due to the “glass ceiling” effect that prevents minorities from being promoted into the upper echelons (Corsun and Costen, 2001). It has been suggested that race may indirectly affect career success through important variables such as education level, work experience, performance evaluation results, highest level attained in the organization, and years at the highest level (Powell and Butterfield, 1997).
There is evidence that racial minorities are not given the same opportunities in organizations as other employees (Ilgen and Youtz, 1986). It may be that minority employees are not steered toward positions or functional departments that lead to career attainment in the firm nor given early promotions needed for advancement (Braddock and McPartland, 1987; Kanter, 1977). Deficits in developmental opportunities also may be related to minorities receiving lower promotability assessments from their supervisors than whites. And, minority members may have fewer intimate network relationships (Ibarra, 1995; Powell and Butterfield, 1997).
H4:Whites will have higher career attainment than non-whites in the organization.
Corporate Experience and Career Attainment
People who work close to corporate headquarters may have higher career attainment. Being in corporate headquarters makes them highly visible to those making promotion decisions. Network theories suggest that those with restricted network access will have lower promotion chances than those with more network access. Network access gives people increased knowledge of what is going on in the organization and enables them to be in positions with high promotion probabilities (Ibarra, 1993; 1995). Network access may be related to centrality in the firm. A factor associated with centrality is working in or near corporate headquarters. Those with greater centrality will have greater promotion opportunities. Limited network access produces multiple disadvantages including restricted knowledge of what is going on in the organization (Ibarra, 1993; 1995). Those with restricted network access will have less awareness of the determinants of career success in the firm. Therefore, we would expect manager’s experience in corporate headquarters to lead to higher career attainment.
In addition to the total number of years at the corporate headquarters, it is also expected that previously being in the corporate region just prior to the manager's last promotion will be significantly and positively associated with the level of attainment. Based upon theories of networking reviewed above, this should be the result of the “recency effect” of top decision makers at the corporate headquarters personally knowing and remembering the candidate when he or she is up for promotion.
H5:Time in corporate headquarters will be positively related to career attainment in the organization.
H6:The manager's most recent job being in the corporate region will be positively related to career attainment in the organization.
The moderating effects of late entry
Late entry may moderate the relationship between corporate experience and career attainment. The access to the central networks of the organization obtained by corporate experience (Ibarra, 1993) coupled with the blank slate of the late entrants may help late entrants to achieve higher career attainment than the early entrants. We would expect the positive relationship between number of years in corporate headquarters and career level attained to be strongest for external entrants. Also, we would expect the positive relationship between most recent job in corporate and career level attained to be strongest for external entrants.
Late entry may also moderate the relationship between career attainment and race and gender. We would expect that entering at a managerial level will have a stronger positive effect on the career attainment of women and minorities as compared to the career attainment of women and minorities who entered at lower levels.
Method
Sample
The research site was a large US-based international company in the service industry with over 200,000 personnel widely dispersed across the US. Most employees enter the firm at a low level and are promoted from within. The firm has a very low turnover rate (less than 4%). Information on managers' careers was obtained from the firm's computerized record system.
There are 251 pairs of mid-level managers (N=502 managers of the 27,141 total managers in the firm) in our sample with one member of the pair having entered the firm at a managerial level and one having entered at an entry level position. In other words, half the sample consisted of 251 mid- level managers who entered the firm in a managerial position and had obtained one promotion (late organization entrants). The other half of the sample consisted of 251 mid-level managers who had entered the firm through entry-level positions (early organization entrants) and had attained the same current managerial level as the late organization entrants.