Were too many corporate leaders, at the top of organizations hit by the 2008/9 recession, blinded by their early experiences working in the boom years of the late 80s?
A new study by University of Toronto's Rotman School of Management considers this issue and finds that the best job performance comes from the match between first and later work experiences. What really makes a difference is how closely the economic environment an employee lands in initially aligns with the one they end up working in later. As this is unpredictable, and not something that can be easily planned for, the study also suggests various things companies can do to ensure future leaders are equipped to operate in different economic circumstances.
Research has already shown that a person's long-term work skills, habits and routines can be shaped or ‘imprinted’ by the economic environment they start off in. Employees arriving in a high-profit time may do better in the long-run because of a wealth of work opportunities to build their skills and reputation, say some researchers. However others have found that those entering in lean times may have the advantage because they learn to be adaptable.
The paper by András Tilcsik says both groups may find themselves at a later disadvantage if there's a substantial shift in circumstances. “We can't really say that one is necessarily better than the other,” says Tilcsik, an assistant professor of strategic management at the Rotman School.
Those ‘good times’ employees might not be as adept in how to extend projects when things slow down. The ‘lean times’ employee might not be nimble enough to keep up with the pace when a company's fortunes shift into high gear.
However, employees who experience similarities between their earlier and later work conditions, perhaps because they arrive during a more typical period, see a positive impact on their performance, Professor Tilcsik's research shows.
Companies that want to help their employees avoid the ‘curse of extremes,’ can try to diversify new employees' early work experiences, giving them opportunities to try work that more closely resembles normal circumstances, Tilcsik suggests. Those coming in during times of abundance might be put on a slower project or two along with the faster-paced ones. If entry happens during a slower period, attention should be given to quickly moving those employees into fast projects once work starts to pick up again.
The study's conclusions were based on personnel data from two information technology consulting companies with good employee retention. Tilcsik also conducted in-person interviews with employees at both firms.
Read the research paper in the current issue of Administrative Science Quarterly.
About Professor András Tilcsik