Do MOOCs Upend Traditional Business Education? 06-05

Do MOOCs Upend Traditional Business Education?

The question keeps educators up at night: Do free, massive open online courses cannibalize enrollment at traditional schools? The results are finally in, part of a new study co-authored by Wharton professor Ezekiel J. Emanuel. Rather than poaching traditional students, MOOCs reach new audiences that business schools, at least, want to target.

In this Knowledge@Wharton interview, Emanuel notes that “it doesn’t seem that MOOCs are undermining traditional business schools, but may be complementing them, enriching them and providing a great opportunity to [engage] other diverse student bodies.”

An edited transcript of the conversation is below.

Knowledge@Wharton: Please summarize your research findings for the study you co-authored,  “MOOCs Won’t Replace Business Schools – They’ll Diversify Them.”

Ezekiel J. Emanuel: We were interested in how MOOCs (Massive Open Online Courses) might affect business education. Everyone is worried … that MOOCs might kill business schools — that free or cheap on-line education might take apart the bricks-and-mortar traditional high-end business schools like Wharton. We were wondering if that is likely to be the case.

The surprising finding to us is that with nearly a million people registering for the Wharton core courses — like accounting and operations as well as some added courses like gamification and the business of sports — it turns out that MOOCs seem to attract people who are not in the usual MBA or executive MBA-kind of programs. [They attract] people from developing countries – there is a high proportion of them in MOOCs. They don’t [typically] [get] MBAs or executive MBAs. {MOOCs attract] first-born Americans, who tend to be highly educated but not terribly well employed.– They are a big proportion of the MOOCs. That was surprising to us, and yet they are not a big representative group in the MBA and executive MBA program.

Again, very surprising to us, [there are] a lot of under-represented minorities, African-Americans, Hispanics and others taking these massive on-line open business courses — obviously a group that we’re trying to get, to increase their representation in the regular MBA and executive MBA programs.

Getting these people, who are otherwise not in the mainstream of MBAs, into business education through MOOCs seems to be very surprising. It suggests that MOOCs are serving a different kind of clientele than regular MBAs and executive MBAs — those people who maybe are traditionally excluded or under-represented in our regular bricks and mortar classes. That might serve as a very enriched population to target for recruitment into MBA and executive MBA programs: smart, well educated, very interested people who otherwise we might not have contacted. In that regard, it doesn’t seem that MOOCs are undermining traditional business schools, but may be complimenting them, enriching them and providing a great opportunity to [engage] other diverse student bodies.

Knowledge@Wharton: What are the key takeaways of your research?

Emanuel: I think the massive on-line education courses that reach thousands, tens of thousands, hundreds of thousands of people on various platforms like Coursera and edX have been a real worry. [People are concerned] that they’re going to upset the higher education marketplace, maybe undermine traditional education. We were very interested in that.

The three or four big takeaways from our study are first, these massive on-line open education courses or MOOCs seem to target very important groups that otherwise aren’t involved in the traditional MBA or executive MBA programs. Groups like students in developing countries, especially non-Bric countries. Students, first generation Americans, recent immigrants who are well educated from their home country but maybe under-employed in the United States, probably are using these MOOCs to gain additional skills and training, and to demonstrate that they are competitive for jobs here. And then another very surprising group – under-represented minorities were also very over represented in the MOOC program as compared to the MBA or the executive MBA program. Nearly 20% of the enrollees on the American side were under-represented minorities. And that’s a group that many business schools have been trying to target to enroll in traditional MBA and executive MBA programs.

A second surprising finding was that women did not fare that well, especially women in developing countries, in these MOOCs. [The MOOCs] tend to be still dominated by well-educated men. There may be bigger barriers for women. Maybe they don’t have the educational preparation to take advantage of the business-style MOOCs. It may also be that they don’t have access to the Internet and necessities like 

A third big takeaway: Many people lament the fact that there’s high enrollment numbers, but when you look at the number of people who complete the course and get certificates, it’s way down at 3% or, in the case of business schools, 5%. Even though that’s a small percentage, it’s important to remember that when you start out with very large numbers, hundreds of thousands, that small percentage is many, many thousands of people, many more people than you have in a regular MBA program.

But more importantly, many of the students say, “Look, getting a certificate is not that important for me. I got a lot of information or a lot of knowledge, or what I wanted, without getting the certificate.” So, we need to think through how MOOCs are actually satisfying the educational needs of students, rather than figuring out that the end result is to get everyone a certificate.

That may also have some important implications for the pricing model. Charging at the end for a certificate may not be the wisest move. Maybe another platform for charging — like a monthly subscription fee or some other [payment] program — would be a much wiser way of revenue generation.

Knowledge@Wharton: What are some of the practical implications of your findings for educators?

Emanuel: One of the important elements from our study of students who take the business massive on-line courses is that they are probably a very good target population for recruiting traditional MBAs.

These are groups that business schools have wanted to enroll, students from developing countries, under-represented minorities, who traditionally are under-represented in business school. And so these massive on-line courses may allow targeting for recruitment that could be greatly enhanced. I’d say that the second important conclusion certainly for business schools is that they should look at MOOCs and these on-line course opportunities as opportunities, not as competitive, and shy away from them fearing that they’re somehow going to undermine what they do in a traditional classroom or an executive MBA program. At least initially, they don’t look competitive. They look like they might be synergistic.

Exploring more deeply with the students who have taken the courses and what they think they’ve gotten out of them, how these courses can enhance or maybe bring them into the executive MBA, bring them into the traditional MBA programs — I think is where we should be looking.

I think the fear and the loathing that often accompanies MOOCs among academic administrators is probably overplayed and we need to think of it much more as a positive opportunity to expand all the great resources we have educating students.

Knowledge@Wharton: Do your conclusions apply to other groups besides those targeted in this research?

Emanuel: This research focused on business schools and business education because we had this unique opportunity given the fact that Wharton was running these core preparatory courses in things like accounting and marketing and operations, as well as some of the additional, more expansive courses like gamification. But the conclusions probably extend to higher education much more broadly.

Many higher education administrators have on the one hand thought they needed to experiment with massive on-line education. But on the other hand, they are kind of dreading it and fearing that it’s going to somehow undercut their finances and enrollments. What we suspect is that there’s actually an opportunity to use the on-line courses to augment what is happening in the traditional educational program. In fact, there are different audiences to use.

The big challenge, which our study doesn’t solve, is the question of how do you make a business model that makes sense for MOOCs, because it does look like completing the program, completing a set of courses and paying for that is probably not the optimal approach.

Knowledge@Wharton: Is there any story in the news that’s relevant to your research?

Emanuel: There was an article in The Wall Street Journaljust the other week talking about how business schools might adapt or might fear massive on-line education, but it had no data. One of the things that we have tried to do is — instead of having a lot of speculation about massive on-line courses and what they’re going to do to higher education and who’s taking them — to actually collect data. The University of Pennsylvania has been probably the leader in offering massive on-line education courses both for business as well as in the non business areas: mythology or poetry or my own health policy course. We’ve also been pioneers in actually looking at who’s taking the courses, why they’re taking them. We’ve been among the first to document the high number of people who sign up, about a third of them actually take the course, begin the course as initiators. But only about 5%-10% of those who have started the course actually complete it.

I like to say it’s rules of thirds. About a third of the people who sign up look at the first lecture. About a third of those who actually look at the first lecture complete the course. It’s a little bit of an exaggeration, but that’s a pretty good rule of thumb. We need to study each one of those.

It’s easy to sign up when it’s free. Once you’ve started the course, we need to understand what you’re expecting from the course and why many of those people get what they seem to want out of the course without completing it. What is it that people are looking for in courses that doesn’t require completing every lecture or completing every assignment? Is it brushing up in their knowledge? Is it prepping them for their next program or their next job?

I think a lot of additional research is going to be needed. At the University of Pennsylvania, rather than speculate, we have been delving into the data and trying to publish as much as we can to educate the conversation about massive on-line education programs.

Knowledge@Wharton: What sets your research apart from other analyses of this topic?

Emanuel: I think the University of Pennsylvania has been a leader in looking at people who take massive on-line courses and trying to understand who they are, why they’re taking the courses, which ones they complete, which ones they don’t complete, what socio-demographic groups they come from, what countries they come from.

Getting hard data and looking at the hundreds of thousands and now millions of people who’ve taken these massive on-line courses is one of the things the University of Pennsylvania is leading in. Another thing we’re trying to evaluate is what exactly people get out of the courses and how they use that information. 

A third thing we’re looking at is, in what ways do these massive on-line courses actually enhance education or maybe undermine education. [We are] trying to empirically evaluate their benefits in terms of actual education, knowledge retained, knowledge utilized…. That obviously takes more time, but we are committed … our group and many others here, to good quantitative research that will inform the discussion going forward about massive on-line courses.

Knowledge@Wharton:  What will you look at next?

Emanuel: We’re trying to understand more concretely what people are getting out of the course, what expectations they come into a course with, and when they stop, what have they gotten that allows them to stop. Or, are they stopping because it’s too much time or they don’t have the resources or there’s some other barrier that [stops them] though they would like to go to completion. So this idea of how exactly to tailor a massive on-line course to make it maximally beneficial for the groups that are taking it is a major issue, and something we know almost nothing about. So that will be a major focus.

My office and my research group are especially interested in the global perspective. I run Penn Global, and part of what motivates us is, who are the people in foreign countries, especially developing countries, who are using massive on-line courses? How can we enhance our offerings to really enhance their education? That’s our mandate in our office. And we are going to continue to research that particular issue.

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Why ‘Incomplete’ Products Increase Consumption 03-21

Why ‘Incomplete’ Products Increase Consumption

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Barbara E. Kahn, professor of marketing and director of the Jay .H. Baker Retailing Center, is the chair of theRetail and Consumer Goods Summit, a conference that Knowledge@Wharton is organizing in collaboration with the Baker Retailing Center on April 28 and 29 in New York City. 

Her research interests include consumer choice, variety seeking, product assortments, brand management and retailing.

In this wide-ranging discussion with Knowledge@Wharton about her recent research, Kahn talks about how a complete product encourages more consumption: A person is likely to eat two pieces of cheese with holes in them but only one if it is solid, for example. It’s a matter of perception, Kahn explains. She also discusses her research on the attention that consumers pay to large assortments of goods and how it influences their choices when information is presented visually or verbally. In addition, she describes a study on how consumers behave when goods are stacked vertically versus horizontally.

An edited version of the conversation follows.Knowledge@Wharton: One of the papers that you have written recently — in collaboration with your colleague Julio Sevilla — is about the notion of a product’s completeness, and how it affects perceptions, preferences, and even the purchase decisions of buyers. What was the question you were trying to investigate in your research?

Barbara Kahn: One of the things that we know is that the way people decide what to buy and what to eat and how much to eat is not necessarily based on objective measures. It’s based more on their perceptions of how things work [or] look…. One of the big findings in the literature before we did our study was that product shape and size and package shape and size affect how much people consume. There’s been previous work that shows that keeping the size of a product the same but changing its shape can influence how much people eat. We were interested in whether or not you think the unit is complete affects how much you eat.

Knowledge@Wharton: So if I were to take a bag of cashews and eat a lot of the broken pieces at the bottom of the bag, I would not be feeling guilty, regardless of how much I consumed, because I would think I had not eaten an entire unit?

Kahn: Right. That’s the idea. Whenever you eat a whole thing, you think you’re eating more, even if the amount is the same as a broken piece. So, if you ate a whole pretzel, you would be aware that you ate a whole pretzel. If you ate a whole bunch of pieces, you’re not aware of how much quantity you’re eating.

Knowledge@Wharton: How do you decide whether a product is complete or not?

Kahn: Well, that is the interesting thing. We do show that you can manipulate what the expectation is, and change people’s behavior. For example, we did a study in this research, where we had rolls or cheese. The roll was incomplete, because there was a hole in it. The cheese was incomplete, because there were holes in the cheese — it wasn’t a solid piece of bread or a solid piece of cheese. When we called it a roll or cheese, people thought the ones with the holes were less complete. They tended to consume more of the holey bread. On the other hand, if we set the expectation that it was a bagel, or that it was Swiss cheese, their thought was: “A whole bagel has a hole in it.” That reversed the findings.

Knowledge@Wharton: How did you go about conducting your research?

Kahn: We did a lot of the research online. [We asked questions like] if this is what it looked like, how much do you think you would eat? How much do you think you’d pay for it? But we did run a field study to validate the research. We did it in Miami with a class of people who were going for a health MBA course. They were physicians and health professionals. So, they were senior, sophisticated people who understood health.

We had a condition, and we had two classes. They either ate lunch in classroom A or classroom B. Lunch was sandwiches that were either cut in half or whole. We held constant in each one the amount of bread, the amount of meat, the amount of everything. We also counted how many sandwiches they ended up eating. We were careful so that a normal portion size would be more than one, because there is also a kind of bias called the unitary bias, where you might just take one of something. So, these were small sandwiches; people would naturally take more than one.

What we found is that when we cut the sandwich in half, people ate more. And, mind you, these were doctors and health professionals, who were liable to fall for this bias as well.

Knowledge@Wharton: What would you say were some of the main takeaways of your research?

Kahn: There are public policy takeaways and marketing takeaways. Basically, we add to this growing literature. There are others who have found these kinds of things. [Research has found] that people focus on the primary dimension of the product. They do insufficient adjustment for the secondary dimension. If something has a long primary dimension and a small secondary dimension, but is the same size as something with a little bit smaller primary dimension and a bigger secondary dimension, they overweight the primary dimension. That is similar to our research, where they overweight the completeness.

Basically, it shows that people are not normative decision-makers. They don’t eat what they think they need to eat to feel full. They eat what they perceive is the right amount, and they use these implicit rules for deciding how much to eat.

It suggests that these things can backfire — or boomerang, we call it. For example, there is other research — not mine, but it’s related — where they show if people eat in 100-calorie packs, or something like that, they can end up eating more, because their perceptions of how much they ate is based on the package or the shape of the product, not on how full they feel.

Knowledge@Wharton: Based on what you’ve said so far, I guess the food and the beverage industries would be the most interested — or most affected — by the findings of your research. Are there any other industries where consumer preference would be affected by notions of completeness?

Kahn: It’s hard for me to say offhand but, theoretically, there should certainly be others. What we find is that it affects choice. And more importantly, probably, is that it affects consumption. The difference is that choice tends to be a more mindful — we call it system-two thinking — kind of decision. Consumption is more of a mindless kind of decision. These things are subtle and perception changes tend to affect the consumption decision. That tends to be truer in food. When you buy clothing, it’s more of a conscious decision. But these things hold in anything that has some kind of mindless consumption pattern.

Knowledge@Wharton: Let’s now turn to some of your other research, in other areas. You were telling me about a new research paper you have done on online and offline perceptions. Could you explain a little bit about what you were trying to investigate?

Kahn: Research has shown that there is such a thing as too much variety. If you go into an assortment and there’s so much going on there that you can’t take it all in, some research shows that people will choose not to choose. They are just overwhelmed by all the choices. I think choice is good. What I’m interested in is: How can we get consumers to pay attention to the variety so that it’s not overwhelming? The metric I’m really interested in is attention. We can put people in front of computers and see exactly what they’re looking at. We can also give people goggles and have them walk up and down a real store and see what they’re looking at. We can see how changes on the shelf affect attention patterns.

Similarly, if you’re buying online, I can see how you’re scanning that computer screen. One of the things that we looked at is how people pay attention differentially to an assortment, if it’s depicted visually, or if it’s depicted by words, holding everything constant.

Knowledge@Wharton: What were some of your main findings here?

Kahn: What we found is, if I gave people a choice: “Would you like to see the assortment visually or described by words?” an overwhelming majority would prefer it visually. We tried all sorts of ways to try to get them not to prefer visual, because I wanted to find a boundary condition. You would assume visual is preferred for something that’s a very aesthetic category. But what about a category like mutual funds? If I could show it visually, people would prefer to see mutual funds visually. It’s surprising how strong the preference was for visual depiction.

When the assortment was depicted visually versus verbally, people perceived there was more variety in general. That was the main effect. You can understand why that was, because you can take in more of the attributes at once visually. When it’s verbal, it’s kind of piecemeal, the way you process it. So, you tend to see more variety when it’s visual versus verbal. And people prefer variety; it’s emotionally nicer.

When the assortment is manageable, visual is preferable. You can take all the variety in. When the assortment gets really large, what we’ve found with eye tracking is that people can’t take in all that variety visually. What they tend to do is kind of glaze over and look haphazardly and randomly over the visual assortment. As a result, they miss certain items. It becomes more complex; they’re more willing to not make a choice.

On the other hand, if the assortment is really large, and I depict it verbally, they may not like it as much. But the only way they can take in that information is to spend a little bit more time. And they tend to look a little more systematically. The net result of that is they take in more variety and they’re more willing to make a choice.

Knowledge@Wharton: What do you think would be the implications for, say, a company like Amazon, which now calls itself the world’s biggest retailer and has an immense variety of products, all depicted online? How would your research be relevant to a retailer of that type?

Kahn: I haven’t done research specifically with Amazon, but I have looked at some results with Campbell’s Soup and other packaged goods. What we’ve found is people go to their favorite soup — chicken noodle — and buy chicken noodle. Campbell has lots of variety. What they want you to do is appreciate that variety. What we’ve found with goggles is, if they look at just the pictures, people glance over, and they don’t take in all the variety. When we can get them to look at the labels, the names, they read it. And then they see there is chicken noodle, chicken stars, chicken whatever. If you are looking at the picture, you will just glaze over it. But if you’re reading, you will [pay more attention].

I talked to a sports retailer. He told me that with athletic clothes, people buy black. They buy black all the time. But if you just had black on the shelf, people wouldn’t see all the different shapes and sizes. So some of the retailers — you can imagine this online also — insert pink and orange. Not because they think people are going to buy them, but because it gives them something to pay attention to. Then you appreciate the variety that is there. So, what you have got to do is get people to stop and pay attention to certain things, or else they glaze over.

Knowledge@Wharton: I was also wondering how your research would relate to a company like Walmart. How could they use your findings?

Kahn: I’m just looking at visual versus verbal. I’m looking at an attention-getter, when there is a wide variety…. If you are in a big store like a Walmart, with all this variety everywhere, it looks like a mountain of products. What you see is maybe what’s on the end aisle, or under the “sale” sign or something. What you want to understand is how to set up a store so that people take in all the variety that is there.

There is a storefront downtown that used to house Anne Klein, which sells clothing. It now is Stuart Weitzman, which sells shoes. Each brand occupied the same physical space, but the space is used differently. In Anne Klein, they keep the entire inventory [visible to the customer]. So, all the dress sizes, all the blouses, all the different things, they’re out [on display]. There is no backroom, really. But if you think about a shoe store, they have just a few shoes out, and all the inventory is hidden at the back. How much variety are you going to take in? I never really thought about it, until I saw the exact same physical space used in really different ways.

Knowledge@Wharton: Another of your papers is about the horizontal versus vertical dimensions of product placement?

Kahn: Here also we used eye tracking. We looked at the theory of attention and perception. We first stipulated that there are two stages. There are more than two, but let’s start with two stages to your choice process. One stage is when you see the whole category. You kind of scan it quickly. Maybe you are not going to make a purchase. There’s three seconds or so, when you walk by. The second is when you plant your feet and you’re ready to make a choice. Now you are spending unlimited time. We looked at those two stages. Under those two stages, should you do it horizontally or vertically?

So, stage one. Three seconds, you’re just scanning there. What we found is, because your eyes are horizontal, you can see things that are horizontal more easily. We call that higher perceptional fluency. 

So, when things are horizontal, and you’re looking very quickly, you take in more variety. The result is that, if things are across a horizontal row and you’re going past it quickly, whether online or in the store, you think there is more variety. When you get to [making] the choice, that’s no longer the case because I’m spending enough time to look at it. 

The quickness — or the ease of looking at it — is not a relevant thing. But now there is another perceptual issue. If you take the same line vertically and horizontally, people always think that the vertical line is longer. When things are horizontal, you think they’re closer together.

We also know that when you think things are closer together, you think they’re more similar. So, when you’re evaluating things, if you don’t have clear preferences, the things that are horizontal are seen as closer together and more equal in preference. You are more likely to, say, pick one or more of them horizontally. When you see them vertically, they seem further apart. There seems to be an order to it more when it’s vertical. And so, you tend to pick one. What we find in general is when things are [displayed] horizontally, you tend to pick more variety. You see more variety quickly. And when you evaluate, you think there are more acceptable options. When it’s vertical, you tend to pick one.

Anecdotally, I think retailers know this. I’ve looked at a lot of convenience stores. They tend to stack horizontally the things with more flavors. What they tend to stack vertically is good, better, best — or best, better, good. The notion is you’re going to take one when it’s vertical and more than one when it’s horizontal. What my research has done, the retailers have figured out by trial and error. They don’t care why; they just know it works. What I do back in the lab is to figure out how you pay attention, and your resulting perceptions. There is no reason — you know, thinking about it in advance — why something would be horizontal or vertical.

Knowledge@Wharton: What’s really interesting about what you said is that in addition to retailers, there are also companies like Netflix, that show thousands of film titles horizontally, and different categories of films vertically.

Kahn: Over time, they have figured out it worked this way. You tend to pick more than one in a particular category. And you choose one category or the other. That’s exactly the same thing. What I think is interesting is that retailers know what works. They don’t know why. It is very reassuring to see the results in the lab validated by real world stuff.

Knowledge@Wharton: We have talked about three of your research papers. Are there any future research projects that you’re working on based on these findings?

Kahn: I am really interested in how the process goes in this new omni-channel world. We know there are stages to the purchase process. You search for information, you evaluate the options, you make a choice, you use the product. So, there are all these different stages. 

In traditional retailing, you made the decisions in-store, and then you took the products home. So, there was in-store and there was at-home. That was it. But now, you might look on your phone for something, on your computer for something else. You might go into the physical store for something else. These different stages can be in all different channels.

I’m curious to know how separating the stages by channel and by time affects decision-making. I’m working on a project in which we started with Warby Parker, the eyeglass retailer started by four Wharton students. 

What you do in Warby Parker? They have changed it now, because they have opened [physical] stores. But originally, you made the decision online. You looked at this big assortment. You waited a couple of days and you got five pairs to try on at home. 

What I was interested in was that separation between making your decision online and having to wait a couple days to get the physical glasses. How did that time between the two stages affect your decision-making? We’re in the process of doing that research now. And we’re finding that, counter to what people might think, the delay between the two stages may not be bad. It may be a good thing.

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Seeking Their Fortune: The Career Path for Top Executives in Big Companies 0-14

Seeking Their Fortune: The Career Path for Top Executives in Big Companies

Executives in the highest ranks of management have become increasingly diverse in recent years, and the number of lifelong employees has continued to decline. At the same time, the recession has “reversed two key trends, increasing both average age and length of tenure.

Those are some of the conclusions drawn from a new study by Wharton management professor Peter Cappelli, IE Business School professor Monika Hamori and Rocio Bonet, also at IE. The study, titled “Who’s Got Those Top Jobs?” looks at the career paths and qualifications of the top 10 leaders in each of the Fortune 100 companies.

Another way to summarize their findings, Cappelli suggests, is to paraphrase a well-known saying: The future is more like the past, only more so. Indeed, the study shows an executive profile that continues to evolve. In 2005, Cappelli and Hamori looked at similar data from 2001 and compared it to data from 1980. This latest research extends the analysis to 2011. And while some of the team’s findings were heavily influenced by the 2008 recession, especially in the area of job mobility, “our strong feeling is that the trends we saw beginning in 1980 are going to continue to play out,” Cappelli says.

The researchers looked at four areas within the Fortune100’s senior ranks: Career trajectory, education, diversity and hierarchy.

Among the key findings:

Careers: Interchangeable Executives

The “relatively steep” decline in the number of lifelong employees is evident despite increases in executive development and succession planning. According to the study, less than one third of the executives in 2011 had started their careers with their current employers, down from 45% in 2001 and more than 50% in 1980. At the same time, the executives’ length of tenure has increased – i.e., they are tending to stay longer at the firm than they did in 2001, a finding that reflects the impact of two recessions on the reluctance of employees at all levels to leave the security of their current jobs.

The recession and prolonged recovery have had other noticeable repercussions on the Fortune 100s’ elite group, Cappelli notes. On average, it took the 2011 executives a year longer than their counterparts in the 2001 group to get to the top due to slower advancement throughout their careers. In addition, outside studies suggest that turnover among chief executives has dropped since 2001; moreover, since 2008, large companies have been more inclined than they were in 2001 to fill vacancies from within.

The researchers provided some recession-related specifics throughout the study. For example, because the 2008 recession affected the financial services industry more than others – requiring them, in some cases, to restructure to avoid bankruptcy – long-established entities like AIG, Bank of America and Freddie Mac “are bringing in more outsiders to fill higher-level executive jobs than they did a decade ago. By contrast, companies whose businesses are more stable — including Caterpillar, Procter & Gamble and UPS – have tended to promote leaders from within.

“All that said,” notes Cappelli, “we have no reason to think that these recession-related developments will continue as the economy improves.” Indeed, the trend that began 15 to 20 years ago – in which executives (and other employees) are seen as more interchangeable than they were in the past – will continue, despite some backing away from it since 2008. In other words, expect a return to less internal mobility and more job hopping.

The researchers also note dramatic differences in these numbers depending on the individual company. Leaders “shot to the top fastest at Google,” where it took only 14 years to rise from an entry level position to the executive suite, while it took 32 years at Hewlett-Packard and ConocoPhillips. Age is a factor as well. Members of HP’s 2011 executive team were over 58, on average, while at Google, they were 46.

“Differences in tenure by company are even more dramatic than differences in time to the top,” the researchers write. Sears executives in 2011 had been there three years, on average, while Chevron executives were there 33 years.

Under the category of “lifers,” the researchers also found significant variance. Ford and Caterpillar, for example, have more lifers at the top now than in 1980, while at Honeywell, the proportion of lifers fell by 80 percentage points. Thirteen of the Fortune 100 companies, including PepsiCo and Bank of America, “had no top executives in 2011 who had begun their careers there.”

Given the results of their latest study, what advice would Cappelli offer people who are interested in a career with a Fortune 100 company? “Sometimes it is useful to be where others are not,” he says. “A company that is in a declining industry can be very attractive to a younger person, because management might turn over more quickly, especially if the executive team’s average age is 58 rather than 38.”

Cappelli also notes that “the influence corporate executives can have has been underplayed by young people…. If you are an executive in a Fortune 100 company, you can affect the lives of thousands of people, from employees to customers to vendors. If you are running a hedge fund, you might become very wealthy, but no one is going to show up for your retirement party unless you are paying them.”

One trend that will most likely continue, regardless of the strength of the economy, is the relative lack of control that executives in large companies have over their careers. In past decades, Cappelli says, “if you were in one of the big companies, you could be sure, provided you were doing a good job, that you would rise steadily toward the top. What we see now are more ‘herky-jerky’ careers.” People stay in jobs during the recession a little longer than usual, and then when they move, they don’t necessarily move in predictable ways. They might leapfrog over others who have spent considerable time on the executive track; or people could be brought in from the outside and put ahead of lifers whose own career track then becomes more questionable, perhaps causing them to move as well. In other words, careers are more in flux and less predictable than they were 20 years ago, Cappelli says, adding that careers also vary a lot more across companies than they did in the past.change companies, and then taking the time to look at different opportunities. “Employees who take charge of their own career paths are able to say: ‘This is where some great opportunities exist.’”

Education: A League of Their Own

The study documents an “upsurge in education” over the last 30 years, with about 65% of the leaders in 2011 holding graduate degrees compared to 62% in 2001 and 46% in 1980. Those companies that had the most MBAs among their executives included Sears (75%), Sunoco (70%) and the Walt Disney Co. (63%).

As for college degrees, the proportion of the Fortune 100 executives with an Ivy League bachelor’s degree dropped from 14% in 1980 to 10% in 2001, but then held steady. Those with bachelor’s degrees from private non-Ivies lost “considerable ground” to graduates of public universities, although, as the researchers point out, most of the 2011 executives attended college in the 1970s “when the resources and status of state schools were near their peak.”

At the graduate level, the Ivy League roared back. Almost a quarter of the executives holding MBAs graduated from business schools at Columbia, Cornell, Dartmouth, Harvard, the University of Pennsylvania (Wharton) or Yale.

“One of the things we know at the undergraduate level is that it’s probably easier now for a really poor student to go to the University of Pennsylvania rather than to Penn State because of financial aid,” says Cappelli. ”It’s probably still true that there are big advantages to being at elite institutions,” he adds. “The difference now is that it used to be all about your undergrad education; these days it’s about your MBA education as well. If you didn’t go to the elite school at the first cut, you can get it at the MBA level.”

Diversity: Riding ‘a Different Elevator’

Leaders were much more likely to be women “and [individuals] born and educated outside the U.S. than leaders in previous years, “although both groups are still far from achieving parity with U.S. men,” the researchers found. For example, 17 of the Fortune 100 companies still have no women in their top 10 jobs.

Those women in the 2011 group who had secured executive positions “had not all ended up in the bottom tier of senior management,” the researchers write. “But few of them rose to the very top, as was true for the 2001 group. Only 5% of the women had made it to the highest-level positions compared with 17% of the men.”

Women executives in the 2011 group reached their top-tier positions slightly faster, on average, than men – 28 years versus 29 years – while “women in middle-tier positions had taken 23 years to get there compared with 26 years for men. They had been promoted sooner in each previous job – after an average of four years, compared with five years for men.” This was also true in 2001.

A possible explanation behind these numbers is that “women ascended faster because they were riding a different elevator,” the researchers conclude. Middle-tier women executives, for example, had held “primarily function-specific roles, such as chief legal officer, general counsel or senior vice president of human resources.” Their male colleagues had more of the general management positions that “typically feed the very top executive jobs.”

Those with Ivy League credentials are likelier to be hired from the outside rather than promoted from within.

As for foreign executives, their presence in the top ranks of the Fortune 100 companies rose from 2% in 1980 to 11% in 2011, and they tended to work in larger, more established companies within that universe. That’s not surprising given that these companies tend to have “more extensive multi-national operations” and thus a bigger pipeline of international managers, Cappelli notes.

Well-rounded, Well-schooled

In short, leaders at the very top are five times as likely as those at the bottom of the executive suite to have earned an Ivy League undergraduate degree, and three time as likely to have earned an Ivy League MBA. Those with these Ivy League credentials are likelier to be hired from the outside rather than promoted from within. As the researchers note, if the Ivy League confers “gold collar” status, it appears to do so mainly through outside hiring.

Nor is it surprising that the executives at the very top of their companies “have taken considerably longer to ‘arrive’ than those in the lower tiers,” the researchers write. “They have held more jobs along the way, which has given them the exposure and ‘grooming’ needed for general management roles, plus more familiarity with ‘operating authority.’” Executives in the middle or bottom tiers more likely worked in “functional silos” on their way up.

Given their extensive review of the characteristics that define the top positions in the Fortune 100 companies, how can firms do a better job of insuring that they find the right people for the most important positions? “They should take hiring more seriously than they do,” suggests Cappelli. In the previous generation, executives were hired and tried out over a period of time in several different functions to see which hires rose to the top. But that is no longer the case. “I think there is an attitude in the executive suite that we will throw some people in, and if they don’t show fast results, we will quickly kick them out and throw someone else in. That’s a really expensive mistake, not just in turnover, but in the costs of getting someone up to speed and then having him or her fail.”

If the researchers were to publish this study again five years out, looking at data from 2016, what does Cappelli think they would find? “Again, it is the idea that the future will look like the past,” he says. “We are going to see average time in a job come down significantly. Right now, the biggest change in our data is that the average amount of time people stay in a job is higher in 2011 than in 2001. But that is almost entirely recession-driven. What we will see as the economy recovers is a lot more job hopping, and a lot more employers complaining about it. One result will be that the average age in these jobs will go down as well.”

In reviewing the characteristics of the most elite jobs, Cappelli offers an interesting side observation on increasing turnover: that the top tier jobs in the study are “actually not all that much fun because the executives have to work incredibly hard and face incredible pressure on the way up. The pay continues to increase, but at some point, these executives will want to get out. Those who leave their companies near the top really don’t want to go work for another company. They are done” with that environment.

Cappelli also suggests that the nature of the specific industry may not matter that much in terms of career track. “It used to be that there were certain things about being in an oil company, or being in a manufacturing company, that shaped who got into those jobs, who stayed, who got promoted and so forth. I think that is less important now. Companies are a little more open to hiring people from outside their industry.”

For their study, the researchers examined the biographies of the top 10 leaders in each Fortune 100 company. They chose 1980 as their baseline because it came just before a major recession. “We wanted to test the conventional wisdom that executive careers have undergone a significant change since the early 1980s,” they write. “And we concluded that they have.”

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