A mobilographic study of corporate presidents

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A mobilographic study of corporate presidents career versus corporate loyalty as alternate routes to the top
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Carrerr versus corporate loyalty as alternate routes to the top
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Werther, William Blanchfield, 1947-
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Thesis--University of Florida.
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Bibliography: leaves 129-136.
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by William B Werther.
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Manuscript copy.
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Vita.

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Full Text

















A MOBILOGRAPHIC STUDY OF CORPORATE PRESIDENTS:
CAREER VERSUS CORPORATE LOYALTY
AS ALTERNATE ROUTES TO THE TOP












By
WILLIAM DL TNCK'FIELD WERTHER, JR.











A DISSERTATION PRES:Y:'LTE TO THE GRADUATE COUNCIL OF
THE UNIVERSITY OF FLORIDA IN PARTIAL
FULFI1.-"NT OF THE REQUIRM._ I_'S FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY











UNIVERSITY OF FLORIDA
1971

































Dedicated

to

Dr. William V. Wilmot, Jr.














AC' 1- 3 OWLEDGMENT '


After twenty academic years of education, neither space

nor the author's memory permit proper recognition of those

who provided him with the tools and opportunities requisite

for this undertaking.

This is especially true of the author's supervisory

conunittee: Dr. Curtis, who interrupted his summer break for

the author's convenience; Dr. Keig, who has been kind enough

to serve a second time; Dr. Blodge t:t, who unknowingly provided

many of the author's most significant hours of learning;

Dr. Ray, w.ho was the first to stimulate the author's voca-

iional interest; and Dr. Wii ot, ..ho has been a willing and

unlimited source of information, encouragenment and assistance.

Lastly, for the author's wife, Debbie, who typed this

and every page, who has been asked to give far too much and

then gave more, there are not words superlative enough to

describe the feelings held.


iii













TABLE OF CONTENTS


Page


ACKNOWLEDGE1ETS . .

LIST OF TABLES . .

ABSTRACT . .



Chapter

I. INTRODUCTION . .


The Scope of the Problem Area .
Overview . .
The Problem Area . .
The Significance of the Problem Area.
Toward a Solution . .
Overview. . .
A Brief Review of Mobility Research
Purpose . .
Hypotheses . .
Croup One Hypotheses: How Frequent is
Leveraging? .. . .
Group Two Hypotheses: Has Leveraging
Helped? . .
Group Three Hypotheses: What Recent
Trends Exist? . .
Presentation Outline . .
Notes . .


iii


. viii

. ix


. 1


3
' 5 .
5
. 5
10
S 11

S 12

12

S 12
13
S 14


II. MANAGERIAL TURNOVER: ITS CAUSES, PREVENTION,
AND IMPACT UPON THE FIRM . .

Introduction . .
The Impact of Managerial Turnover upon the
Firm . . .
An Evolving Development . .
The Past Imipact . .
The Future Impact . .
Summary . . .












Chapter


The Causes of Managerial Turnover .
Opportunity for Future Growth .. .
The Need for Recognition . .
Remuneration . .
Operational Conflicts . .
Pure Mobility . .
Summary . . .
Preventing Turnover . .
Toward Reducing Business Generated
Turnover . .
Providing recognition and an opportunity
for growth . .
Remuneration . .
Communications . .
Psychic income . .
Leadership and the decision-making
process . .
Locking in executives . .
Summary . .
Toward Reducing Culturally Generated Turn-


over . .
Adjusting to the mobicentric.
Tolerating the mobicentric.
Avoiding mobicentrics .
The use of mobicentrics .
Surnunary . .
Notes . .


ITI METHODOLOGY . .


Introduction . .
The Sample. . .
Presidential Characteristics .
Research Procedure .
Data Collection .


Evaluation Procedures
Group One Hypotheses:
Leveraging .
Hypothesis one
Hypothesis two
Hypothesis three
Group 'ITo Hypotheses:
Helped? .


. 38
S 39
S 39
S 39
. 40
. 41
. 43


. 48


. 48
. 48
S 49
S 50
S 50


for Hypotheses.
How Frequent is
. .


Has Leveraging


S. 51


. 52
. 52
. 53
S. 54


. 55


Page










Chapter Page

Hypothesis one . 55
Hypothesis two . 56
Group Three Hypotheses: What Recent
Trends Exist?. . 58
Hypothesis one ... 58
Hypothesis two . 59
Summary . . .. 61
Notes . . .. 63

IV. THE RESEARCH FINDINGS . .. 65

Introduction . . 65
The Results of the Group One Hypotheses 65
Hypothesis One . 65
Hypothesis Two . 66
Hypothesis Three . ... 67
The Results of the Group Two Hypotheses 67
Hypothesis One . 68
Hypothesis Two . 69
The Results of the Group Three Hypotheses 71
Hypothesis One . 71
Hypothesis 1Two . 72
Summary . . .. 75
Notes. . . 77

V. SUMMARY, CONCLUSIONS, AND IMPLICATIONS FOR
FURTHER RESEARCH ... ... 78

Overview . . .. 78
Summary . . .. 78
Introduction . 78
Hypotheses . . 79
Group one hypotheses: how frequent is
leveraging?. . 79
Group two hypotheses: has leveraging
helped?. . .. .80
Group three hypotheses: what recent
trends exist?. .. . 80
Methodology and Results .. 80
The sample . .. 80
The evaluation procedures and their
results . .. 81











Chapter


Conclusions . 82
On the Frequency of Leveraging 82
On the Usefulness of Leveraging .. ... 84
On the Recent Trends of Leveraging 84
On Reconciling Contradictory Differences. 85
Implications for Further Research 87
Managerial Mobility at Lower Levels 88
Sources of Mobility . .89
Notes . . .. 91

APPENDICES . . .. .. 92

Appendix A . .. 93

Appendix B . . 107

Appendix C . . 115

BIBLIOGRAPHY . . 129

BIOGRAPHICAL SKETCH . .. 137


vii


Page












LIST OF TABLES


Table Page

1. Average Ages Associated with Different
Frequencies of Leveraging . .. 70

2. The Frequency of Leveraging ;Aimong Presidents
Made President During the 1967 to 1970
Period . . 73

3. The Average Number of Years of Service (ANYS)
and Average Age When Made President (AAWMP)
for All Mobile Presidents Made President
During the 1967 to 1970 Period .. ... .74

4. The Average Number of Years of Service (ANYS)
and the Average Age When Made President
(AAWMP) for All Presidents Made President
During the 1967 to 1970 Period ...... .76

5. The Results of Hypotheses One, Two, and Three
Subjected to a Quintile Approach Employed
in the Supplemental Analysis. ... 120

6. The Results of Hypothesis Four Using the
Quintile Approach Employed by the Supplemental
Analysis ..... . 121

7. The Results of Hypothesis Five Using the Quin-
tile Approach Employed by the Supplemental
Analysis .... ... 123

8. The Results of Hypotheses One, Two, and Three
Based on the Number of Workers Employed 124

9. The Results of Hypothesis Four Based on the
Numbers of Workers Employed .... .. 126

10. The Results of Hypothesis Five Based on the
Number of Workers Employed .. .127


viii












Abstract of Dissertation Presented to the Graduate
Council of the University of Florida in Partial Fulfillment
of the Requirements for the Degree of Doctor of Philosophy




A MOBILOGRAPHIC STUDY OF CORPORATE PRESIDENTS:
CAREER VERSUS CORPORATE LOYALTY
AS ALTERNATE ROUTES TO THE TOP


By

William Blanchfield Werther, Jr.

August, 1971


Chairman: Dr. William V. Wilmot, Jr.
Major Department: Department of Management and Business Law


Introduction

Based upon the widely held belief that there has been

a shift in prime loyalties of managers from the corporation

to the career, many writers have argued that inter-corporate

mobility among presidents and top executives is widespread

and increasing.

Such a development presents management with a twofold

problem: first, increases in managerial turnover are dis-

ruptive and costly. However, the impact, causes, and pre-

vention of inter-corporate mobility only represent the cor-

porate perspective. And, although this part of the problem

area is important, it was not the primary concern of this

study.











Primary concern focused upon the other side of the

problem area: the manager's viewpoint of the increased

turnover. That is, does leveraging appear to have been a

common ingredient in the careers of those who have success-

fully achieved the presidency? The approach to this ques-

tion involved answering three subordinate questions: how

frequently has leveraging been used in the careers of presi-

dents? Has leveraging appeared to help those who have used

it? What recent developments in the use of leveraging have

occurred?




Hypo- theses


Corresponding to the last three questions, three groups

of hypotheses were set forth to be evaluated.

Grouo One Hypotheses: How Freauent is Leveraging?

1) All presidents of the 500 largest, industrial'
corporations surveyed have leveraged once, and
60 per cent have leveraged twice;

2) Of those preside,-its who leveraged, less than
5 per cent leveraged after becoming a top
officer in a company (e.~., Executive Vice-
President, Vice-President, Treasurer, Secre-
tary); and

3) Less than 1 per cent of the presidents surveyed
leveraged back to a company with which they were
previously associated.











Group Two Hypotheses: Has Lever '-inca Help~ ed?

1) When compared with those presidents who did
not leverage, mobile presidents had a lower
average age when made president; and

2) The more frequently preside,.ts have leveraged,
the lower their average age was at the time
they becante president.

Group Three Hypotleses: What Recent Trends Exist?

1) During the 1967-to 1970 period, there has
been an increase in the percentage of presi-
dents who have leveraged in their career;
and

2) During the 1967 to 1970 period, the widening
use of leverage at higher ranks will be indi-
cated by an increasingly larger decline in
the average number of years of service presi-
dents have with their firm, when compared with
the decline in the average age of presidents
at the time they achieved that position.


The Sample

The sample was selected from the presidents of the top

500 industrial corporations as ranked by Fortune on the

basis of sales. More specifically, the sample included the

following presidents:

1) Those who were president of one of America's
largest 500 industrial corporations in 1970,
and

2) Those who were made president of such corporations
during the 1967 through 1969 period but were
subsequently replaced before 1970.

All founders, relatives of founders, and those about











whom data. were insufficient were eliminated from considera-

tion. All data on the 456 presidents studied were obtained

from corporate directories.


The Results and Conclusions

Each of the seven hypotheses was rejected.

In closing, it was concluded that mobility among the

presidents of industrial corporations, though extensive, was

not as common as the literature might lead one to believe.

On the other hand, however, it was shown that over 30 per

cent of all presidents had leveraged at least once after

becoming an officer of a company.


xii














CHAPTER I

INTRODUCTION




The Scope of the Problem Area


Overview

Where once career and corporate loyalty seemed mutually

compatible, there now appears to be a new emphasis.

Top-flight executives .. .no longer feel
a prime loyalty to the corporation. There
is a new set of values at work: loyalty to
a discipline or a profession, and to a per-
sonal career.

Or, as Jennings has stated:

The success drive is actually a moral imper-
ative. It is simply imprudent to display
too nakedly this intensive drive to mount the
corporate heirarchy. The executive learns to
conceal this insatiable drive by gearing it
to the objectives and purposes of his corpo-
ration. Outwardly he is the loyal corporation
man. Inwardly he serves this arbitrary drive
for personal success.

Thus, there seems to be a shift in prime loyalties from the

firm to the career.4

The result of this ostensible trend appears to have

manifested itself in an increasing rate of turnover among

all levels of management. Jennings believes, "The trend is










that by 1970 every president will have leveraged5 at least

once, and 60 percent will have leveraged twice.,6 Harold A.

Miller surveyed over 1300 presidents and vice presidents

and concluded that mobility is a ". significant charac-

teristic of newly-named top management executives. More

and more top management positions are going to outsiders."7

This managerial turnover, coupled with the extensively
8
reported shortage of capable managers, has presented many

firms with the costly problem of additional recruiting and

9
training. And, when dealing with high managerial posts, turn-

over is even more costly. Admittedly, the present supply of

managers exceeds the demand,0 but all indications point to a

managerial-manpower shortage in the future.11


The Problem Area

The problem area can be divided into two parts: the

first division is the causes, prevention, and impact of the

increased use of leveraging by managers. Essentially, this

is the problem area as viewed from the corporate perspective.

And, although it will be reviewed below, the primary empha-

sis of this research shall be the second part of the problem

area: the manager's viewpoint of the increased turnover and

managerial shortage. That is, how can he best pursue his

personal career goals: loyalty to the firm or to his career?










Or, are corporate and career loyalty mutually compatible?

Are we moving into a new era, the era of the mobicentric

12
manager?2 Will managers move to the top because of loyalty

and long service to the firm? Or, will climbing to the

pinnacle of today's modern corporations require managers to

become mobicentric?


The Significance of the Problem Area

If industrial management is entering the era of mobi-

centric managers, there are significant implications for

both corporate management in general and individual managers

in particular.

Corporate management will be forced to re-evaluate many

policy decisions. For example: should non-vested pensions

become vested? Should pensions be given portability clauses?

Should the board of directors have more outsiders on it to

provide continuity? Should decision making be more central-

ized to minimize the strategic value of managers who may

join a competitor?13 Or, should decision making be less

centralized in order to provide managers with greater auton-

omy, interest and, hopefully, more loyalty?14

Beyond these decisions, corporate management will have

Lo pay closer attention to their promotion policies.15 They











will have to watch fast-rmoving executives to determine if

their performance record is built at a high expense in human

cost (e.g., a fast moving executive may use an autocratic

style which may result in good short-term performance at the

expense of later disruptions--turnover, grievances, or, at

extremes, wildcat strikes).16 Moreover, this illustrative

list is no more than a glimpse into a virtual Pandora's box.

For individual managers, the ramifications of the believed

increase in mobility could be most significant. Besides the

greater effort he will have to devote to this problem, he

will have to continuously evaluate his firm's employment

strategy. Is his firm resisting the trends by developing

and promoting loyal employees? Or, is his firm failing to

provide him with opportunities to develop and then hiring

"outsiders" to fill positions above him? If the firm utilized

the second approach, a previously loyal manager may have to

. pyramid experience rather than develop a continuity

of experience with one company .. .. "17 That is, he may

have to map out his own career development through strategic

job changes.

However, if the mobicentric manager exists only in the

speculation of a few writers,18 then truth should silence

the concept.










In summary, the significance of this problem area lies

not only in the questions that are in need of answers, but

also in the questions that the answers will evoke.



Toward a Solution


Overview

H. J. Heinz, II, has been quoted as asking, "Why write

. about the American executive? Why not leave the poor

guy alone? Hasn't he been overdissected and overanalyzed?"19

Admittedly, much has been written about the American

executive. However, the implications for individual careers

and corporate policy dictate that he be studied to ascertain

the nature of the alleged increase of inter-corporate mobil-

ity.


A Brief Review of Mobility Research

Studies of upward mobility have proliferated over the

last fifty years.
20
Many of the earlier studies, such as those by Visher,2
21 22 2 24
Smith,21 Schneider, Centers,23 and Form and Miller,24 were

largely concerned with the relationship between the father's

occupation and that of his son. Other inquiries by Fortune,25
26 27 28
Sibley,26 Anderson, et al.,7 and Nelson and Hatt have

focused upon the education or intelligence of upwardly mobile










29 30 31
individuals. Schneider and Adams have tied general

success to periods of expanding opportunities and to "

communities of different chronological age .,32 respec-

tively.

Beyond these and other,33 predominately sociological

studies, there have been more recent investigations directed

specifically at inter-corporate mobility. But, since these

reports have centered upon the causes and prevention of exec-

utive turnover and have almost entirely ignored the extent of

mobility, they will be outlined in Chapter II, "Managerial

Turnover: Its Causes, Prevention and Impact upon the Firm."

Of those publications which have extensively studied

mobility in business, several will be discussed to facili-

tate explanation of this study's purpose.

In 1952, a Fortune inquiry was based upon a sample of

900 executives.34 This study was directed at a wide array

of factors including the educational attainment, geographic

origins, career channels (e.g., production, finance, market-

ing, etc.), length of service, and age level of the business

leaders. Moreover, the findings presented an aggregate de-

scription of inter-corporate mobility among respondents.35

Unfortunately, no comparison was made between the one-third

of the executives who had worked for only one company and

the two-thirds who had rk fr two or ore firms.36
the two-thirds who had worked for two or more firms.










Warner and Abegglei published two books37 in 1955, based

upon a massive questionnaire survey of more than 8,500 re-

spondents. The purpose of their study (like that of an

earlier investigation by Taussig and Joslyn, American Busi-

ness Leaders)38 was to analyze the mobility of business

leaders during the course of their career. They examined a

wide range of factors such as the socio-economic background

of business executives (including the occupations, geographic

origins, and education of their parents); the impact of

mobility upon changes in status, friendship circles, and the

development of new behavior patterns; and the geographic

distribution of leaders by region and size of place of birth.

That is, these surveys were concerned with the characteristics

of those who had moved to the top. However, they did not

explore the differences between upward mobility as a result

of long, continuous service and upward mobility as a result

of inter-corporate mobility.

A fourth, and more germane, study of mobility was

Mabel Newcomer's, The Big Business Executive.39 Like others,

she too discusses the executives' origins, their fathers'

occupations and income, the leaders' educational background,

early positions and principal occupations. However, Newcomer's

findings are noteworthy because they indicate that from










1900 to 1950, fewer men (as a percentage of all respondents)

40
were achieving the presidency before age fifty.4 Moreover,

the length of service before becoming president had in-

41
creased. If those trends are operating today (contrary to

the belief of some writers), then career and corporate

loyalty would seem mutually compatible.

Contrasting these conclusions is a fifth, and more re-

cently published, study by Professor Eugene E. Jennings, The

Mobile Manager: A Study of the New Generation of Top

43
Executives.43 In 1967, Jennings introduced ". the

fledgling technique of mobilography."44 The purpose of

mobilography is ". .to describe the positions through

which managers of large industrial corporations pass as they

go to the top, and make predictions based upon these descrip-

tive data."45 That is, "Mobilography is basically concerned

with the men who move into the offices of the executive suite

and with their career backgrounds."46

As such, mobilography addresses itself to many facets of

the corporate environment. A few such aspects are as follows:

a) The importance of crucial subordinates upon
whom managers must depend;47

b) A manager's relationships with those who
evaluate, nominate, sponsor, and promote him;48

c) The treatment of superiors, peers and sub-
ordinates who have had their upward mobility
arrested;49










d) The relationships between rmobility and a host
of other factors such as corporate strategy,
50
competency, growth, age, intelligence, etc.;
and

e) The manager's use of leverage to maintain his
upward mobility.51

From his studies, Jennings has concluded that inter-

corporate mobility is not only a common occurrence, but that

52
it will become more common in the future.52 This inter-

corporate mobility has been labeled leveraging.

Leveraging occurs when a manager leaves one corporation53

54
and joins another. He may leave because ". .. he sees

his upward mobility is blocked by a slow moving supe-

rior .. Or he may leverage because he had made some

grave mistakes and he feels he cannot overcome them by any

"55
amount of excellent performance." More simply, "He is

prepared to leave his corporation if it means he can go

higher or faster in another."56

Admittedly, these interpretations provide a rather one-

sided perspective because they stress only mobility-oriented

reasons for managerial termination. Terminations which stem

from other sources are ignored. For example: W. F. Breitmayer

studied 1500 executives and found that "Most executives who

change jobs do so to take on bigger job challenges. What

they are chiefly looking for is more responsibility and










broader experience."57 Iost sources confirm Breitmayer's

assertion by pointing to some variant of the lack of op-

portunity for challenge concept as a prime cause of mana-

gerial turnover.58 Other closely related factors include

the stockpiling of over-qualified managers because good men

are often scarce,59 rigidly defined jobs which give the

manager no leeway for his unique abilities,60 or the firm's

failure to provide managers with an opportunity to develop.61


Purpose

This study, however, is not primarily concerned with the

reasons for managerial turnover cited above.62 Instead,

primary concern will focus upon the effect of managerial

turnover upon the manager's career. That is, the major

purpose of this writing is to study the effect leveraging

has upon the president's rise to the top, the frequency of

leveraging, and the recent trends which seem to exist.

Thus, this investigation will be similar to the Fortune,

Newcomer, Jennings, Warner and Abegglen inquiries in that it

will study tenure, mobility and some personal characteristics

of executives. However, this study differs from previous

research in several key respects. First, unlike the Fortune

report, an attempt will be made to contrast the characteristics

of the mobile managers with their non-mobile counterparts.











Second, the rate of upward mobility of those who utilized

inter-corporate job changes will be formally compared with

those who do not. Neither Jennings, Newcomer, or Warner

and Abegglen performed this analysis. Third, unlike Jennings'

previous work, this investigation will utilize a cross-

section63 analysis over a wider sample64 of presidents. And

fourth, this research will have as an ancillary objective

the development of a source of data against which future,

inter-corporate mobility trends can be Treasured.

In short, this empirical exploration will go beyond

merely looking at the characteristics of top executives.

Instead, it will attempt to determine whether career or

corporate loyalty has led presidents to that position most

rapidly.



Hypotheses


To facilitate examination, the hypotheses can be grouped

around the three principal questions of this study: how

frequently is leveraging used in a president's career? Does

leveraging appear to help managers rise to the top? What

recent trends in the use of leveraging exist?










Group One Hypotheses: HoT Frequent Is Leveraqing?

1) All presidents of the 500 largest, industrial
corporations65 surveyed have leveraged once,
and 60 per cent have leveraged twice;66

2) Of those presidents who leveraged, less than
5 per cent leveraged after becoming a top
officer in a company (e.g., Executive Vice-
President, Vice-President, Treasurer, Secre-
tary); and

3) Less than 1 per cent of the presidents sur-
veyed leveraged back to a company with which
they were previously associated.

Group Two Hypotheses: Has Leveraging Helped?

1) When compared with those presidents who did
not leverage, mobile presidents had a lower
average age when made president; and

2) The more frequently presidents have leveraged,
the lower their average age was at the time
they became president.

Group Three Hypotheses: What Recent Trends Exist?

1) During the 1967 to 1970 period, there has
been an increase in the percentage of presi-
dents who have leveraged in their career; and

2) During the 1967 to 1970 period, the widening
use of leverage at higher ranks will be indi-
cated by an increasingly larger decline in
the average number of years of service presi-
dents have with their firm, when compared
with the decline in the average age of presi-
dents at the time they achieved that position.










Presentat ion OtJUtline


The remainder of this dissertation will be organized

into four additional chapters. Chapter II will review the

causes, prevention, and impact of managerial turnover from

the corporate perspective. Chapter III will discuss the

sample studied and the research methodology employed to test

the hypotheses. The fourth chapter will present the results

of this investigation. Finally, Chapter V will summarize

this dissertation, draw those conclusions which seem reason-

able in light of the results, and indicate the implications

this inquiry holds for further research.















NOTES


William H. Whyte, Jr., The Organization Man (New York:
Simon and Schuster, Inc., 1956), pp. 131, 161-62.

2Seymour Freedgood, "The Churning Market for Executives,"
Fortune, Volume 72, Number 3 (September, 1965), p. 152.

N.A., "Why They Want to Get to the Top," Iron Age,
Volume 197, Number 8 (February 24, 1966), p. 39. Also see
Arch Patton, "The Coming Scramble for Executive Talent,"
Harvard Business Review, Volume 45, i'L.ilber 3 (May-June, 1967),
p. 156.

This view is also supported elsewhere. See N.A.,
"More Managers Join the Jobless," Business Week, Number 2125
(May 23, 1970), p. 34. N.A., "Job Hopping Recruits Still
Plague Companies," Steel, Volume 164, Number 20 (May 19, 1969),
p. 72k. N.A., "Not Enough Chiefs," The Maglazine of Wall
Street, Volume 121, Number 12 (March 2, 1968), p. 42.
Robert C, Albrook, "How to Spot Executives Early," Fortune,
Volume 78, Number 1 (July, 1968), p. 106. N.A., "Those
Restless Young Executives," Dun's Review, Volume 92, Number
1 (July, 1968), p. 37.

Jennings uses the term 'leverage' to mean the act of
changing jobs from one corporation to another. As such,
military, health, or educational leaves will not be consid-
ered leveraging for the purpose of this paper. Following
Jennings, this paper will take the liberty of using leverage
as a verb to facilitate presentation and understanding. The
term 'President' or 'Chief Executive Officer' will be uti-
lized when referring to the highest line officer who has
responsibility for the corporation's operation.

Eugene E. Jennings, The Mobile Manager: A Study of
the New Generation of Top Executives (Ann Arbor: Graduate
School of Business Administration, The University of Michigan,
1967), p. 24.










7Harold A. Miller, "1,300 Presidents and Vice Presidents
Who Made It," Business Management, Volume 36, Number 3
(June, 1969), p. 20. Also see N.A., "One-fifth of Top Jobs
Go to Outsiders, Survey Finds," Management Services,
Volume 4, Number 3 (May-June, 1967), p. 7. N.A., "Those
Restless Young Executives," Dun's Review, Volume 92,
Number 1 (July, 1968), p. 37. Robert C. Albrook, "Why It's
Harder to Keep Good Executives," Fortune, Volume 78, Number
6 (November, 1968), p. 137. George J. Berkwitt, "The Revolt
of the Middle Managers," Dun's Review, Volume 94, Number 3
(September, 1969), p. 39. Jaala Weingarten, "How Do You
Keep Executives?" Dun's Review and Modern Industry, Volume
88, Number 1 (July, 1966), p. 35.

Arch Patton, op. cit., p. 155. John Perham, "Where
Are Tomorrow's Executives?" Dun's Review and Modern Industry,
Volume 87, Number 6 (June, 1966), p. 37. "Not Enough Chiefs,"
op. cit. N.A., "It's Tougher to Find Good Managers," Steel,
Volume 157, Number 2 (July 12, 1965), p. 25.

"National surveys estimate the true costs of turnover
to a company at $2,000 to $5,000 when changing
administrative personnel." Ferdinand F. Fournies, "The
Real Reasons People Quit," Administrative Management, Volume
30, Number 10 (October, 1969), p. 45. Also see, "Those
Restless Young Executives," p. cit., p. 37.

1"More Managers Join the Jobless," op. cit., p. 33.
N.A., "More Managers Pound the Bricks," Industry Week,
Volume 167, Number 4 (July 27, 1970), p. 11. N.A., "Demand
for Managers Dips--But Shouldn't," Iron Age, Volume 205,
Number 7 (February 12, 1970), p. 25.

1lAs Feilke recently stated:
"The management market is flooded today.
But when the economy bounces back .talent will
be as scarce as ever. Maybe scarcer.
By the mid-70's, industry will be hit by a million
man shortage in the 35 to 45 age bracket ."
M.F. Feilke, "Women, Women Everywhere, But Not a Manager in
Sight," Iron Age, Volume 206, Number 9 (August 27, 1970),
p. 63. Or, as John Dunlop feels:
we face a decade in which there will be a great
growth of young men (20 to 34) in the labor force--
but very keen competition is likely to develop for
men in the age group over 35. That should have very










important reprecussi-ons in managerial types of
jobs.
John T. Dunlop, "The Nation's Manpower Arrangements," The
Conference Board Record, Volume 7, Number 3 (March, 1970),
p. 28. Also see, Salvatore V. Didato, "Some Reminders
About Selecting Good Managers," Personnel Journal, Volume
49, Number 6 (June, 1970), p. 489. N.A., "Management Crunch:
'The Dearth of Births'," Sales Management, Volume 98, Number
10 (May 15, 1970), p. 102. "More Managers Pound the Bricks,"
op. cit. "Demand for Managers Dips--But Shouldn't," op. cit.

12Eugene E. Jennings, op. cit., pp. 24-5. Jennings uses
the term mobicentric manager to refer to those managers who
strive to stay mobile, always moving up the corporate hier-
archy in one industrial corporation or another. Their
loyalty is to their career not to the corporation they
presently happen to be associated with.

1Thomas J. Murray, "The Case of the Disloyal Executive,"
Dun's Review, Volume 90, Number 6 (December, 1967), p. 37.

14Hyman W. Porter and Edward E. Lawler, III, "The Effects
of 'Tall' Versus 'Flat' Organization Structures on Managerial
Job Satisfaction," Personnel Psychology, Volume 17, Number
2 (Summer, 1964), pp. 135-48.

15Theron F. Miller, "How to Slow the Turnover Flow,"
Personnel Journal, Volume 47, Number 5 (May, 1968), pp. 321-
22. N.A., "Recruiter Gives Methods to Forestall Executive
Loss," Management Services, Volume 5, Number 2 (March-April,
1968), p. 9. Edward E. Lawler, III, "How Long Should a
Manager Stay in the Same Job?" Personnel Administration,
Volume 27, Number 5 (September-October, 1964), p. 27. N.A.,
"The Reasons Top Executives Change Jobs," Nation's Business,
Volume 56, Number 2 (February, 1968), p. 84.

1Likert has said:
S. managers usually experience rewards and
promotions for achieving high production and
low costs over the short run rather than the
long run. Moreover, since many managers are
transferred after about two years, their at-
tention is focused primarily on short run
results. Given these conditions ., put-
ting pressure to increase production on a well-
established organization engaged in work for










which performance standards can be set can
yield substantial and immediate increases
in productivity. This increase is obtained,
however, at a cost to the human assets of
the organization.
Rensis Likert, New Patterns of Management (New York: McGraw-
Hill Book Company, Inc., 1961), pp. 69, 71. Also see
C. Argyris, "Research Trends in Executive Behavior,"
Advanced Management, Volume 21, Number 3 (March, 1956), p.
7.

17"Job Hopping Recruits Still Plague Companies," op. cit.

18
N.A., "The Best Route to the Top," Iron Age, Volume
200, Number 15 (October 12, 1967), p. 25.

19
9Osborn Elliott, Men at the Top (New York: Harper and
Brothers, 1959), p. ix.

20
Stephen S. Visher, "A Study of the Type of the Place
of Birth and the Occupation of Fathers of Subjects of
Sketches in 'Who's Who in America'." The American Journal
of Sociology, Volume 30, Number 5 (March, 1925), pp. 551-
557.

21
21Mapheus Smith, "Occupational Mobility of Notable
Persons," Sociology and Social Research, Volume 23, Number
4 (July-August, 1939), pp. 503-513.

22
22Joseph Schneider, "Social Origin and Fame: The
United States and England," American Sociological Review,
Volume 10, Number 1 (February, 1945), pp. 52-60.

23Richard Centers, "Occupational Mobility of Urban
Occupational Strata," American Sociological Review, Volume
13, Number 2 (April, 1948), pp. 197-203.

24William H. Form and Delbert C. Miller, "Occupational
Career Patterns as a Sociological Instrument," The American
Journal of Sociology, Volume 54, Number 4 (January, 1949),
pp. 317-29.

25N.A., "The 30,000 Managers," Fortune, Volume 21,
Number 2 (February, 1940), pp. 58-62, 106, 108, 111.










Elbridge Sibley, "Some Demographic Clues to Strati-
fication, American Sociological Review, Volume 7, Number
3 (June, 1942), pp. 322-30.

27
C. Arnold Anderson et al., "Intelligence and Occupa-
tional Mobility," The Journal of Political Economy, Volume
60, Number 3 (June, 1952), pp. 218-30.

2Nelson N. Foote and Paul K. Hatt, "Social Mobility and
Economic Advancement," American Economic Review, Volume 43,
Huimber 2 (May, 1953) pp. 364-78.

29Carson McGuire, "Social Stratification and Mobility
Patterns," American Sociological Review, Volume 15, Number
2 (April, 1950), pp. 195-204.

30Joseph Schneider, "Social Class, Historical Circum-
stances and Fame," The American Journal of Sociology,
Volume 43, Number 1 (July, 1937), pp. 37-56.

3Stuart Adams, "Regional Differences in Vertical
Mobility in a High Status Occupation," American Sociological
Review, Volume 15, Number 2 (April, 1950), pp. 229-34.

32Ibid., p. 229.

33
3Gideon Sjoberg, "Are Social Classes in America Becoming
More Rigid?" American Sociological Review, Volume 16, Number
6 (December, 1951), pp. 775-83. Also see Louis I. Dublin
and Robert J. Vane, Jr., "Shifting of Occupations Among
Wage Earners as Determined by the History of Industrial
Policyholders," Monthly Labor Review, Volume 18, Number 4
(April, 1924), pp. 732-42.

34
N.A., "The Nine Hundred," Fortune, Volume 46, Number
5 (November, 1952), pp. 132-35.

35Ibid., p. 232.

36Ibid.

37
37W. Lloyd Warner and James C. Abegglen, Occupational
Mobility in American Business and Industry, Minneapolis:
The University of Minnesota, 1955. And, W. Lloyd Warner and
James C. Abegglen, Big Business Leaders in America, New York:
Harper & Brothers, 1955.










38F.W. Taussig and C.S. Joslyn, .-*L-ican Business
S-*.]-ss, New York: The Macmillan Company, 1932.

39Mabel Newcomer, The Big Business Executive, New York:
Columbia University Press, 1955.

40
In 1900, 59.9% of those studied achieved the presidency
before age fifty as opposed to 59.0% in 1925 and 45.6% in
1950. Ibid., p. 111.

41In 1900, 90.8% of those studied achieved the presidency
before obtaining twenty years of service with the firm. In
1925 and 1950, only 76.1% and 58.8%, respectively, had ob-
tained the rank of presidents before having twenty years
experience with their firm. Ibid. p. 96.

42See footnotes 2, 3, 4, and 6.

43
4Eugene E. Jennings, op. cit.

44Ibid., p. vii.

45Ibid.

46Ibid., p. 6.

47
Ibid., pp. 43-55.

48Ibid., pp. 36-43.

49
Ibid., pp. 71-93.

50Ibid., pp. 10-23.

51Ibid., pp. 23-24.

52Ibid., p. 24.

53The term corporation or firm shall be employed through-
out this writing instead of the more general term, organi-
zation. Although it seems reasonable to assume, a prior,
that most (if not all) of Jennings' findings would apply to
any formal organization (e.g., the Armed forces, hospitals,
etc.), his research has been limited to industrial corpora-
tions.










5iugene E. Jennings, on. cit., p. 23.

55
Ibid.

5Ibid., p. 104.

5N.A., "Why Do Managers Change Jobs?" Iron Age, Volume
198, Number 1 (July 7, 1966), p. 43.

58"How to Spot Executives Early," op. cit. S.H. Hockenberry,
"Unscrupulous Job Counselors Lure Many Executives," Iron
Age, Volume 205, Number 3 (January 15, 1970), p. 61. Miller,
op. cit. "The Real Reasons Top Executives Change Jobs," on.
cit. "Those Restless Young Executives," op. cit.

59N.A., "Why Good Managers Decide to Quit," Iron Age,
Volume 202, Number 15 (October 10, 1968), p. 23.
60
"Recruiter Gives Methods to Forestall Executive Loss,"
op. cit.

61Miller, op. cit., p. 321.

6Managerial Turnover: Its Causes, Prevention, and
Impact upon the Firm will be reviewed in Chapter II.

63Eugene E. Jennings, op, cit.

64*
Jennings' work was ". based upon 1,500 managers
and executives selected from 500 large industrial firms and
230 presidents who held office during the sixteen years
over which this study was made." Jennings, op cit., p. vii.

65The top 500 industrial corporations were based upon
the Fortune classification. Eleanore Carruth "The Fortune
Directory of the 500 Largest Industrial Corporations,"
Fortune, Volume 81, Number 5 (May, 1970), pp. 181-200.

66This hypothesis is a test of an assertion made by
Jennings in his book The Mobile Manager: A Study of the New
Generation of Top Executives, op. cit., p. 24.















CHAPTER II

MANAGERIAL TURNOVER:
ITS CAUSES, PREVENTION, AND IMPACT UPON THE FIRM



Introduction


As indicated in Chapter I, managerial turnover is a

two-sided problem: first, inter-corporate mobility may

present individual managers with an alternative to careers

based exclusively upon organization loyalty. In fact, with

the widely acknowledged increase in mobility, the prudent

use of leveraging may be necessary if a manager is to pursue

2
his career goals to the fullest extent possible. Quite

obviously, this side of the problem may hold significant

implications for individual careers.

The other side of the problem area deals with the orga-

nizational implications. Namely, what impact does inter-

corporate mobility have upon the firm? What causes turnover?

How can it be prevented or lessened?

The purpose of Chapter II will be to discuss these three

questions from the corporate viewpoint. In doing so, this

chapter studied the turnover problem facing business organiza-

tions in general and not the top 500 companies in particular.










The Imuact of Ma!na2cerial Turnrover uoon the Firm


An Evolving Development

In 1956, William H. Whyte stated in his book, The

Organization Man, that:

For the executive of the future, trainees say,
the problem of company loyalty shouldn't be a
problem at all. Almost every older executive
you talk to has some private qualifications a-
bout his fealty to the company; in contrast,
the average young man cherishes the idea that
his relationship with The Organization is to be
for keeps.

Once upon a time it was conventional for
young men to view the group life of the big
corporation as one of its principal disadvan-
tages. Today, they see it as a positive boon.

However, by the middle part of the 1960s, this attitude

apparently had changed: individuals no longer appeared to

cherish the idea that their ". relationship with The

Organization is to be for keeps."4 To the contrary, "The

mobicentric man values motion and action because they

are change, and change is his ultimate value."5 Furthermore,

"He undergirds the entire economic structure--and is pro-

ducing men like himself."6

This is not to say that the mobicentric manager is the

rule and the organization man the exception. However, the

literature does indicate that the former is becoming increas-

ingly more common than in the past. To illustrate:










a) A 1959, Fortune survey of 1700 executives
revealed that an ". overwhelming num-
ber were chosen to fill their present jobs
by promotion from within--only 13 per cent
said they were hired from outside
S7

.b) A 1963 article asserted that ". one
out of eight newly appointed chief exec-
utive officers comes from the outside
n8

c) However, a study conducted just four years
later revealed that "Nearly one out of five
top management promotions went to a corpor-
ate newcomer during 1967 ."

d) And, in 1970,--just three years later--
forty per cent of the ". men who
become president do so after joining the
corporation at a high level rather than
after working their way up through the
ranks of one company."0

If correct, these citations indicate that inter-corporate

mobility has been increasing over the last few years. More-

over, this evolving development has had a significant impact

upon American industry in the past, and it appears likely

that it will continue to do so in the immediate future.


The Past Impact

Although it cannot be shown in dollars and cents
on a profit-and-loss statement, turnover at the
executive level is without doubt one of the most
costly hidden items borne by the modern corpora-
tion.1

And this belief was put forth before the widely publicized

increases in turnover associated with the last five years.










More recently, Stull estimated that managerial turnover

costs American industry over 100 million dollars annually.12

Mason supported this conclusion and added to it:

About 100,000 middle- and upper- management
executives will change jobs this year.

The direct cost of each such change
averages some $1,000, so job switches add ap-
proximately $100 million a year to business
overhead. To this must be added the cost of
disruptions caused by departures of experienced
men and the indirect costs of finding replace-
ments for them.13

Others estimate ". the true costs of turnover to a

company at .$2,000 to $5,000 when changing .ad-

ministrative personnel,"4 and ". .. roughly a half-million

middle managers switch jobs every year .15 If all

the costs of on-the-job training and lost productivity were

known, even this $2,000 to $5,000 estimate might prove to

be unrealistically conservative. For example: one survey

found that ". the task of keeping a full and efficient

team on the job ."16 required top executives to spend

". as much as 30% of their time doing just this."17

A 1968, Fortune survey on the impact turnover has had

upon corporations revealed the following:

31 per cent of the responding companies
cited 'high recruiting and training costs as
the most serious result.' This was followed by
'loss of scarce executive talent,' 24 per cent;










'difficulty in filling openings,' 18 per cent;
'dilution of average staff experience,' 16 per
cent; and 'disruption of group projects,' 11
per cent. Although invited to do so, almost
none of the companies listed benefits from
turnover.18

Lastly, it seems reasonable to argue that this expensive

and disruptive development will continue into the immediate

future.


The Future Impact

The bases for asserting that managerial turnover will

persist in the immediate future are the following three points:

First, it is a widely acknowledged demographic fact

that the low birthrates of the 1930's have already resulted

in a decline in the prime source of middle managers: males

19
in the 35 to 45 age bracket.19 Moreover, this group ".

will not regain its 1963 peak until 1979. Indeed, the

number of men in this age bracket will have dropped by more

than 1 million (8% below the 1963 level) by the time it hits

bottom in 1974."20

Second, coupled with the decreasing supply will be an

increasing demand: "It is expected that by 1975, there will

be 90 million persons in the work force and we will need

three million additional men to assume managerial roles

among them."21 In short, "By 1975, the managerial shortage

will be much more serious than our shortage of.other










industrial specialists (engineers, scientists, etc.)."22

"Aptly, the famine is called the Middle Management Gap."23

Third, concurrent with the decreasing supply of poten-

tial executives there seems to have been a fundamental shift

in loyalties. In the words of one placement specialist:

The modern concept of management being a
profession in and of itself, which has
been fostered by the business schools, is
one cause of job switching. For under this
concept a man has more loyalty to his pro-
fession, that of being an executive, than
to his company.24

Whatever the reason for this shift, ". organizational

loyalty in its old form plainly is dead, and it is not

25
likely to be revived ." in the foreseeable future.2


Summary

Thus, ". we face a decade in which .very keen

competition is likely to develop for men in the age group

over 35."26 And, in the presence of such competition, old

organization loyalties appear to be fading. Therefore, it

seems reasonable to conclude that high levels of corporate

turnover will persist with all the attending costs and dis-

ruptions.











The Causes of Mana erial Tirnover


Although the causes of turnover are probably as numer-

ous as the individuals who change jobs, attention will fo-

cus upon the more commonly cited reasons.


Opportunity for Future Growth

The most frequently mentioned motive is the desire to

hold positions which provide the manager with an opportunity

for future growth. Included here are such variants as a

hunger for greater responsibility, a need for bigger chal-

lenges, a wish for increased job relevancy, and the like.

Furthermore, these conclusions are supported by empirical

27
field research27 in addition to sounding likely on an a

prior basis:

most American executives are ambitious.
If they feel that the company they are with,
for some reason or other, isn't going to af-
ford them the opportunity to move up, they are
inclined to look around or be receptive to
discussions with other companies.28

Admittedly,

the problem may not be as much the lack
of opportunity as management's failure to make
it known. In many instances, subordinates in-
sist that they need wider powers when actually
they have all the authority they need ..

However, the actual opportunity in any job is wholly irrel-

evant if it is not perceived by the individual. Obviously,










it is management's duty to communicate.

Therefore, whether "slow promotion in the present spot,"30

31 32
rigidly defined jobs,3 lack of interest,32 lack of respon-

sibility,33 insufficient challenge,34 or the like are of-

fered as reasons for managerial turnover, they all seem to

revolve around the desire for an opportunity to grow.


The Need for Recognition

Closely allied to the demand for growth is the need

for recognition. The individual wants to be told ". how

important his work is, or how needed he is, or how valuable

he is to the organization."35 This need is emphasized clearly

by one study: ". middle and lower level managers tended

to describe their jobs as of lower status and interest the

longer they were in their jobs."36 One possible explanation

offered was that ". .. individuals who remain in the same

job may feel they are being overlooked as far as promotion

is concerned and thus developed negative job attitudes."37

Obviously, it is not possible to promote everyone in an

organization as rapidly as they would like. But, it is pos-

sible to minimize negative job attitudes by increasing the

office holder's interest through other forms of recognition

(e._., a larger office, pay increases, etc.).










Remuneration

Money is listed third because it generally
is number three in importance as a reason
for .. resignations.38

However, this ranking does not fully appreciate the complex-

ity of money as a cause of turnover: not only must the rate

of pay ". be competitive with the rate that same talent

could get in another organization .,39 but "Unfair

handling of salaries can be as big a headache as under

paying. "40

As the placement director at U.C.L.A. said:

Twenty-five years ago, a person who did not
go into business relegated himself and his
family to second-class economic status.41

However, today there are other alternatives such as government

or education. Moreover, couple such opportunities with the

mobility exhibited in this country, and it is clear that to

be competitive means American business must look at more than

the remuneration paid in its community or industry.

Even when the financial package is competitive, salaries

must be equitably related throughout the organization:

Not that the competitive aspects of salary
are to be discounted, of course. But to
many executives, the differences in pay scales
between companies .are not nearly as
important as the .. .pay levels of their
own associates.42











This additional complexity enters in because of the symbolic

value of money:

For these men money has great significance
as an indication of what their superiors
think of their contribution. .43


Operational Conflicts

Beyond the opportunities for growth, the need for recog-

nition and remuneration, there exists a whole range of prob-

lems which may arise from the day-to-day operation of the

company.

Personality conflicts (when not used as an excuse or

rationalization for some other source of conflict) are prob-

ably an unavoidable source of turnover.44 Similiarly, con-

tinually inconsiderate management (e.. transferring an

executive rather than spreading the.burden) may lead to

45
turnover.

Other sources of displeasure, which might cause job

switching, may result unintentionally from the operation of

the company. Such sources as the following have been

mentioned: inadequate budgets;46 disagreement with policies;47

differences of philosophy; and numerous symbolic factors

like the thickness of carpets, size of offices, number of

windows, etc.49










Pure Mobility

Pure mobility, or moving for the sake of moving, ap-

pears to be a recent development.

Professor Jennings may be the first to have
spotted this more fundamental drive that
makes today's ablest corporate managers
tick. Interviews with hundreds of managers
at all levels have convinced him that move-
ment is no longer a means to an end but an
end in itself.0

That is, ". it is not power or money or position, but

getting positions and leaving positions that counts. This

is one reason why the leverage rate has increased drastically

in the past ten years."51 Therefore, this cause of turnover

does not seem organizationally based. Instead it appears to

be culturally embedded. Albrook explains this development

as follows:

By the Korean war, the .growth of
technology and the .economy had begun to
generate a huge demand for managers and pro-
fessional men with up-to-date education and
skills. At the same time, low depression birth
rates began to show up in a shortage of college
graduates and later in a steady shrinkage in the
age group that provides young managers. In a
sellers' market, mobility became easier and
safer.
Better-educated managers had higher estimates
of their own abilities and expectations of op-
portunities and rewards that seemed brash to
older executives. When the new man-
agement breed confronted old-time middle managers,
who had learned their profession the hard way
and been reared on the virtues of patience
and corporate loyalty, the clash of values










produced more turnover. Older men left in
a huff when they saw younger men took off
when they encountered a slow-moving superior
whom they could neither bypass, dislodge,
52
nor respect.


Summary

It appears, therefore, that the primary causes of turn-

over arise from two broad sources: from recent changes in

society and from the nature of some business organizations

themselves.

Measures aimed at reducing turnover will be presented

below.



Preventing Turnover


Unlike the previous section, attention will focus upon

not only those concepts commonly offered to prevent or les-

sen managerial turnover but also upon those measures which,

because of their uncommon nature, might inject new life into

programs aimed at reducing this turnover.

Organizationally, the following discussion will treat

causes of turnover which arise from both business organizations

and society. Emphasis will be placed on the former since,

obviously, there is quite little individual organizations

can do to lessen turnover of the latter type.










Toward Reducinj Business Generated Turnover

Most suggestions aimed at reducing turnover primarily

concentrate on a range of problem areas which parallel the

range of causes associated with turnover.


Providing recognition and an opportunity for growth

In many companies, up to 50 percent of college
graduates recruited as potential managers quit
within five years Those who resign
usually blame 'lack of opportunity.' This can
mean no more than a failure of the company to
demonstrate a serious early interest in their
potential.53

As a result, "Graduates are developing their own

training programs by making several job transfers in the

early years of their careers."54

The point that stands out is the need for a training

program which provides development for executives while using

the individual's potential. Failing to find such a program,

some firms have eliminated or shortened training programs in

hopes of reducing turnover.55

A realistic approach along these lines is one adopted

by American Telephone and Telegraph Company, Inc. (A.T. & T.).

A.T. & T. trainees are now sent out into the
field as assistants to district managers or
superintendents who may supervise as many as
300 or 400 people. The trainees are
assigned to tasks that the manager would other-
wise have to do himself, jobs that encourage
a lot of self-development and can be measured.










On the executive level, E.I. duPont's executive devel-

opment programs ". have discreet provisions for easing

certain personnel into positions where they are less likely

to collide with able executives on their way up."57 It is

argued further that "Knowing there will be no long-

tenure human obstacles in the way of promotion encourages

capable executives to stay."58 It encourages them to stay

not only because of the opportunities that would exist but

also because, while these individuals are getting promotions,

they are receiving recognition. Therefore, the A.T. & T.

and duPont approaches seem to be an improvement over "The

pat answer .that the executive is responsible for

developing .himself."59 Moreover, it avoids situations such

as ". exceedingly capable executives on the secondary

level of management sweating out for five to seven

years the retirement of senior executives who have long since

lost their full effectiveness."60

Underlying these approaches must be a complete commit-

ment to hire from within when sufficient talent exists.

Beyond this, it also is recommended that firms "Give

proper publicity to .personnel for their inventions,

patents, publications .. ,61 and other efforts.










Remuneration

Compensation plans can be a significant source of turn-

over at all levels in the organization. However, if the

firm's compensation package (including incentives and fringe

benefits) is competitive and equitable, managerial losses to

other firms for financial reasons will be minimal and prob-

ably not significant enough to justify active concern.


Communications

while profit incentive and frequent pro-
motions remain major lures, most personnel
authorities still feel that lack of communication
remains the most significant reason for executive
unrest.6

As pointed out in the second part of this chapter, it

is management's responsibility to communicate. A firm with

extensive benefits, opportunities and the like may face high

levels of turnover simply because these aspects have not

been properly communicated throughout the organization.

Aside from company bulletin boards, newspapers, and wide

circulation of all but the most confidential memos, the

sincere and periodic use of performance appraisals probably

represents the most ideal means by which top management can

effectively communicate objectives throughout the organiza-

tion.










Lastly, it is hard to disagree with Flarshiem's asser-

tion that "An open door to top management is the No. 1

element to get and retain top personnel in a company."63


Psychic income

To appeal to some executives, ". more and more

companies today are offering what psychologists would call

'psychic income'--in other words, the plain, old-fashioned

status symbol."64 Two factors are contributory to the in-

creased popularity of this preventive technique. First,

items with psychic value such as carpeting, office size, and

company cars "show." And, since they are more visible than

some marginal wage increase, they enhance status.65 Second,

.. in this affluent society, immediate rewards often

take a back seat to such intangibles as psychic satisfaction

in the job .66 That is, top executives of major

American firms, already receiving some of the largest salaries

in the world, probably have little need for the after tax

increase a monetary raise would yield.


Leadership and the decision-making process

The more democratic the organization, ceteris paribus,

the lower turnover is apt to be.

Most companies feel that a management that al-
lows a judicious amount of individual decision-










making and easy communication between sub-
ordinates and superiors will fare better,
and have less turnover, than one that rules
autocratically.67

More specifically, a procedure used at the Detroit

Edison Company was aimed at letting middle management share

in the goal-setting process.68

The executives are invited not only to set
their own long-range work goals but to for-
mulate policies to that end--subject, of
course, to company approval. The program
is likely to weed out the indecisive, less
aggressive individuals, while giving the
more assured and assertive executives the
feeling that they participate in company
69
decisions.


Locking in executives

A good many large companies try to lock
in their executive with an old management
standby: a supposedly defection-proof
array of salaries, pensions, benefits and
70
stock options.

However, the problem with such an approach is that the

cure, if effective at all, may be far worse than the ailment:

first, ". none of the lures can guarantee executive re-

tention since most companies have them."71 Second, ".

if the fences are high enough to corral men of exceptional

value for a time, they are almost certain to lock in mediocre

men for life. Soon second-raters clog the channels of

advancement. Blocked, abler men below start polishing up










their resumes."72 In the long run, the costs associated

with this technique may be too high.


Summary

.The underlying basis for all the above procedures--

except the last--is good human relations: treat individuals

as individuals; treat them fair; trust them; provide them

with responsibility, recognition, and a future in which they

can grow.' In short, "'Identify prospects early, overload

them, watch them and reward them.'"73


Toward Reducing Culturally Generated Turnover

The methods presented above concentrate on correcting

probable deficiencies in organizations or locking in exec-

utives by making their financial arrangements so appealing

they could not foresake them for another employer.

Here the orientation changes: concern will focus upon

what firms can do to minimize the unfavorable aspects con-

nected with the mobicentric man--one who views mobility as
74
an end in itself.74 But, since mobicentric managers appear

to have emerged largely as a result of cultural changes, there

is little individual companies can do. As Albrook reasons:

S. it is difficult or impossible for a
company to find any useful or consistent pat-
tern of motives, and not a few industrial
psychologists doubt that individuals themselves










can sort out and objectively report their
reasons for job switching. It seems pos-
sible that in many cases these motives are
only the shifting and changing facets of a
larger feeling that taking on a new job,
mastering it, anc moving on to another is
itself a hallmark of success and growing
competence. The other rewards have become
fringe benefits or mere symbols of the cen-
tral essential accomplishment.75


Adjusting to the mobicentric

If Albrook's reasoning is accepted, then it appears

companies have three options:

1) Tolerate the mobicentric manager;

2) Where possible, avoid employing indi-
viduals whose records indicate high
levels of mobility; or

3) Attempt to use such individuals suc-
cessfully.

Tolerating the mobicentric.--Tolerating or coping with

such individuals hardly seems constructive. It is decision-

making by indecision; and it does not seem to be the best

alternative.

Avoiding mobicentrics.--Avoiding mobicentrics is, at

least, a conscious decision. However, such an ostrich-like

approach would not be an effective decision: first, the

increase in mobility coupled with the decline in the 35 to

45 age population would limit the firm's staffing options.

Second, avoiding potential mobicentrics may be impossible











since it may not be possible to determine vwho they are

(e. ., new college recruits). Third, this approach views

mobicentrics as a problem rather than a challenge.

The use of mobicentrics.--By accepting Albrook's

analysis of the mobicentric individual and the view the

mobicentrics represent a challenge--rather than a problem,

it may be possible to successfully employ them for long

time periods.

One possibility that might have appeal to the mobicentric

is as follows:

'Top management in general doesn't seem to
realize that entrepreneurial companies
are more attractive and seem more rewarding
to managers than custodial types.'
In the years ahead, large companies may
find it necessary to break themselves up .
into smaller, separate pieces, each of which
76
would be run as an independent company.

To this, one president added that

'. .. the only way small companies can sur-
vive in the future is to operate in an associ-
ation as satellites surrounding a larger com-
pany.' It does not take too much imagination
to push that idea one step further and suggest
that perhaps the only way for the large com-
pany to survive is to create the satellites.77

Moreover, in the present context, it takes even less imagi-

nation to envision such planet/satellite arrangements with

a common managerial pool. Extended even further, one could

visualize ". .. the exchange of middle managers from










1,78
government and industry .78 Or, exchanges between

different firms might be possible, even desirable.

If, instead, organizations grow larger and/or exchanges

of personnel between corporations, industries, and/or

government cannot be arranged, personnel departments might

be able to retain mobicentric individuals by using intra-

corporate competition (between independent units) to simulate

the inter-corporate job market. In this way, mobicentrics

could maintain their high levels of vertical, lateral, and

geographic mobility while at the same time the corporation

would have lowered its turnover and recruitment efforts.

Failing to establish a managerial pool or an in-house

mobility network, companies would most likely be forced to

either tolerate mobicentrics or avoid hiring them: in the

first case, turnover would remain high and probably increase.

In the second situation, the firm would be limiting the

source of future recruits.



Summary


The problem area of inter-corporate mobility can be

viewed from two sides. First, there is the individual's

perspective: does leveraging appear to be useful or hinder-

ing? Second, there is an organization perspective: what










impact does leveraging have upon the firm? What causes it?

How can it be prevented or lessened?

This chapter has focused upon the organizational view-

point. Specifically, it was pointed out that the true im-

pact on the firm cannot be accurately measured although it

is generally agreed that managerial turnover is very costly.

Second, several causes of turnover were discussed. These

included lack of opportunity for growth, lack of recognition,

remuneration, operational conflicts, and pure mobility.

Lastly, based upon these causes, several commonly recognized

approaches to prevent turnover were pointed out. Providing

opportunities for growth and recognition, competitive and

equitable remuneration, open communications, psychic income,

good leadership, locking executives in, and adjusting to

mobicentric individuals were the techniques mentioned.

The following chapters will focus primarily on the

individual's viewpoint.










;OTf ES


Harold A. Miller, "1,300 Presidents and Vice Presidents
Who Made It," Business Management, Volume 36, Number 3
(June, 1969), p. 20. N.A., "One-fifth of Jobs Go to Out-
siders, Survey Finds," Management Services, Volume 4,
Number 3 (May-June, 1967), p. 7. N.A., "Those Restless
Young Executives," Dun's Review, Volume 92, Number 1
(July, 1968), p. 37. Robert C. Albrook, "Why It's Harder
to Keep Good Executives," Fortune, Volume 78, Number 6
(November, 1968), p. 137.

Eugene E. Jennings, The Mobile Manager: A Study of
the New Generation of Top Executives, (Ann Arbor: Graduate
School of Business Administration, The University of Michigan,
1967), p. 24. Or, Albrook, op. cit.

William H. Whyte, Jr., The Organization Man, (New
York: Simon and Schuster, Inc., 1956), p. 131.

Ibid.

Eugene E. Jennings, "Mobicentric Man," Psychology
Today, Volume 4, Number 2 (July, 1970), p. 35.

Albrook, 2p. cit., p. 138.
7.
N.A., "1700 Top Executives," Fortune, Volume 60,
Number 6 (November, 1959), p. 140.

Judith Dolgins, "A Good Man Is Hard to Keep," Dun's
Review and Modern Industry, Volume 81, Number 5 (May, 1963),
p. 64.

"One-fifth of Top Jobs Go to Outsiders, Survey Finds,"
op. cit.
10
Jennings, "Mobicentric Man," p._ cit., p. 70.

1Dolgins, op. cit., p. 63.

12
1Richard Allen Stull, "Manpower Planning at the Manage-
ment Level," Personnel Journal, Volume 46, Number 6 (June,
1967), p. 348.







44


13Joseph G. Mason, "How to Keep Key Executives,"
Nation's Business, Volume 54, Number 8 (August, 1966),
p. 75.
14
Ferdinand F. Fournies, "The Real Reasons People
Quit," Administrative Management, Volume 30, Number 10
(October, 1969), p. 45.

J5aala Weingarten, "How Do You Keep Executives?"
Dun's Review and Modern Industry, Volume 88, Number 1
(July, 1966), p. 35.

1Dolgins, op. cit.
17
17bid.
18
Albrook, op. cit., p. 176. Also see, Fournies,
op. cit., p. 45.

19
9For example see, Arch Patton, "The Coming Scramble
for Executive Talent," Harvard Business Review, Volume 45,
Number 3 (May-June, 1967), pp. 155-56, 159. Salvatore V.
Didato, "Some Reminders About Selecting Good Managers,"
Personnel Journal, Volume 49, Number 6 (June, 1970), p. 489-
91. John Perham, "Where Are Tomorrow's Executives?" Dun's
Review and Modern Industry, Volume 87, lumber 6 (June, 1966),
p. 91. John T. Dunlop, "The Nation's Manpower Arrangements,"
The Conference Board Record, Volume 7, Number 3 (March,
1970), p. 28. M.F. Feilke, "Women, Women Everywhere, But
Not a Manager in Sight," Iron Ae, Volume 206, Number 9
(August 27, 1970), p. 63. N.A., "Management Crunch: 'The
Dearth of Births,'" Sales Management, Volume 98, Number 10
(May 15, 1970), p. 102. N.A., "Demand for Managers Dips--
But Shouldn't," Iron Age, Volume 205, Number 7 (February 12,
1970), p. 25. N.A., "Not Enough Chiefs," The Magazine of
Wall Street, Volume 121, Number 12 (March 2, 1968), p. 42.

20Patton, op. cit., p. 156.

2Didato, op. cit., p. 489.

22
2Ibid.

23
Feilke, op. cit., p. 63.


24Dolgins, op.cit., p. 64.










25
Albrook, op. cit., p. 180.

2Dunlop, op. cit., p. 28.

27
See, for example, the following: Mason, op. cit.
Perham, op. cit. p. 91. Weingarten, op. cit., p. 35.

28N.A., "The Reasons Top Executives Change Jobs,"
Nation's Business, Volume 56, Number 2 (February, 1968),
p. 84.

29
2Mason, op. cit.

30N.A., "Recruiter Gives Methods to Forestall Executive
Loss," Management Services, Volume 5, Number 2 (March-April,
1968), p. 9.

31Ibid.

32
3Fournies, op. cit. p. 46.

33Dolgins, op. cit.

34"Those Restless Young Executives," op. cit., p. 38.

35Fournies, op. cit., p. 45.

36Edward E. Lawler, "How Long Should a Manager Stay in
the Same Job?" Personnel Administration, Volume 27, Number
5 (September-October, 1964), pp. 7-8.

37Ibid., p. 27.

38Fournies, op. cit., p. 46.

39Ibid.

40Ibid.

41"Those Restless Young Executives," op. cit., p. 39.

42Dolgins, op. cit., p. 116.

43Ibid.

44Fournies, op. cit.










45"Recruiter Gives Methods to Forestall Executive
Loss," op. cit.

46Mason, op. cit. Dolgins, o cit., p. 64.

4Mason, op. cit,

48George J. Berkwitt, "The Revolt of the Middle Managers,"
Dun's Review, Volume 94, Number 3 (September, 1969), p. 40.

49Weingarten, op. cit., p. 36.

Albrook, op. cit., p. 139.

51Jennings, The Mobile Manager: A Study of the New
Generation of Top Executives, p. 25.

52Albrook, op. cit.

53
Robert C. Albrook, "How to Spot Executives Early,"
Fortune, Volume 78, Number 1 (July, 1968), p. 106.

54N.A., "Job Hopping Recruits Still Plague Companies,"
Steel, Volume 164, Number 20 (May 19, 1969), p. 72k.

55"Those Restless Young Executives," op. cit., p. 38.

5Ibid., pp. 38-39.

57
5Weingarten, op. cit. p. 35.

8Ibid.

59Dolgins, op. cit.

6Ibid.

6Theron F. Miller, "How to Slow the Turnover Flow,"
Personnel Journal, Volume 47, Number 5 (May, 1968), p. 322.
62
Weingarten, op. cit. p. 36.
63
Henry Flarshiem, "How Do You Motivate and Hold on to
Your Best Executives?" Sales Management, Volume 97, Number
14 (December 15, 1966), p. 50.










6Weingarten, o__. cit.

65Ibid.

66"Those Restless Young Executives," op. cit., p. 37.

7Weingarten, op. cit., p. 59.

68Ibid., p. 36.


69Ibid.

70Ibid., p. 59.
71
71Ibid.

7Albrook, "'hy It's Harder to Keep Good Executives,"
op. cit., p. 137.

73Perham, op. cit., p. 93.

74
7Albrook, "Why It's Harder to Keep Good Executives,"
o2p. cit., p. 139.

75Ibid.

7Berkwitt, op. cit., p. 41.

77Ibid.

78Albrook, "Why It's Harder to Keep Good Executives,"
op. cit., p. 180.














CHAPTER III

METHODOLOGY



Introduction


In Chapter III, the primary purpose will be to describe

the sample and methodology used in this mobilographic study.



The Sample


The sample was drawn from the presidents of the top

500 industrial corporations as ranked by Fortunel on the

2
basis of sales. Admittedly, when compared with the total

of business enterprises in-this country, a mere 500 industri-

al corporations may seem to be a small number. However,

this group is quite significant. Based on figures compiled

by Fortune3 in 1970, these 500 companies employed over 14.7

million employees, had sales in excess of 465 billion dol-

lars, and had assets valued at more than 401 billion dollars.

Specifically, the sample was comprised of the following

individuals:

a) Those who were president of one of America's
largest 500 industrial corporations in 1970,
and










b) Those who were made president of such
corporations during the 1967 through 1969
period but were subsequently replaced be-
fore 1970.

After eliminating from this sample those presidents about

whom data were insufficient and those who were founders or

relatives of founders, the actual sample size was 456.

(Those individuals omitted are indicated in Appendix A.)


Presidential Characteristics

Since the primary objective of the present study is

concerned with mobility, only brief mention will be made

of the group's characteristics.

As a group, the 456 individuals had an average age of

49.1 years when they were made presidents. However, their

ages ranged from 29 to 67 years of age. And, although many

presidents obtained that position through inter-corporate

job changes and registered zero years experience with their

firm, their average years of service before being made

president were 15.8, with one individual having 46 years of

service before reaching the presidency.4

Educationally, the group average was slightly above

the bachelor's level with 158 of the presidents having ob-

tained at least one graduate degree.5

All of the 456 individuals studied were males.










Research Procedure


Data Collection

To evaluate the hypotheses set forth in Chapter I, the

following information was obtained from corporate direc-

tories6 about each of the presidents included in the final

sample:

a) The age and year when the individual became
president;

b) The length of time the individual was with the
firm prior to becoming president;

c) The extent each person had leveraged in his
career;

d) The number of mobile presidents who returned to
a firm with which they previously had been em-
ployed; and

e) The number of mobile presidents who leveraged
after having become a top officer.

In collecting this information, several guidelines

were followed. First, a subject who left his company for

reasons of health, education, military or governmental ser-

vice was not considered to have leveraged if he returned

directly to the corporation which employed him prior to his

leave. If instead the individual went to work with another

firm, he was credited with one leverage. In either event,

his length of service was based only upon the actual years

employed by the firm (e.f., a person who had been employed











by a company from 1950 to 1970, and had left the company

for two years because of the Korean Police Action, was

credited with 18 years of service).

Second, transfers from one subsidiary to another or

to the parent company were not viewed as leveraging.

Third, individuals working for firms which were ac-

quired by another company were not considered to have

leveraged to the acquiring firm. Moreover, their length of

service was computed from the time they started to work for

the acquired firm.

Fourth, if a subject's company was acquired by a firm

he had worked for previously, this action was deemed beyond

the control of the individual and not counted as a leverage

to the previous firm.

Fifth, as indicated above, those subjects about whom all

necessary data were unavailable, who began their own com-

panies, or who were relatives of founders were omitted from

the sample.


Evaluation Procedures for Hypotheses

To facilitate presentation, the hypotheses will be

segregated into three groups, and the procedures applied to

each hypothesis will be discussed.


_ _










Group One Hypotheses: How Frequent Is Leveraging?

As a group, the purpose of the first collection of

hypotheses will be to establish the importance of the

problem area. For clearly, if leveraging is in fact rare

or is used primarily to further the individual's career

goals with one company, the importance of the problem area

would be diminished.

More specifically, this group will provide a better

understanding of how widely leveraging has been used by the

presidents studied, how common it has been at higher mana-

gerial ranks, and whether leveraging has been used as a

means to acquire a higher position in a corporation with

which the individual was previously associated.

Methodologically, the approach utilized for this group

will be one of measuring the frequency of leveraging with

respect to the situations outlined by each hypothesis. That

is, a descriptive approach will be employed.


Hypothesis one.--As stated in Chapter I, the first

hypothesis is as follows:

All presidents of the 500 largest, industrial
corporations surveyed have leveraged once, and
60 per cent have leveraged twice.7

Quite obviously, the evaluation of this hypothesis will

require determining:










a) Whether all presidents have in fact leveraged
(as Jennings so straightforwardly asserted in
his book), and

b) Whether sixty per cent of these presidents have
leveraged twice.

This will be accomplished by obtaining the percentage of

all presidents who leveraged once and the percentage of

those who leveraged twice. By so doing, it will be pos-

sible to ascertain the extent to which leveraging has been

employed by the presidents of leading corporations during

their careers.

Hypothesis two.--Although it is believed the use of

leveraging is widespread, its occurrence at the highest

corporate ranks below the presidency is probably not very

common. For at this point, the executive is clearly in the

arrival stage of his career. ("This stage is measured by

how frequently and with what duration the individual inter-

acts with the president on a face-to-face basis.")9 Thus it

would seem reasonable to argue, a priori, that the arrival

stage affords the executive greater autonomy, responsibility,

and challenge. As such, the executive most likely would

have greater loyalty to the organization on the one hand,

and, on the other, he would have more to lose by appearing

disloyal and looking for another position elsewhere. There-

fore, it seems reasonable to assert that leveraging among

top officers is rare.










The second hypothesis reflects this belief:

Of those presidents who leveraged, less than
5 per cent leveraged after becoming a top
officer in a company (e.g., Executive Vice-
President, Vice-President, Treasurer, or Secre-
tary).

Once again, the procedure to evaluate the hypothesis is

simple and direct: the percentage of all mobile presidents

who leveraged after becoming top officers will be obtained.

Then the actual result will be compared with the expected

one to determine how frequently leveraging has been used

at high ranks by presidents during their careers.


Hypothesis three.--At the beginning of Chapter I,

Freedgood was quoted as stating:

Top-flight executives no longer feel a
prime loyalty to the corporation. There is
a new set of values at work: loyalty to a
discipline or a profession, and to a personal
10
career.

11
If Freedgood and others are correct in their assessment,

then it seems most unlikely that an individual would lever-

age from one company to another for the purpose of enhancing

his future prospects with the first firm. Moreover, both

the first firm and the individual would probably have reser-

vations: those re-hiring the individual would probably

doubt his loyalty, and the individual would question the

warmth and sincerity of his homecoming. Therefore, it would










be very seldom that an individual would return to a company

with which he was previously associated.

This is more specifically set forth in the third hy-

pothesis:

Less than 1 per cent of the presidents surveyed
leveraged back to a company with which they were
previously associated.

Exactly how unlikely it has been will be ascertained

by determining the percentage of all presidents who have

leveraged back to a firm with which they were previously

associated.

Group Two Hypotheses: Has Leveraging Helped?

Irrespective of the frequency of leveraging, the

question of whether it has helped mobile presidents still

remains. The group two hypotheses are aimed at answering

that question.

More specifically, this group of hypotheses has as a

dual purpose:

a) The determination of whether mobile presidents
or their non-mobile counterparts achieved that
position at an earlier age; and

b) The determination of whether more mobile presi-
dents achieve that position at an earlier age
than their less mobile counterparts.

Hypothesis one.--In the belief that mobile presidents

would exploit opportunities for advancement more actively










(e.g., they will even seek out other opportunities), the

following hypothesis was set forth:

When compared with those presidents who did not
leverage, mobile presidents had a lower average
age when made president.

Assuming the mobile presidents do have a lower average

age, this hypothesis will be tested by employing the

Kolmogorov-Smirnov two-sample test.12 Moreover, since the

hypothesis ". indicates the predicted direction of the

difference, a one-tailed test is called for."13

This test was selected because it ". is a test of

whether two independent samples have been drawn .from

populations with the same distributions."l4 That is, this

test will.make it possible to determine whether the differ-

ence between the cumulative frequency distributions associ-

ated with the mobile and the non-mobile presidents is sta-

tistically significant.

If the averages are in the predicted direction, and

are statistically significant for a one-tailed test at the

.05 level, the hypothesis will be accepted.


Hypothesis two.--As an extension of the previous hy-

pothesis, hypothesis two states:

The more frequently presidents have leveraged,
the lower their average age was at the time
they became president.










If it is correct, then.the average age when made president

(A;:w;4P) for those who did not leverage should be higher

than for those who had leveraged once. Likewise, the

AAWMP for those who leveraged once should be higher than

for those who had leveraged twice, etc. Restated, those who

have leveraged N times should have a lower AAWMP than those

who have leveraged N-l times.

Here again, the hypothesis will be tested by using the

Kolmogorov-Smirnov two-sample test.15 And, as in the pre-

ceding hypothesis, a one-tailed test will be applied since

the hypothesis predicts the direction of the difference.16

This will be accomplished by comparing the cumulative

frequency distribution of presidents by the age at which

they achieved the presidency for those who did not leverage

with those who had leveraged once. Then the comparison will

be made between those who had leveraged once and those who

had leveraged twice, etc. This procedure will be repeated

for the N groups until the cumulative frequency distribution

by age for group N-l has been compared with the distribution

for group N.

The hypothesis will be accepted if all average ages

are in the predicted direction and the differences in the

underlying distributions are statistically significant for

a one-tailed test at the .05 level.










Group Three Hypotheses: What Recent Trends Exist?

Many theorists and practitioners argue that the use of

leveraging has been increasing.17 Jennings believes that

the use of leveraging has been increasingly common in the

careers of presidents.18 The first hypothesis of this

group will evaluate Jennings' belief by studying those

presidents made president in each of the four years from

1967 to 1970.

Furthermore, the second hypothesis will attempt to

show indirectly that leveraging at higher managerial ranks

among these subjects has increased too.


Hypothesis one.--The first hypothesis of this group

states:

During the 1967 to 1970 period, there has been
an increase in the percentage of presidents
who have leveraged in their career.

The procedure to be employed here is twofold: first,

the percentage of presidents who have leveraged in their

career will be determined for each year of the four-year

period, 1967 to 1970. It is hypothesized that the percent-

age of presidents made president in 1967, and who have lever-

aged, will be smaller than the corresponding percentage for

1968. Likewise, the percentage for 1968 will be smaller

than the one for 1969, and the 1969 percentage will be

smaller than the 1970 percentage.










Second, if this relationship holds, it will be tested

by use of the Kolmogorov-Smirnov one-sample test. This

test differs from the Kolmogorov-Smirnov two-sample test

in that this test compares the observed cumulative fre-

quency (of presidents who did leverage in each year) with

the theoretical cumulative distribution. The theoretical

distribution is determined from the null hypothesis which,

in this case, means that the percentage of presidents made

president and who have leveraged in any one of the four

years is 25% of the total number of such presidents ob-

served. That is, the theoretical cumulative distribution

would be 25%, 50%, 75%, and 100% for 1967, 1968, 1969, and

1970, respectively.

For this hypothesis to be accepted, the relationship

between the percentage of mobile presidents made president

each year must be in the predicted direction and statis-

tically significant for a one-tailed test at the .05 level.


Hypothesis two.--The last hypothesis states:

During the 1967 to 1970 period, the widening use
of leverage at higher ranks will be indicated by
an increasingly larger decline in the average
number of years of service presidents have with
their firm when compared with the decline in the
average age of presidents at the time they a-
chieved that position.










The evaluation procedure for this hypothesis is also

twofold: first, the rate of decline in the average number

of years of service will be compared with the rate of de-

cline in the average age of presidents when made president.

This will be done for the following periods: 1967-68,

1968-69, and 1969-70. In each of these three periods, the

percentage decline in the average number of years of serv-

ice (ANYS) should be greater than the percentage decline in

the average age when made president (AAWMP). Moreover, the

difference between the percentage decline in ANYS and the

percentage decline in the AAWMP should become larger in the

1968-69 period and still larger in the 1969-70 period.

Second, assuming these restrictive assumptions are

met, the statistical significance of these results will be

ascertained. The Chi-Square test for four samples will be

used to accomplish this. Briefly, the Chi-Square test

determines whether the differences between the observed

distribution and the expected distribution (as determined

from the null hypothesis) are significantly different. Un-

der the null hypothesis, the AAWMP and the ANYS for each

year should not be significantly different than the AAWMP

and the ANYS for the combined 1967 to 1970 group. There-

fore, half of the subjects made president in 1967 (and in










1968, 1969, and 1970) should be below the combined groups'

mean age and half above it under the null hypothesis. By

comparing the expected results under the null hypothesis

with the observed results, it will be possible to reject

the null hypothesis and accept the alternative hypothesis

if the differences are significant at the .05 level for a

one-tailed test. That is, if the distributions of the age

when made president and the number of years of service are

statistically significant over the 1967 to 1970 period,

then the differences in the percentage decline between the

ANYS and the AAWMP will be accepted as having only a five

per cent (or less) chance of being a random occurrence.



Summary


This chapter's primary purpose has been twofold:

first, the source, size, and characteristics of the sample

were discussed. In that discussion, it was pointed out that

the net sample was composed of 456 males whose average age

was 49.1 years. These 456 individuals were selected from

the top 500 industrial corporations in America and did not

include those presidents who began their own companies or

were relatives of founders.











Second, the purpose and research procedure related to

each hypothesis was also discussed. Broadly speaking, the

first group of hypotheses was designed to determine the

extent of leveraging. The second group was employed to

determine if leveraging appears to have helped individual

presidents achieve the presidency more rapidly than their

non-mobile counterparts. The last group of hypotheses had

as its purpose the goal of uncovering any recent trends in

the use of leveraging.










NOTES


1
Eleanore Carruth, "The Fortune Directory of the 500
Largest Industrial Corporations," Fortune, Volume 81,
Number 5 (May, 1970), pp. 181-200.

2
According to Fortune, ". all companies on the
list must have derived more than 50 per cent of their
revenues from manufacturing and/or mining." Ibid., p. 184.

3Ibid., pp. 181-200.

4These figures were compiled from information contained
in Dun & Bradstreet Reference Book of Corporate Managements
1970, New York: Dun & Bradstreet, Inc., 1970.

5Ibid.

Ibid. Also, the Dun & Bradstreet Reference Book of
Corporate Managements for 1969, 1968, and 1967, were used.

This hypothesis is a test of an assertion made by
Eugene E. Jennings in his book, The Mobile Manager: A Study
of the New Generat.ion of Top Executives (Ann Arbor: Graduate
School of Business Administration, The University of Michigan,
1967), p. 24.

8Ibid.

9Ibid., p. 8.

1 Seymour Freedgood, "The Churning Market for Executives,"
Fortune, Volume 72, Number 3 (September, 1965), p. 152.

N.A., "Why They Want to Get to the Top," Iron Age,
Volume 197, Number 8 (February 24, 1966), p. 39. Also see
Arch Patton, "The Coming Scramble for Executive Talent,."
Harvard Business Review, Volume 45, Number 3 (May-June, 1967),
p. 156. Robert C. Albrook, "How to Spot Executives Early,"
Fortune, Volume 78, Number 1 (July, 1968), p. 106. N.A.,
"Those Restless Young Executives," Dun's Review, Volume 92,
Number 1 (July, 1968), p. 37. N.A., "More Managers Join
the Jobless," Business Week, Number 2125 (May 23, 1970),
p. 34.







64


12The Kolmogorov-Smirnov two--sample test is explained
in Sidney Siegel, Nonparametric Statistics for the Behavioral
Sciences (New York: McGraw--Hill Book Company, Inc., 1956),
p. 127.

13Ibid., p. 13.

14
Ibid., p. 127.

15
See footnote 12 above.

1Siegel, op. cit.

17See footnote 7, Chapter I.


18Jennings, o cit., p. 24.














CHAPTER IV

THE RESEARCH FINDINGS



Introduction

The results of the research outlined in Chapter III are

presented in this chapter.



The Results of the Group One Hypotheses


As stated in the previous chapter, the purpose of the

first group of hypotheses was to evaluate how frequently

leveraging has occurred. Specifically, the answers to three

questions were sought: how widely has leveraging been used

by the presidents studied? How common has leveraging been

at higher managerial ranks? And has leveraging been used

as a means to acquire a higher position in a corporation

with which the individual was previously associated?


Hypo thesis One

The first hypothesis stated that:

All presidents of the 500 largest, industrial
corporations surveyed have leveraged once and
60 per cent have leveraged twice.










The procedure employed to evaluate this hypothesis

was descriptive and direct: after screening out those

2
presidents whose records were unusable, the percentage of

presidents who leveraged once and the percentage who had

leveraged twice were determined.

The result of this procedure was as follows: of the

442 presidents holding that position in 1970, 60.6 per cent

(or 268 presidents) had leveraged once or more, and 33.3

per cent (or 147 presidents) had leveraged twice or more.

Clearly this hypothesis failed, and the frequency of

leveraging is not as common as argued by Jennings.


Hypothesis Two

The second hypothesis of group one was as follows:

Of those presidents who leveraged, less than
5 per cent leveraged after becoming a top
officer in a company (e.q., Executive Vice-
President, Vice-President, Treasurer, or Secre-
tary).

Here, too, the procedure was straightforward: the percent-

age of mobile presidents who leveraged after being made a

top officer was obtained. Of the 268 presidents who had.

leveraged, 135 of them had leveraged after being made a top

officer. That is, 50.4 per cent of the mobile presidents or

30.5 per cent of all presidents used in this study had lever-

aged after being made a top officer.










This hypothesis was rejected too.


Hypothesis Three

The last hypothesis of this group argued that:

Less than 1 per cent of the presidents surveyed
leveraged back to a company with which they were
previously associated.

The evaluation of this hypothesis involved determining

what percentage of the 268 mobile presidents leveraged back

to a firm with which they were previously associated. Of

that sample, 2.6 per cent (or 7 presidents) worked for the

same firm twice at different points in their careers. (Re-

stated, of the 442 presidents studied 1.6 per cent worked

for the same firm twice.)

Since 2.6 per cent of the sample rejoined a firm with

which they were previously associated, this hypothesis was

also rejected.



The Results of the Group Two Hypotheses


The second group of hypotheses was aimed at determining

whether leveraging has helped those managers who have used

it. Toward that end, two questions were pursued: first,

do mobile managers achieve the position of president at a

younger age than their non-mobile counterparts? Second, do










more mobile managers achieve the position of president at

a younger age than their less mobile counterparts?


Hypothesis One

To learn if there was any significant difference be-

tween mobile and non-mobile managers with respect to the

age at which they achieve the presidency, the following

hypothesis was set forth:

When compared with those presidents who did not
leverage, mobile presidents had a lower average
age when made president.

The procedure to evaluate this hypothesis was twofold:

first, the mean age of both groups (i.e., mobile and non-

mobile presidents) was determined. Second, a one-tailed,

Kolmogorov-Smirnov two-sample test was employed to deter-

mine the statistical significance of the findings.

The results were as follows: the 268 mobile presidents

had an average age of 48.65 when they became president.

The 174 non-mobile presidents had an average age of 49.54

when made president. That is, the mobile presidents of

this sample, on average, became president almost one year

(.89 of a year) sooner than their non-mobile counterparts.

However, the one-tail probability of obtaining two distri-

butions (of mobile and non-mobile presidents) as divergent










as the two distributions found in this study by chance

would be 39 per cent.

Therefore, even though the average ages were in the

predicted direction, the hypothesis was not accepted be-

cause the results were not significant for a one-tailed

test at the .05 level or better.


Hypothesis Two

If mobile presidents achieve the presidency at an

earlier age than their non-mobile counterparts, then the

more mobile presidents should achieve the presidency at a

younger age than their less mobile counterparts. Following

that thinking, hypothesis two stated:

The-more frequently presidents have leveraged,
the lower their average age was at the time
they became president.

Hypothesis two was tested by grouping all presidents

by the number of times they had leveraged and computing the

mean age for each group. However, since the mean ages of

the groups were not in the predicted direction, there was

no need to calculate the statistical significance of the

results.

Table 1, on the following page, indicates that the

average age when made president (AAWMP) does decline when

moving from non-mobile presidents (those who leveraged zero











TABLE 1






Average Ages Associated
with Different Frequencies of Leveraging


Number Number Average
of in Age of
Leverages Group Group

0 174 49.5

1 121 48.7

2 58 48.8

3 50 48.6

4 24 49.0

5 7 49.6

6 5 50.8

7 3 45.0










times) to presidents who have leveraged once. However, the

AAWMP for those who leveraged twice is increasing rather

than decreasing as hypothesized.

Therefore, this hypothesis was rejected.



The Results of the Group Three Hypotheses


The purpose of the last group of hypotheses was to

determine whether leveraging has been increasingly common

in the careers of presidents during the last four years.4

If it has been, then the percentage of presidential openings

filled with mobile presidents would be on the increase.

Moreover, the importance of such a trend toward increased

mobility would be even more significant if it was accompa-

nied by an increase in leveraging at higher managerial lev-

els. That is, if the increased mobility was the result of

frequent moves early in their careers followed by stable,

long-term employment by the firm in which they subsequently

became president, the increased mobility would not warrant

significant attention.


Hypothesis One

To determine whether leveraging has been increasing

the following hypothesis was evaluated:










During the 1967 to 1970 period, there has been
an increase in the percentage of presidents
who have leveraged in their career.

This hypothesis was evaluated by determining the number

of presidents who obtained that position in 1967 and then

finding the percentage of that number who had leveraged.

This procedure was repeated for 1968, 1969, and 1970. Under

this hypothesis, the percentage of mobile presidents would

have had to increase in each subsequent year for the hy-

pothesis to hold.

As can be seen from Table 2, the percentage decreased

each year. Therefore, this hypothesis was also rejected.


Hypothesis Two

To assess the severity of leveraging at higher manage-

rial levels the following hypothesis was put forth:

During the 1967 to 1970 period, the widening use
of leverage at higher ranks will be indicated by
an increasingly larger decline in the average
number of years of service presidents have with
their firm when compared with the decline in the
average age of presidents at the time they a-
chieved that position.

That is, the hypothesis assumes that the average number of

years of service (ANYS) and the average age when made pres-

ident (AAWMP) would decline as a result of increased lever-

aging. However, as can be seen by Table 3, the ANYS and












TABLE 2







The Frequency of Leveraging Among
Presidents Made President During the 1967 to 1970 Period


Number Number Percentage
Made That That
Year President Leveraged Leveraged


1967 71 46 64.8

1968 71 40 56.3

1969 64 36 56.2

1970 22 12 54.6













TABLE 3











The Average Number of Years of Service (ANYS)
and Average Age When Made President (AAWl;:P) for All Mobile
Presidents Made President During the 1967 to 1970 Period


Year ANYS AAWMP


1967 7.7 49.6

1968 8.4 50.4

1969 10.4 50.7

1970 8.3 48.6










the AAWIP do not decline as hypothesized. In fact, when

mobile and non-mobile presidents are grouped together for

each year, the ANYS actually increases over the 1967 to

1970 period. (See Table 4.)

Therefore, this hypothesis was not accepted either.



Summary


The purpose of Chapter IV has been to state the re-

sults of the methodology outlined in the preceding chapter.

The results of this research have caused each hypothesis to

be rejected. Since such an outcome was completely contrary

to the widespread consensus found in the literature on mo-

bility, additional analyses of the data were conducted and

included in Appendix C.












TABLE 4











The Average Number of Years of Service (ANYS)
And the Average Age When Made President (AAWMP) for All
Presidents Made President During the 1967 to 1970 Period


Year ANYS AAWMP


1967 15.6 51.0

1968 16.7 52.0

1969 17.2 50.5

1970 18.0 49.3











NOTES


This hypothesis was a test of an assertion made by
Eugene E. Jennings in his book, The Mobile Manager: A
Study of the New Generation of Top Executives (Ann Arbor:
Graduate School of Business Administration, The University
of Michigan, 1967), p. 24.

2
As indicated in Chapter III, those subjects about
whom all necessary data were unavailable, who began their
own companies, or who were relatives of founders were
omitted.

3Jennings, op. cit.


4See footnote 18 in Chapter III.
See footnote 18 in Chapter III.















CHAPTER V

SUMMARY, CONCLUSIONS, AND IMPLICATIONS
FOR FURTHER RESEARCH




Overview


The purpose of Chapter V will be to summarize the pre-

ceding chapters, state those conclusions which can be de-

rived from this study, and discuss the implications these

conclusions hold for further research.




Summary


Introduction

Based upon the widely held belief that there has been

a shift in the prime loyalties of managers from the firm to

the career,l many writers argued that inter-corporate mo-

bility among presidents and top executives was widespread

2
and increasing.

Such a development presents management with a twofold

problem: first, increases in managerial turnover are dis-

ruptive and costly. However, the impact, causes, and pre-

vention of inter-corporate mobility only represent the










corporate perspective. And, although this part of the

problem area is important, it was not the primary concern

in this study.

Primary concern focused upon the other side of the

problem area: the manager's viewpoint of the increased

turnover. That is, does leveraging appear to have been a

common ingredient in the careers of those who have success-

fully achieved the presidency? The approach to this ques-

tion involved answering three subordinate questions: how

frequently has leveraging been in the careers of presidents?

Has leveraging appeared to help those who have used it?

What recent developments in the use of leveraging have oc-

curred?


Hypotheses

Corresponding to the last three questions, three groups

of hypotheses were set forth to be evaluated.

Group one hypotheses: how frequent is leveraging?

1) All presidents of the 500 largest, industrial
corporations surveyed have leveraged once, and
60 per cent have leveraged twice;

2) Of those presidents who leveraged, less than
5 per cent leveraged after becoming a top
officer in a company (e.g., Executive Vice-
President, Vice-President, Treasurer, Secre-
tary); and










3) Less than 1 per cent of the presidents surveyed
leveraged back to a company with which they were
previously associated.

Group two hypotheses: has leveraging helped?

1) When compared with those presidents who did
not leverage, mobile presidents had a lower
average age when made president; and

2) The more frequently presidents have leveraged,
the lower their average age was at the time
they became president.

Group three hypotheses: what recent trends exist?

1) During the 1967 to 1970 period, there has
been an increase in the percentage of presi-
dents who have leveraged in their career;
and

2) During the 1967 to 1970 period, the widening
use of leverage at higher ranks will be indi-
cated by an increasingly larger decline in
the average number of years of service presi-
dents have with their firm, when compared with
the decline in the average age of presidents
at the time they achieved that position.


Methodology and Results

The sample

The sample was selected from the presidents of the top

500 industrial corporations as ranked by Fortune4 on the

basis of sales. More specifically, the sample included the

following presidents:

1) Those who were president of one of America's
largest 500 industrial corporations in 1970,
and










2) Those who were made president of such
corporations during the 1967 through
1969 period but were subsequently re-
placed before 1970.

All founders, relatives of founders, and those for whom

data were insufficient were eliminated from consideration.


The evaluation procedures and their results

The process of evaluating the first group of hypotheses

was descriptive and direct: the percentage of presidents

who leveraged once, who leveraged twice, who leveraged

after becoming a top officer, and who leveraged back to a

firm each had previously leveraged out of was obtained and

compared with the expected results. As stated in the pre-

ceding chapter, the resultant percentages caused all three

of the group one hypotheses to be rejected.

In studying mobile presidents to see if they achieve

the presidency at an earlier age, the average age when made

president was determined for both mobile and non-mobile

presidents. It was found that mobile presidents did achieve

the presidency sooner by an average of .89 years. However,

this outcome was not statistically significant. The second

hypothesis of group two was also rejected. By grouping the

presidents by the number of times they had leveraged and

computing the average age for each group, it was determined










that the more frequently a president leveraged, on average,

did not result in hiMm being made president at an earlier

age.

Lastly, the third group of hypotheses was concerned

with recent trends. To evaluate whether the use of lev-

eraging by presidents during their careers has been on the

increase, the percentage of presidents made president during

the 1967 to 1970 period who had leveraged decreased from 1967

to 1970; this hypothesis was rejected. To assess the

severity of leveraging at higher managerial levels, the

average number of years of service presidents had with their

firms before being made president and the average age at

which they-were made president were determined. However,

since this last hypothesis in group three was based on the

assumption that the average number of years service and the

average age when made president would decline through this

period, the hypothesis was rejected when these assumptions

were not borne out by the data.



Conclusions


On the Frequency of Leveraging

With regard to the frequency of leveraging, the picture










which emerges from this research is as follows: of the

presidents studied, 60.6 per cent leveraged once and 33.3

per cent leveraged twice. But, of those who leveraged

over half (50.4 per cent) leveraged after being made a top

officer and only 2.6 per cent of them ever returned to a

company each had leveraged out of. Therefore, even though

leveraging was not as common as Jennings argued it would

be, it has been common, affecting over three-fifths of the

presidents studied. Moreover, with 30.5 per cent of all

presidents (or 50.4 per cent of the mobile presidents)

having leveraged after being made a top officer, it is

quite apparent that ". turnover at the executive level

is without doubt one of the most costly hidden items borne

by the modern corporation."5

Admittedly, the mobile individual's technical and

managerial skills are probably highly transferrable. How-

ever, the manager's understanding of the organization's

informal relationships--which was built at the expense of

the organization--are lost by leveraging. And, since only

2.6 per cent of those studied leveraged back to a previous

employer, such losses are seldom recovered by the firm.

In short, the problem of leveraging is not as wide-

spread as hypothesized. However, the observed proportion










of turnover among top officers does represent a costly loss

of organizational understanding.


On the Usefulness of Leveraging

When mobile and non-mobile presidents were compared on

the basis of their average ages when made president, it was

found that the mobile ones achieved the presidency .89 of a

year sooner than their non-mobile counterparts. But, since

the differences between the age distributions of these two

groups had a high probability (39 per cent) of occurring by

chance,'it cannot be safely concluded that mobile presidents

achieve the presidency at a younger age.

Furthermore, there was neither a positive nor negative

relationship between the number of times presidents lever-

aged and their average age when they became president.

Therefore, it cannot be concluded that leveraging has been

helpful or harmful to the careers of those presidents

studied.


On the Recent Trends of Leveraging

With regard to recent developments, data generated from

this study have led to two interesting findings: first, the

percentage of presidents recently made president and who

have leveraged actually decreased during the 1967 to 1970










period. Second, the average tenure for all presidents made

president during this period increased.

Thus, these observations indicate that among those

made president of a top 500 corporation, there exists a

trend toward less inter-corporate mobility.


On Reconciling Contradictory Differences

Clearly the frequency, usefulness, and trends associ-

ated with leveraging found in this study are contradictory

to the impression conveyed by the literature in this area.

The obvious question which remains is: how can these dif-

ferences be explained?

Several explanations of this outcome seem plausible.

There is a definite possibility that the literature over-

states the problem of managerial turnover. Those who deal

with mobile managers may be the victims of selective per-

ception. They seek out mobile managers in their research

and find many exist. Managers who have been successful at

it boast of its advantages; those who have been unsuccess-

ful stay quiet. The result is that employment counselors,

personnel managers, and researchers receive only a biased

picture leading to biased conclusions and articles. Since

many are receiving the same unbalanced inputs, assertions

about the increasing use of mobility obtain widespread










support by others equally misinformed. Then, through nu-

merous articles, those outside the employment services

area are led to believe in the existence of widespread mo-

bility too. Moreover, people outside this area probably do

not clearly distinguish between inter- and intra-corporate

mobility. Thus, they perceive the arguments in the liter-

ature as being supported by their own incorrect observations

on mobility.

Also plausible is a second explanation. Mobility may

be common at lower levels among those who do not seek high-

er office. They may have found a level at which they are

content. Unable or unwilling to move up, they seek grati-

fication by moving around. Outwardly, they appear highly

ambitious and successful. Inwardly, they are not ambitious

but instead content.

A third explanation, indirectly supportive of the sec-

ond, is as follows: even though unemployment levels during

the late 1960's were low, managers may have been less willing

to leverage because of the economic uncertainty associated

with this period. Many managers probably realized that

government economic policy would attempt to reduce inflation

and the by product of such efforts would be higher levels of

unemployment coupled with a decline in business activity.-










Rather than leverage into an uncertain environment, mobile

managers may have elected to wait out the impending devel-

opments by staying in their present company. Increasingly,

this may have forced a president to be selected from with-

in the organization.

In summary, one point seems certain: inter-corporate

mobility among those studied is not as common as one would

be led to believe from the available literature. Whether

this is the result of illogical assumptions, personal pro-

clivities, economic conditions or some combination of these

is less than certain but could be researched. In any case,

it does not appear that mobicentric managers have gained

anything approaching the unanimous control Jennings pre-

dicted for them by 1970. Admittedly, it is clear that they

are an important segment of managerial ranks and they are

not a mythical fabrication. However, from this research,

it is not clear that the use of inter-corporate mobility

represents any advantage for its users.



Implications for Further Research


The implications for further mobiliographic research

are primarily twofold and will be treated under two broad










sub-topics: managerial mobility at lower levels and the

sources of mobility.


Managerial Mobility at Lower Levels

.Since the lower level managers of today represent

tomorrow's top management and since mobility among top

executives appears to be both frequent and costly, addi-

tional research into the frequency and trends of leveraging

at lower managerial ranks may provide an indication of the

future magnitude of mobility among top executives. More

specifically, is the frequency of leveraging increasing or

decreasing among lower levels of management? Are those who

are leveraging, leveraging around or up organizational

hierarchies? Obviously, with almost a third of all 1970

presidents having leveraged after being made a top officer,

this is an important problem irrespective of the answers to

those questions. However, the intensity with which future

research efforts should be directed at this problem would

be influenced by the answers. For clearly, if leveraging

is declining among lower levels of management or it is pri-

marily lateral, the problem is less pressing then it would

be if leveraging was found to be increasing and vertical.

In either eventuality, the problem at its present level