Leveraging HR Analytics for Business Model Innovation
Firms navigating the constantly changing business environment demand a supply of executives who can create and execute new business models, achieve financial targets, strengthen corporate ethical reputation, and transform the organization in pursuit of corporate sustainability. This paper aims to leverage human resources (HR) analytics to explore how high-potential managers navigate different developmental paths to reach the C-suite and how and why different developmental paths influence their turnover after becoming an executive. Combining job analysis and competency assessment with sequence analysis, we applied HR analytics on 53 general managers’ work experience spanning 57 years (n = 2,742), with roles, job requirements, and 20 executive competencies over 1,000 positions. Our findings reveal three distinct developmental paths that lead to the C-suite, characterized by differences in the content, context, timing, and complexity of work experience. Furthermore, we identify that a more complex developmental path tends to reinforce executives’ competency in self-awareness while inhibiting their development of technical competency, ultimately resulting in reduced executive turnover. Applying HR analytics with empirical data embedded in job and organizational contexts, this study reveals the importance of timing and complexity of work experience in executive development. It also offers insights for firms to leverage HR analytics to optimize their leadership pipeline and reduce executive turnover along with business model innovation.
HR analytics, executive development, sequence analysis, executive turnover, business model innovation, organizational transformation.
Firms navigating the constantly changing business environment demand a supply of executives who can create and execute new business models, achieve financial targets, strengthen corporate ethical reputation, and make transformational changes in pursuit of business innovation and corporate sustainability (Bawany, 2014; Chan et al., 2021; Popli and Raithatha, 2022). Identifying and developing such executives is challenging (Everett, 2020; Leap, 2008). Internal recruiting may suffer from significantly smaller talent pools (Lussier and Hendon, 2018), whereas external hires may require orientation to perform well (Bidwell, 2011; Raffiee and Byun, 2020). Thus, firms often aim to create a leadership pipeline (Charan et al., 2001; Conger and Fulmer, 2003), designing organizational career paths with the “right” work experience (DeRue and Wellman, 2009; Dragoni et al., 2011; McCall, 2004) and the “right” timing (Cappelli, 2019; Groysberg et al., 2004), to help high-potential managers reach the C-suite and execute business strategies.
Developing a leadership pipeline is essential, but HR managers face difficulties consistently implementing it across employees' diverse career paths (Lake, 2020). For example, what is the optimal timing for high-potential employees to transit into a managerial role? Should firms distinguish employees with broad work experience from those with in-depth experience? Could prior career paths predict the earlier departure of executives before the company’s investment in executive development pays off? All these questions need systematic analysis considering the variety of employee work experience, developmental paths, and career outcomes.
The increasing prevalence of HR analytics makes such systematic analysis possible. HR analytics refers to “the processes involved with understanding, quantifying, managing, and improving the role of talent in the execution of strategy and the creation of values” (Huselid, 2018, p. 680). It includes mathematical techniques and how to link these techniques to organizational strategies. Along with the development of standardized tests and the proliferation of accessible digital HR databases, HR analytics has attracted widespread attention (Huselid, 2018; Yoon, 2018, 2021). A survey covering over 10,000 HRs and managers across 140 countries shows that 71% of companies see HR analytics as a high priority in their business (Deloitte, 2017). Scholars have also found that HR analytics help organizations better differentiate their workforce (Wang and Cotton, 2018), allocate human capital (Pease, 2015), predict performance and turnover (Sajjadiani et al., 2019), improve strategy execution (Levenson, 2018), and develop leadership (Garvin, 2013).
In this paper, we applied three steps of HR analytics (Garvin, 2013; Huselid, 2018; Levenson, 2018). First, we identified the business model transformation and workforce strategy for a Fortune 100 company: to develop the C-suite. Then we created workforce metrics align with the strategy based on 53 general managers’ work experience spanning 57 years (n = 2,742), with roles, job requirements, and 20 executive competencies attached to over 1,000 positions. Lastly, we conducted sequence analysis (Abbott and Tsay, 2000; Biemann et al., 2020; Joseph et al., 2012) to address strategic issues. Specifically, we investigated three questions: (1) What are the primary developmental paths of work experience leading to the first-time general manager position? (2) How does being on a particular developmental path influence an executive’s turnover after taking the first-time general manager position? (3) From a competency-based perspective, how does being on a particular developmental path influence an executive’s turnover after taking the first-time general manager position?
Sequence analysis is a suitable HR analytical method for helping companies develop executives. As a method for analyzing qualitative, longitudinal, and categorical data (Abbott,1995; Biemann and Datta, 2014), sequence analysis is capable of capturing the longitudinal and sequential nature (Hall, 2002) of an individual’s developmental path and career - defined as “the evolving sequence of a person's work experiences over time” (Arthur et al., 1989, p.8). Previous work experiences are critical antecedents for later work experiences (Manzoni and Mooi-Reci, 2011). Each experience, which might involve context, content, and timing, follows other experiences to form the sequence of a development path (Abbott and Tsay, 2000).
Executive development, a subset of leadership development, is the development of individuals to be effective in executive roles and processes (Day and Dragoni, 2015). Due to its importance for individual and organizational success, previous studies have proposed many perspectives to help develop successful leaders.
Some studies focus on the specific methods used to train leaders, such as executive education in business schools (Crossland et al., 2014), challenging tasks, including international assignments (DeRue and Wellman, 2009; Dragoni et al., 2011, 2014; Pless et al., 2011), coaching and formal corporate training (Athanasopoulou and Dopson, 2018; Bednall et al., 2014; Lacerenza et al., 2017). Some studies focus on developing specific leadership behaviors, such as transformational, transactional, and laissez-faire leadership (Avolio, 2004) or the antecedence, processes, and outcomes of different leadership behaviors (e.g., Schliep, 2016). Other studies take a longitudinal approach and consider the role of time in executive development (Koch et al., 2017; Liu et al., 2021).
Our study adopts the longitudinal perspective and focuse on investigating executives’ developmental paths of work experience. Real-time on-the-job work experiences are often considered the primary factors of executive development (Day and Thornton, 2018; McCall, 2004, 2010). In the sections below, we start with a literature review on the importance of work experience to develop executives, followed by exploring the format, consequence, and underlying mechanisms of developmental paths of work experience.
The literature contains numerous studies exploring leader development via work experience. Much of it shows that work experience improves leaders’ performance (including organizational performance), accelerates their promotion to the top, increases their compensation, and reduces their turnover intention (Crossland et al., 2014; Custódio et al., 2013, 2019; DeRue and Wellman, 2009; Dragoni et al., 2011, Dwivedi et al., 2022; Godart et al., 2015; Liu et al., 2021; McCall, 2004, 2010; Schmid and Mitterreiter, 2021; Seibert et al., 2017). From the executive development point of view, it is the longitudinal and accumulative effect of work experience that accounts for a person’s development of job-related knowledge and skills and, therefore, advancement into higher-level positions (Fischer et al., 2017; Liu et al., 2021; Tesluk and Jacobs, 1998).
The work experience theory (Tesluk and Jacobs, 1998) states that work experience is a three-dimensional, multilevel, and temporal construct. The first dimension is work content, referring to career states, such as positions, departments, and companies (Crossland et al., 2014; Karaevli and Hall, 2006). These states improve leaders’ work motivation and develop their knowledge and skills (Chen and Pan, 2019; Dragoni et al., 2011, 2014; Godart et al., 2015; Quiñones et al., 1995; Seibert et al., 2017; Srikanth and Jomon, 2020; Zaccaro et al., 2015). The second dimension is work context, which shapes leaders’ work attitudes and behaviors through rules and expectations or by triggering unexpected conditions such as work-city relocation (Bright et al., 2009; Hirschi, 2010; Liu et al., 2021). Finally, the third dimension involves the timing (i.e., when and in which order) of a job move, such as becoming an HR manager in the third year after joining a company or relocating from Boston to Tokyo in the eighth career year. Timing matters for leadership development, as specific work experiences, such as challenging job assignments, work best for early-career managers (Carette et al., 2013; Chattopadhyay and Choudhury, 2017).
In our study, we build on the work experience theory (Tesluk and Jacobs, 1998) and assess executive development by constructing the “complexity” of work experience paths using sequence analysis, which considers paths’ variance in context, content, and timing. It encapsulates one’s leadership development path in terms of the time spent on each content in each context throughout one’s work experience. The complexity construct emphasizes the temporal nature of work experience, echoing the definition of a career: an evolving sequence of a person’s work experience over time (Arthur et al., 1989).
As no studies have systematically detailed executives’ developmental paths through the lens of work experience complexity that integrates all three dimensions (i.e., content, context, and timing) of work experience theorized in the work experience theory, we attempt to use sequence analysis to explore the following research question:
Research Question 1: What are the primary developmental paths of work experience that lead to first-time general manager positions?
Many organizations face executive turnover as a crucial HR issue (Bauer et al., 2006; Michaels et al., 2001). This is because preparing high-potential employees for executive roles involves long-term succession planning (Giambatista et al., 2005). Organizations often find it risky to make such a long-term investment for fear of losing talent to competitors (Downey et al., 2001). Compared to other levels of managers, executives are often more ambitious toward promotion (Judge et al., 1995), and may leave a company for common reasons such as unsatisfied compensation (Dreher et al., 2011) and unpleasant work relationships (Bauer et al., 2006), or organizational reasons such as relational and reputational shocks (Andrus et al., 2019). More importantly, they may look for new companies or positions that could fulfill their career aspirations, speak for their excellence, and advance their careers (Hamori, 2006).
According to the work experience theory (Tesluk and Jacobs, 1998), work experience influences secondary work outcomes, including career development and individual performance, via immediate outcomes such as work motivation, knowledge and skills, and work-related attitudes. Certain work experiences‒reflected in the quantitative, qualitative, or interactive components of work experiences may directly lead to turnover.
Previous studies have provided empirical evidence to work experience’s impact on those immediate motivational, affective, and attitudinal outcomes proposed in the work experience theory (Tesluk and Jacobs, 1998), which we argued may indirectly lead to turnover. For example, Dong et al. (2014) found that developmental job experience boosted employees’ pleasant feelings, which decreased their turnover intention. Moreover, Dwivedi et al. (2022) found that executives’ experience of CEO diversity-valuing behavior increased female executives’ feeling of psychological safety, which increased their retention.
Based on the above rationales in the work experience theory and the evidence in the literature, we expect that executives on different developmental paths of work experience identified in Research Question 1 may have different likelihoods of turnover after taking the first-time general manager position. Therefore, we investigate the following:
Research Question 2: How would being on a particular developmental path influence an executive’s turnover after taking the first-time general manager position?
In executive development, the primary objective is to improve high-potential employees' skills and capabilities to suit executive and senior leadership roles in organizations (Day, 2000; Day and Dragoni, 2015; Joo, 2005; Russell, 2001; Sandberg, 2000). The competency-based approach is often used to evaluate the effectiveness of executive development programs (Lundberg, 1972; Moldoveanu and Narayandas, 2019). Past research has found that executive competencies can be developed via multiple executive development programs/activities, such as classroom-based learning (Mintzberg, 2004), trans-organizational peer-to-peer learning (O’Neill and Bent, 2015), corporate leadership development programs (Kragt and Day, 2020; Kwok et al., 2021), executive coaching (Haan, 2021), and real-time on-the-job learning (Ahadi and Jacobs, 2017).
Scholars have pointed out real-time work experience is a powerful way with low cost and high effectiveness to train leaders (McCall, 2004, 2010; Thomas and Cheese, 2005). Studies found that people with more work experience acquired better leadership skills, handled complex situations better, and motivated and led teams more effectively (Day et al., 2014; Dragoni et al., 2011; Dirani et al., 2020). Moreover, people taking on various roles and accumulating diverse work experience have been exposed to various situations and learned to adapt to different environments (Tesluk and Jacobs, 1998). As a result, they were more likely to develop leadership competencies such as strategic thinking (Dragoni et al., 2011), task-relevant skills (Dokko et al., 2009), cognitive breadth (Crossland et al., 2014), HR competencies (i.e., business knowledge, functional expertise, and change management; Srikanth, 2019), and identity clarification (DeRue and Ashford, 2010). Leaders’ strategic thinking and creativity can be developed via global work experience (Dragoni et al., 2014; Godart et al., 2015). Their self-efficacy, cognitive capacities, entrepreneurial action learning, and managerial end-state competencies can be developed via challenging developmental experiences (Chen and Pan, 2019; Seibert et al., 2017; Srikanth and Jomon, 2020; Zaccaro et al., 2015). Altogether it is suggested that executive competency can be developed via executives’ work experience.
As executives in an organization could follow different developmental paths of work experience, depending on the timing, order, and duration they experienced in a particular career state, being on different paths could influence executive turnover differently by developing a different set of competencies. Previous studies have found that turnover intention and actual turnover behaviors correlate with specific competencies (Kiefer et al., 2022; Zaccaro et al., 2015). Despite the evidence indicating competency may serve as a mediator explaining why being on a particular developmental path to the top would lead to turnover after becoming the top, we still lack a nuanced and systematic understanding of how this mediation process might work. There is a need for more research to understand how the variance in work experience relates to the development of executive competencies.
Research Question 3: From a competency-based perspective, how does being on a particular developmental path influence a manager’s turnover after taking the first-time general manager position?
We studied the work experience of executives in a global technology company from 1963 to 2019. During these 57 years, the sample company underwent a business model transformation in response to technology innovation and industry competition and redesigned its organizational structure. This research setting was selected due to its relevance to business model innovation and executive development challenges faced in today’s volatile, uncertain, complex, and ambiguous (VUCA) business environment, where general managers must acquire a range of competencies through diverse work experiences to be successful.
We collected two rounds of data during the company’s execution of a leadership development program for its new general managers to support its business model innovation and strategic organizational transformation. First, from 2001 to 2004 (Time 1), the company opened a “general manager” position for candidates in and out of the company globally. The sample executives were specifically assessed, selected, and performance-managed for the position. expected to lead a business with at least $1 billion annual income in sales. The company hired an HR team consisting of HR consultants and in-house HR specialists to create a competency model and a job classification system. The selection process results in appointing 53 general managers worldwide (83% male; Meanwork-tenure = 23.83, s.d. = 6.23; Meanorganization-tenure = 20.89, s.d. = 9.21). We collected each general manager’s competencies, job evaluation, and career history, including the time and content of every job, position, city, and business unit.
The second round of data (Time 2) was collected from 2016 to 2019, 15 years after the candidates took the general manager position. We collected the data from public records, including LinkedIn, Bloomberg, and the company’s website. The information included the time and content of every job move during the 15 years (if any).
We applied sequence analysis to explore our research questions. Sequence analysis is a data mining technique that aims to discover patterns within a particular group of people (Abbott and Hrycak, 1990; Biemann et al., 2020; Joseph et al., 2012; Kleinbaum, 2012; Koch et al., 2017).
The unit of analysis in sequence analysis is each self-defined sequence (work experience sequences in our study). Following Biemann and Datta’s (2014) procedure, first, we used optimal matching to generate a distance matrix for the dyadic similarity between the work experience sequences of each pair of managers. Second, based on the distance matrix, we used cluster analysis with the Ward method (Ward, 1963) to identify the groups of prototypical developmental paths (Biemann and Datta, 2014). Finally, we calculated the characteristics of developmental paths. We focused on complexity, which simultaneously captured the content, context, and timing of work experiences. Complexity was measured by the Shannon entropy of a sequence (Gabadinho et al., 2011).
All these analyses were conducted with the software R package TraMine R (Gabadinho et al., 2011).
The content of work experience was measured by four career states: business unit, position, work-related know-how, and company. These career states were frequently used in the literature to capture the variety of general managers or CEOs’ lifetime work experience (e.g., Crossland et al., 2014; Custódio et al., 2013; Mueller et al., 2021; Schmid and Mitterreiter, 2021).
A business unit is part of a company’s organizational structure that offers products and services and is responsible for revenues and costs. Following the sample company’s organizational structure, we got 64 business units, such as Global Business Service and Global Technology Service.
To measure positions, we first collected labels of positions in the sample company and got over 1,000 positions. Then, we categorized the positions based on their functional backgrounds and get a meta-level insight into the positions’ impact on leader development. In this way, we got 21 positions, such as marketing, administration, and finance. These positions existed in more than one business unit.
Work-related know-how was measured by the Hay Group’s guide chart-profile method, a widely recognized job evaluation technique designed for senior management-level jobs (Hay and Purves, 1951; Mondy, 2012). Although the Hay job evaluation system was sometimes criticized for having subjective evaluation bias and being so costly that it was suitable only for large companies (for a review, see EL-Hajji, 2015), the subjective bias was mitigated to some extent as the evaluation criteria were standardized and tailored to the company’s needs and circumstances (Murlis and Fitt, 1991). A group of in-house HR specialists and consultants systematically compared over 1,000 jobs to assess the relative value of a specific job. They identified 18 categories of know-how (labeled KH1 to KH18) with a combination of three role profiles and six levels of problem-solving skills (see Table Ⅰ).
The role profile dimension was determined by the level of accountability for business results and the degree of control over resources for achieving those results. At one end of the spectrum were “line” roles, accountable for bottom-line financial results and controlling resources. At the other end were “staff” roles, indirectly impacting financial results and mainly responsible for counseling, execution, and support. In between were “collaborative” roles, in which the degree of impacts on financial results varied.
Company was the company one switched to after becoming a general manager (if any). We used cross-company paths to capture managers’ mobility after becoming an executive. As senior executives, they all took the same general manager position and worked on the “enterprise leadership” level (see the know-how categories in Table 1). When they left the company, the business unit was no longer an appropriate measure because different companies’ business units were not comparable. Therefore, the cross-company path was the best choice to capture mobility after one became a senior executive.
The context of work experience. City, representing an external work context, was measured by work locations, such as Boston or Tokyo. CEO leadership era, measured by CEOs’ transitions, reflected internal work environments with different company missions, corporate culture, and operations. As a large global company that operates in over 150 countries and has a history of over 100 years, the sample company identified work locations and CEO leadership eras as two essential work contexts for leadership development.
Timing of a job move. We used sequence analysis to measure timing, which was better than traditional methods in identifying career dynamics (Gabadinho et al., 2011). Table Ⅱ provides some examples.
We used the complexity metric in sequence analysis to calculate the complexity of a developmental path. The complexity metric is a composite measure of the number of transitions in a path (e.g., three in Ann’s case in Table Ⅱ) and the predictability of the next move in a path. It is calculated as the geometric mean of the normalized number of sequence transitions and the normalized longitudinal sequence entropy. Specifically, the formula for the complexity of a sequence x is
Competency. The term “competency” refers to knowledge, skills, and abilities that are described in specific behaviors instrumental in delivering desired results or outcomes at work (see Chouhan & Srivastava, 2014 for review). Following the competency model-building process first created by McClelland (1998) and then populated in HR practices (Campion et al., 2011; Hollenbeck et al., 2006; Shippmann et al., 2006), the sample company’s HR team created a competency model that reflected the company’s strategic direction, organizational change, and requirement for excellent job performance in the general manager position. This general manager competency model consisted of three categories (technical, relational, and self-awareness) and 20 sub-competencies. Each competency had an assessment scale of 4 levels that included behavioral descriptions, examples of each level, and additional assessment rules to maintain inter-rater reliability.
All 53 general managers in this study were assessed to the general manager competency model. First, the HR team interviewed each candidate using the behavioral event interview technique (McClelland, 1998) to obtain accurate descriptions of their work behaviors (Motowidlo et al., 1992; Flanagan, 1954). Then, they evaluated the behaviors recorded in the interview and assessed each candidate on all 20 competencies on a scale of 0 to 4 (0 = lowest, 4 = highest) (see Table Ⅲ).
Turnover was measured by whether an executive left the company in the 5th, 10th, and 15th year after the C-suite appointment (1 = yes, 0 = no). Of the sample, 13.2% left the company in the 5th year, 32.1% in the 10th year, and 39.6% in the 15th year. Over the 15 years, three managers retired, and two passed away.
To answer Research Question 1, we used cluster analysis with the Ward method (a type of sequence analysis; Ward, 1963). As a result, three clusters of developmental paths emerged from the data. Following the standard way of conducting sequence analysis (e.g., Biemann and Wolf, 2009; Ellersgaard et al., 2019; Joseph et al., 2012; Koch et al., 2021), we called these stayers, internal movers, and external hires. These labels captured the main distinguishing characteristics of managers’ developmental paths in the different clusters (see Figure 1).
Figure 1 shows the representative paths for the three clusters. Stayers work in no more than two business units (mean = 0.67, s.d. = 1.50). Internal movers move frequently and internally from one business unit to another (mean = 7.24, s.d. = 3.25). External hires are acquired from other companies, including boomerang employees and outsiders (transitions in this company: mean = 1.76, s.d. = 3.31). Despite different developmental paths, they did not show significant differences in demographics, such as education and work tenure.
ANOVA analysis in Table Ⅳ shows that internal movers had more complex cross-unit paths (complexity score = 0.66) than stayers (complexity score = 0.12) (F(1,34) = 150.10, p < .001). They also had more complex cross-city paths (internal movers: 0.52; stayers: 0.16; F(1,34) = 23.28, p < .001) and cross-era paths than stayers (internal movers: 0.80; stayers: 0.58; F(1,34) = 4.34, p < .05).
To answer Research Question 2, we did a logistic regression on executive turnover and a linear regression on the complexity of executive mobility paths in the near, middle, and long term (i.e., the 5th, 10th, and 15th years).
The results in Table Ⅴ show that complexity in developmental paths significantly impacted either executive turnover or complexity in executive mobility paths at the 10th and 15th years but not the 5th year. In the 10th year, managers with a more complex cross-city path had a higher likelihood of turnover (β = 1.18, p <.05, see Model 1b). Compared to stayers, internal movers (β = -2.66, p <.05) and external hires (β = -2.05, p <.05) were less likely to leave the company (see Model 1b). Over 15 years after becoming a general manager, compared to stayers, external hires were likely to have a less complex, more stable mobility path (β = -0.51, p <.05, see Model 2b). In addition, the mobility of managers with a more complex know-how path became more stable (β = -0.43, p <.05, see Model 2c).
We used backward stepwise selection to identify which competencies might be related to executive turnover. Starting with the complete set of competencies (i.e., a holistic view on variable selection, Darlington, 1968), we excluded each competency insignificantly correlated with either executive turnover or complexity in mobility paths, as such an irrelevant regressor would decrease the precision of the estimated coefficients and predicted values (i.e., the principle of parsimony, Lancaster, 1999). The results in Table Ⅵ show that managers with a technical competency of working the matrix (a term used by the company to describe an employee’s ability to coordinate efforts from various parts of the firm) were more likely to leave the company ten years after becoming a general manager (β = 0.96, p <.05, see Model 3b). On the other hand, those with self-awareness of learning agility were less likely to leave the company in the 10th year (β = -1.22, p <.05, see Model 3b) and the 15th year (β = -0.99, p <.05, see Model 3c). Moreover, the technical competency of team leadership was positively related to the complexity of executive mobility paths within ten years (β = 0.21, p <.05, see Model 4b) and 15 years (β = 0.10, p <.01, see Model 4c), while self-awareness, in terms of honest self-assessment, was negatively related to the complexity of executive mobility paths within the 15 years (β = -0.08, p <.01, see Model 4c).
We did a post-hoc analysis of the relationship between the complexity of developmental paths and competencies. The results show a positive relationship between the complexity of the cross-unit path (e.g., an internal mover) and self-awareness of learning agility at the end of that path (β = 0.41, p <.01) and a negative relationship between the complexity of the know-how path and the technical competency of team leadership (β = -0.46, p <.05).
By analyzing 53 general managers’ work experience spanning 57 years (n = 2,742), we identified three primary developmental paths leading to first-time general manager positions: stayers, internal movers, and external hires (Research Question 1).
Moreover, we tested whether being on a particular developmental path would influence a manager’s actual turnover behaviors after taking the first-time general manager position (Research Question 2). Our findings demonstrated that stayers were more likely to leave the company in the 10th year after taking the position than internal movers and external hires.
In addition, we explored why having been on a particular developmental path influenced a manager’s actual turnover behaviors after taking the first-time general manager position (Research Question 3). We took a competency-based approach and observed some initial evidence that managers following a more complex developmental path were less likely to leave a company after taking the first-time general manager position because of the development of self-awareness. Moreover, technical competencies developed via a less complex developmental path facilitated turnover, whereas relational competencies did not significantly impact executive turnover.
Hence, our findings provide empirical evidence to prior research that leadership development requires a lifelong perspective, taking into account time and context (Castillo & Trinh, 2018; Liu et al., 2021), and that work experience is crucial for leaders' competency development and decision-making (Srikanth, 2019; Srikanth & Jomon, 2020). Our utilization of sequence analysis reveals different patterns of work experience throughout a leader's career development (Biemann and Wolf, 2009; Ellersgaard et al., 2019). Additionally, the complexity of work experience, including content, context, and timing, impacts leader development (Day & Thornton, 2018), as it facilitates competency development and influences executives' turnover decisions (Srikanth & Jomon, 2020).
Our study advances executive development in several ways as we identify patterns of executive development and examine the relationship between these patterns and executives' turnover behaviors.
First, existing research on executive turnover has not examined developmental patterns as an essential antecedence of executive turnover. Instead, previous research has primarily focused on individuals’ job dissatisfaction, social networks, and demographic backgrounds (e.g., Choi and Park, 2020; Joseph et al., 2022; Wei et al., 2022), the misalignment of interests between executives and shareholders (e.g., Andrus et al., 2019), and organizations’ practices and policies (e.g., Chiu and Sharfman, 2018; Stern and James, 2016; Tröster et al., 2018). Our study extends the literature by examining how the complexity of development paths before taking the first-time general manager positions can affect turnover after people become general managers. We found that a more complex developmental path could decrease executive turnover.
Second, existing research on career or work experience patterns to date has primarily focused on describing the paths to the top, while the work experience paths’ impact on career outcomes after reaching the top has not been investigated (e.g., Ellersgaard et al., 2019; Koch et al., 2017; Schmid and Mitterreiter, 2021). Our study focused on the turning point of becoming a first-time general manager and examined how prior work experience influences post-general-manager turnover. Previous studies often limit their conceptualization of work experience to narrow factors such as tenure, specific job assignments, or a single career dimension (e.g., status, employer, function) (e.g., Dragoni et al., 2011; Koch et al., 2017). Our study broadens this perspective by considering work experience holistically and demonstrating how work experience complexity affects not only the rise to the top and turnover behaviors after reaching the top. This provides direct empirical evidence for the impact of timing on executive development, addressing the calls for more longitudinal studies on executive development and the temporal nature of careers (e.g., Blair-Loy, 1999; Higgins, 2005; Mayrhofer and Gunz, 2019, 2022; Moen, 2003).
Our findings on Research Question 3 shed light on executive competency by explaining the relationship between work experience paths, competency development, and executive turnover. We found that managers with more complex developmental paths had a higher level of self-awareness competency in learning agility and a lower level of technical competency in team leadership. This partially explained their turnover behavior after reaching the top.
Finally, our study also makes methodological contributions. The study sheds light on using HR analytics to facilitate the systematic development of a leadership pipeline aligned with a firm’s strategy. Many HR analytical techniques proposed in the literature, such as artificial neural networks, genetic algorithms (Azadeh and Zarrin, 2016), and the Markov model (Cao, 2022), are often “purely mathematics,” making results hard to generalize or apply by HR managers (Huselid, 2018; Levenson, 2018; Sajjadiani et al., 2019). One novel feature of our method is that we used sequence analysis to capture the complexity of leadership development via work experience across lifetime careers. Traditional methodology, such as variance analysis, cannot capture the moving picture of one’s work experiences throughout a career.
Our findings offer practical insights for executive development. First, though multiple developmental paths all possibly prepare for executive positions, an optimal path may exist for executive development. We identified three optimal paths to the top in multinational companies. Given that an executive’s optimal developmental path should align with the organization’s strategy, business model innovation, and market competition, we recommend that managers assist high-potential employees to search for and develop optimal work experience paths.
Second, by linking the pre-executive developmental path to executive competencies and turnover, our study pertains to a critical resource allocation question HR professionals face in executive development: develop or buy? Our results show that more complex developmental paths typically reduce executive turnover, especially in the long term, such as ten years after stepping into an executive role. Our findings suggest that managers should look beyond the simple make-or-buy decision and seek patterns of specific work experience, especially the timing of work experience.
Overall, our results highlight the role of work experience in executive development. Specifically, the design of optimal work experience requires long-term HR planning and roots deeply in fundamental HR practices (e.g., job design, recruitment and selection, promotion, performance appraisal, and training and development).
This study has limitations that suggest future directions. First, we collected data within one company. Though the study has the merit of teasing out unobserved organizational factors, generalizing the results to other contexts should be done cautiously. The company’s scale may strengthen the complexity of managers’ work experience. Employees, especially internal movers, may have had more opportunities to experience different positions, business units, or cities. Therefore, the findings are best generalized to companies with a similar scale.
Second, sequence analysis can be applied to any sample size using qualitative, longitudinal, and categorical data (Durbin et al., 1998). Our findings were universal in that the content, context, timing, and complexity measures and the sequence analysis technique could be applied in any company. However, generalizing the results to companies with little or no variation in culture, positions, business units, and work-related know-how should be done cautiously.
Moreover, the relatively small sample size limits the possibility of exploring the relationship between pre-executive developmental paths and career outcomes in a sophisticated way. With a larger sample, future studies could consider mediators, such as commitment, risk-taking, and social capital, and moderators, such as HR policies and organizational culture.
Our study, in response to the significance of executive developmentfor business model innovation, demonstrates the use of HR analytics to uncover the mechanisms behind executive development in a multinational company to enhance executive selection, development, and retention. We identified three typical developmental paths to first-time executive positions and their related characteristics (content, context, timing, and complexity). These characteristics were then linked to executive competencies and turnover. This provides a deeper understanding of how work experience can be utilized to cultivate a pool of managers for executive positions. In addition, our approach emphasizes the crucial role of timing in executive development. It suggests that proper work experience sequencing can enhance employees' readiness for executive positions and help them navigate business innovation.
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