IBM, Southwest Airlines, and other companies proactively help workers advance their careers to try to retain them, says research by Joseph Fuller. The findings show just how important an employer can be to future salary and job prospects.
Companies vying to fill entry-level roles should take a page from AT&T and American Express and offer aggressive advancement opportunities to workers without college degrees to help expand the talent pool, says a new report.
According to “The American Opportunity Index: A Corporate Scorecard of Worker Advancement,” a worker’s choice of company has considerable bearing on how fast they climb the ranks, how likely they are to land a better job elsewhere, and whether they’ll be hired and promoted. The study specifically looks at roles that were open to people without college degrees and assesses America’s 250 largest public companies as ranked by Fortune magazine.
“All employers are not created equal in terms of the type of springboard they provide for advancement and that's something that workers and employment counselors and local educators ought to be aware of.”
The results show that workers—even those who lack traditional hiring credentials—should be selective about where they work. And companies looking to attract, retain, and grow talent should make sure they’re giving their workers opportunities to advance, says Harvard Business School Professor Joseph Fuller, one of the scorecard’s authors.
“All employers are not created equal in terms of the type of springboard they provide for advancement,” says Fuller, who co-leads the Managing the Future of Work project at HBS. “And that's something that workers and employment counselors and local educators ought to be aware of.”
The index ranks the 50 best companies along several dimensions, including promoting from within, career stability, and providing early experiences that allow employees to get better jobs with future employers. The top three firms overall were AT&T, American Express, and Cisco Systems. The report was co-written by Matt Sigelman, Nik Dawson, and Gad Levanon of the Burning Glass Institute and supported by the Schultz Family Foundation.
The scorecard comes as employers struggle to find skilled workers in a stagnant labor pool, trends that are likely to worsen in the future, the researchers say. Companies are also facing more scrutiny from regulators and investors who are increasingly evaluating how employers treat workers. And they’ve been blamed for creating economic conditions that cause half of American workers born in the 1980s to earn less than their parents—whereas 90 percent of those born in the 1940s earned more.
“There are a number of pretty clear, hard-nosed considerations that make focusing on issues like this worthy of attention of even the most profit-oriented value-maximizing executive,” says Fuller.
Employees fare better at some companies than others
Fuller and colleagues looked at data on 3 million employees who began working at Fortune 250 companies between 2017 and 2021, as well as the job requirements of more than 40 million online job postings. They focused on roles like office manager or customer service representative, for which about 30 percent of workers lack a college degree.
Combining that data from Lightcast, a labor market analytics company, with approximately 20 million self-reported salary records on Glassdoor, the authors tracked how workers in these roles fared over five years. They focused on nine key areas, including how easily workers were hired, what they earned, how quickly they moved up, how often they went on to better jobs elsewhere, how many workers stayed at a company, and how many rose to leadership roles.
Employees working at certain companies were far more likely to advance and succeed than employees working at others, leading to some startling disparities between companies ranked in the top 50 versus those ranked in the bottom 50:
Some employees are waiting longer for promotions. Employees at a firm that is slow to advance workers need to work a year longer to get promoted than those at a company known to speed employees up the ladder.
The five-year career outlook varies widely. After five years, workers at companies that excel at promoting workers are almost three times further ahead in their careers than those toiling at companies where promotions are few and far between.
Pay differences add up. Workers in the top firms for compensation earn almost 2.5 times more than their peers in the same roles at the worst firms, which results in earning $1.5 million or more over the course of a career.
The future looks brighter for some. Employees at companies that are adept at launching careers are more than 60 percent more likely to land a better job elsewhere than those working at the worst firms.
“There are very profound implications for economic security, advancement, and learning,” says Fuller. “If you join a company that is a lower-tier performer, it's not dooming you to some bad outcome, but your odds of getting a good outcome are significantly reduced.”
Which companies are known for helping workers?
The authors profile five companies that stand out.
IBM. The technology company has removed the college requirement for 50 percent of its jobs, like software development, for example, widening possibilities for advancement. The company has also developed apprenticeship programs, allowing employees to earn while they learn.
Southwest Airlines. In its 51-year history, the company has never had a layoff, offering employees remarkable stability.
WESCO International. The industrial company is known for moving entry-level employees into new roles.
U.S. Bank. More than 45 percent of the bank’s 2022 hires were not college graduates, and the company fills nearly 40 percent of its positions with internal candidates.
Liberty Mutual. The insurer fills more than 80 percent of managerial positions with internal candidates.
“This is not a name and shame exercise,” says Fuller. “This is trying to get better information into the hands of more aspiring workers and provocative information into the hands of corporate decision makers and boards.”
How to advance more workers
Corporate managers can systematically provide workers with better opportunities by:
- Creating metrics to track their company’s performance. Businesses can keep close tabs on pay, promotions, education and training opportunities, and retention.
- Establishing actionable, concrete goals for advancing workers. This may require a company to begin by focusing on just one parameter first.
- Asking questions to drive an internal mobility strategy. If, for example, a company is having a hard time finding entry-level workers, it might look for ways to draw from a wider pool of talent.
Workers and potential employees can take control, too, by:
- Being realistic about which jobs are available where they live. Too often, says Fuller, young workers will study in fields like video game programming that sound exciting but aren't available locally.
- Looking beyond the initial terms and conditions of employment. Most workers accept a new job thinking of fundamentals like salary, title, and vacation time. But, says Fuller, they also need to be looking at the long-term. Where do employees end up? Are they promoted?
- The American Opportunity Index is one tool to help level the playing field, he says.
“We want people to have—on both the employer and the worker side—just a better basis for exercising their judgment,” says Fuller.
Source: Pamela Reynolds, HBSWK
Image: Southwest Airlines
