The Pros, Cons, and Impact of Technical and Managerial Job Progression
Career Paths at Work
Career progression has historically focused on providing growth for individual contributors and managers. Both roles are essential and pay for one path relative to the other can reflect this. Earning potential is linked to the skills and talents of the individual, their performance, the performance of the department in which they work, or the company as a whole. Pay may also be linked to the size of the role, the size of the staff reporting to an individual, and the job risk related to their performance and the performance of the people who report up to them.
Individual contributors generally have no, or very few, direct reports. They may provide leadership or guidance through both words and action, but are seldom personally responsible for the growth, performance, decisions, or actions of anyone else. For many job families, the maximum earning potential for individual contributors is constrained by the broad availability of similarly skilled talent, the value the position delivers to the company, and the limited requirements for the position. For other job families, maximum earning potential can rival and even exceed that of someone in the managerial path.
Individual contributors with the highest earning potential include those whose jobs are the most difficult to fill, those with the most significant impact on departmental of company success, and those with the highest market demand for similar talent. Roles requiring advanced degrees often fall into this category. Senior sales positions often earn this status as well. These types of roles have limited budget control or financial planning and reporting consist mainly of individual project-based results.
Managerial positions nearly always require direct reports or co-reports. These individuals are not only responsible for their performance. They are also responsible and should be held accountable, for the performance of those who directly or indirectly report to them. Managers are often individuals who have good technical skills, but even better “people” skills.
Managerial roles focus on controlling costs and increasing profits. They must create and execute on both strategic and tactical plans for growth through proper employment and motivation of people and assets. They must also understand and remain updated on financial information that allows them to make adjustments and report to their superiors when necessary.
The Strategic Challenge
Moving from a technical or professional track to a managerial track is not possible, nor is a goal, for every individual. The very best individual performers can make generally equivalent income and in some roles even greater sums of money than a similarly positioned manager. For this reason, many track changers are among the better individual performers, but not the highest performers in their specialty. These individuals may have better opportunities for advancement in a managerial role than as a potential industry leading or changing technical or specialized professional. While the move is often communicated as a promotion, it is often a promotion in future potential rather than a promotion of current stature. This can result in what is essentially a lateral move regarding base pay. The challenge is communicating the potential of the new role in a way that clarifies expectations and the potential for improved future growth.
It is critical that the company emphasizes the importance of clarity of the management role, expectations as a manager, and clearness on what it means to be a company leader. Without a pay change or increase, the CHRO should anticipate the questions and pushback they might get from the employee being promoted, and have answers to those areas of push back formulated.
The opportunity to bounce to management signifies a willingness to climb the ladder long-term. And so much depends on the individual’s aspirational state of mind. Do they prefer to be a leader of ideas or a leader of actions and people? Are there more levels about to be attained and will they influence more people? Do power or control motivate them or do they prefer doing?
It is true that technicians and salespeople often out-earn their bosses, but being a boss, in and of itself, provides a certain level of reward and satisfaction. And, since the managerial track is the precursor to a potential executive role, the right candidate will out-earn the career path compensation opportunities as a strong technician. (An example of total rewards hierarchy shown below). So, do they take the long view or the short view?
The Tactical Solution
When talent pools are especially restricted the upper ranges of base pay for the best technical and professional can easily meet and exceed the levels of their associated managers. This can exacerbate the potential value of equity compensation that may be held from an earlier stage in the company’s growth cycle. One tactical approach is to provide greater short-term incentive opportunities for those in the managerial track. These programs can leverage pay on the company, group, and individual performance. This approach provides an offset to the additional personnel accountability and financial responsibilities associated with the management track.
The addition of managing people and money is a clear advancement risk for anyone choosing the management track. Providing a clear and communicated incentive for high performance conveys the company’s understanding of the added impact of the new position. In the absence of a short-term incentive plan, a company may want to consider augmenting the long-term compensation for the individual. Long-term incentives, especially when linked to company-wide financial or stock price performance, show recognition of the managers broader impact on company success. A properly designed and understood incentive plan can ensure that the individual understands the value of their new role and that the company has both the time and focus to ensure that the individual is successful in the new role.
Most importantly to ensure the new manager’s success is clear, there should be regular communication and training. Even individuals who have the perfect personality and mindset to be managers will need training on how to best execute their new role. The combination of training and incentives are the best way to deliver on the goals of both the individual and the company.
FutureSense, LLC is a management consulting and professional services firm specializing in people strategies and organizational solutions that drive performance. We have valued partnerships with our clients in the areas of strategy, organization, and people – building our relationships with a thoughtful, responsive and authentic approach to business practices.