by Mark Cummuta

The Impact of Globalization on Executive Job Searches and Economic Prosperity

Aug 12, 20088 mins

I’m beginning to understand why it’s been so hard and taking such a long time for me to find a new CIO job. It’s not just the economy (i.e., “Bad News Comes In Waves For Economy”), the wildly fluctuating stock markets, a Presidential election year in the US, and overly cautious business and IT leaders that are complicating my job search. Major shifts in global corporate ownership are rippling downstream, affecting enterprises’ hierarchical structures, executive roles, and hiring criteria, as I’ve learned from my recent discussions with David Gray, an international executive consultant and researcher based in Australia.

After being introduced to Mr. Gray through a mutual acquaintance, I’ve learned a great deal about his ongoing research on business efficiency and executive employment through a number of Internet-based conferences and conference calls. Gray is preparing to publish his research after having spent over 10 years studying the globalization of businesses and its impact on business efficiency. It was during this time that Gray noticed the beginnings of a disturbing trend where better qualified executives were being eliminated from the interview selection process from many organizations, including both large corporations and small and midsize businesses.

Gray believes, based on his research, that since the 1990s the globalization of business has led to a significant shift in corporate ownership to external financial organizations. These outside, indirectly affiliated organizations’ increasing focus on quarterly results has led to a shift away from the innovation and quality that established American manufacturing’s excellence, and toward an emphasis on cost reductions, primarily by simplifying processes and outsourcing these to emerging economies. Gray notes that feeding this shift in core business values has been the ready access to investors’ cash, and to credit-rich consumers worldwide who are willing to sacrifice quality and service for “cheap luxuries.”

These economic shifts have created two unprecedented consequences, according to Gray’s research.

First, as manufacturing has moved to cheaper but less efficient sources, the world has seen an unusual phenomenon of increasing relative investment returns at the same time that productivity, efficiency and quality have all been in sharp decline.

Second, and on a more personal level, Gray believes that these same economic changes have created an environment where executives experienced in innovative problem-solving and long-term strategic business development have been eliminated as an unnecessary expense. Gray’s research suggests that an executive’s employability — their ability to get hired for senior executive-level jobs — is no longer a function of their experience, qualifications and credentials because modern business practices are devaluing wisdom.

Gray’s conclusions came as somewhat of a shock to me, and indeed they are somewhat counter-intuitive. “People think business is a dispassionate environment, and that ‘it’ thinks logically, such that the best person will be put in place – the best and the brightest – to lead,” says Gray. “But that’s not so. ‘It’ is actually people and power and politics, and as we all know, people in power want to stay in power.”

Gray’s research indicates that the corporate expectation that excellence allows people to move up in their careers is not entirely true. An individual’s career growth based on their own excellence appears to have a ceiling. In other words, their practical knowledge of the business and ability to execute on that knowledge will only get them so far. Beyond that, says Gray, soft skills and cultural/political acumen become dramatically more important than practical knowledge. Once executives reach the $500,000+

salary range, says Gray, “they move mentally from running the business successfully to a constant socio-political campaign of retaining their position of power.”

Gray notes that the greatest disparity or change in executive experience levels is seen when “actual decision-making is no longer in the hands of individuals with knowledge and experience in the business.” For example, when outside investors buy out innovative firms (e.g., “The Next Bubble Is Here: Private Equity Buying Out Web 2.0 Firms”), or outside financial firms become majority stakeholders. “Both are more interested in extracting wealth rather than in building the business,” according to Gray.

As proof, Gray cites statistics that show that the average EVP or CEO at a small or even midsize company is now 31 to 33 years old, while ten years ago they were 38 to 44 years old. Further, the tenure at the executive levels is dropping: in the early 1990s executives had 17 years at the executive levels before reaching the income plateau. Today they only have an average of 11 years of experience before their incomes level off or begin to decline. These executives are also getting their first executive jobs at an earlier age: Today Gray sees 28 and 29 year olds – barely out of MBA school – entering their first senior executive jobs, versus 10 to 15 years ago, when people didn’t get their first executive-level job until they were around 38 or 39 years old. While this demographic shift might be somewhat expected as Baby Boomers start retiring, Gray’s research shows that “the declining average age of executives is moving far faster than generational statistics predict.”

To Gray, a key piece of supporting evidence is the downward trend of executives’ average salaries as they enter their late thirties and early forties. Top executives who used to make $1 million per year at or above age 37 are now making as little as $120,000 per year at age 43.

Gray has coined the term, “Achievement Discrimination” to describe the resulting decline in the hiring potential of previously highly sought after executives based on their years of experience, education, certifications, industry experience, mentoring and other criteria.

Others are starting to note this trend, too. For example, the senior managing director with executive compensation specialists Steven Hall & Partners in New York, notes in the Forbes’ article “Are You Making Too Much Money?”, “We’ve had an intense dispersion of power, first from management to the board, and then from the board to the various outside forces.”

Gray also finds some agreement from David Winston, a principal with Heidrick & Struggles, that the claim of a ‘skills shortage’ is “grossly misrepresented”. Both argue that there are innumerable highly-skilled and experienced executives available for the right firm and the right opportunity. At issue, according to Gray, is not the availability of these skills by executives ready, willing and able to build businesses through good times and bad. Rather, it is more a matter of valuing – and paying for – the experience these leaders can bring to the table in a global economy fixated on quarterly profits instead of long-term growth and business stability.

While I find Gray’s research very interesting intellectually, I also find it disheartening. It almost creates a feeling of hopelessness for me as an individual job seeker, that someone else is pulling my strings — not to mention the carpet out from under my feet. Indeed, after I worked on several drafts of this blog

entry, I had some reservations about posting it because the message seemed so depressing. This CIO Job Search blog is supposed to give people ideas and solutions … hope. This entry, meanwhile, began feeling like the antithesis of that. After discussing this with my editor, we agreed that Gray’s research was worth sharing and debating because this topic is interesting, it does affect us, and it needs to be open for discussion. And for some people struggling to find a new executive-level job, who think the reason they can’t get a job is all their fault, we thought it might be helpful for them to know that much larger socio-economic forces are influencing some executive-level hiring and firing decisions today.

Again, this is not to say that executive job searches in this day and age are futile unless you’re in you’re early 30s. I don’t want to leave anyone with the impression that you can’t get an executive-level job no matter how hard you try because of these economic forces. I bring this information to you to give you a mental break in a way, to make your realize that it’s not solely your fault you can’t get a job, to make you realize that you’re not finding a job because you’re not qualified. I just want to raise the idea that you might be having trouble finding a senior executive job because of these larger forces at work.

That being said, I still find opportunities from this information. I believe the key takeaways from Gray’s research are that networking skills are still the strongest leading indicator of your long-term career success. That is, your ability to network with other individuals, both internally and in your industry when working, and externally while investigating new opportunities, is the best way to plumb a company’s culture, it’s executives’ leadership styles, and it’s true decision-makers. Now armed with Gray’s research on these trends, I hope that you will start taking a much harder look at these kinds of cultural indicators as you are prospecting and interviewing for your next great opportunity.

And if Gray is correct, and if this trend is growing globally, then innovative, privately-held firms and name-brand management consulting firms are the place to be for hard-charging executives with stellar experience. Until, of course, those firms get bought out, too. 😐

I would be very interested in hearing your thoughts on this potentially divisive subject.

Mark Cummuta