Virtually unanimously, employers report that positions above entry-level jobs are filled through internal promotion. This means, of course, that many positions in sub-baccalaureate labor markets are closed to individuals without experience in particular firms, including new entrants to the labor market and re-entry students.
Almost universally, internal promotion is based on job performance as assessed by supervisors.[95] As in the case of hiring standards, promotion practices are only rarely codified in personnel policies; the small and medium-sized firms are particularly informal.[96] Typically, firms will post notices of opportunities for advancement, and employees will bid for these opportunities. Supervisors will then rank those who have bid for an opening and then choose the "best" applicant based on their record on the job and the match between the skills they have required and those required in the promotion opportunity.
One change from past practice, at least in the labor markets where we interviewed (which tend not to be unionized), is that seniority rarely counts in promotion decisions.[97] The human resource manager in a mid-sized tool and die manufacturer in Cotooli contrasted the current promotion policies as follows:
[Seniority] was [a factor in promotion] in the past, isn't as much anymore. In the past there was always--you get into the machine skilled-level trades and after you've been there eight or ten years we'll say, "Yeah, you've moved up." Whether or not they've really acquired the skills necessary was academic. I know it's true here [at this company]--what it's gone to now is, if you don't have it, you don't have it. The good old boy network is not going to happen here because we are now in a global marketplace and from a corporate standpoint we are trying to broaden our horizons and diversify our business to get more and more away from the automotive end of the industry and more into other areas. In order to do that, you can't just take--just because Joe over here has been with the company for twenty years but he still breaks the machine, breaks an end-mill every time he tries to square up a block because he's using the wrong tool in the mill--can't really necessarily say, "O.K. Joe, you've been here twenty years, you're a top toolmaker." You can't do that anymore. But years ago that's the way it was.
What emerges consistently--in promotion as in initial hiring--is an image of a world in which competition has squeezed every firm to hire and promote only the most productive individuals, in which all slack has been eliminated. Even if this portrait is exaggerated, it still indicates a renewed emphasis on job performance that might be missing in a world of lesser competition or institutionalized promotion practices (such as those associated with unions).
The dominance of internal promotion and of promotion based on job performance, means that capacities employers cite as necessary on the job--motivation, persistence, cooperation, initiative, flexibility, adaptability, communications skills, the ability to learn new tasks (particularly as technology or work organization changes), and other "foundation skills"--are crucial for long-term success. Employers consistently cite these capacities as more important than job-specific skills--command of machining techniques, for example, or knowledge of accounting principles. This also means that certain capacities which may not be particularly important for entry-level jobs become crucial when individuals are considered for promotion. As the manager of the accounting department of a Rosefield firm explained,
I've learned coming out into business that one of the things you do more than anything as you rise up in general is that communications becomes the thing that separates people more than anything else, that it becomes the most important skill that you have--maybe even beyond what your technical skills can be. You can be very good technically, but if you can't communicate, that's going to hold you back. So I think that's much more critical than most people understand when you're coming up through school. English is never fun. You think, "I don't need that. I'm going to be a rocket scientist; I don't need to know those other things." But really you do.
While it is difficult to know why behavioral and interpersonal skills should be more important than technical skills, one interpretation is that there is a sufficiently large pool of workers with these skills while there is substantial variation in personal capacities. Another interpretation is that--at least for occupations in the sub-baccalaureate labor market--variation in technical skills above some minimum level is not especially important. That is, given the need to machine a part or produce a drawing or complete certain accounts or diagnose an electronic failure, highly skilled individuals may not be appreciably more productive than those with moderate technical skills since the task is not one where there is much difference between adequate and superior performance. Furthermore, if the timing of production is collective rather than individual, greater facility and quicker execution may not matter either. In contrast, the difference between motivated workers and those who routinely fail to show up or individuals who can perform only one job and those who can shift flexibly among different tasks may be more substantial. While this interpretation must remain speculative in the absence of more detailed ethnographic research, the conclusion remains: Employers in our four labor markets consistently referred to the importance of personal capacities and rarely mentioned job-specific technical skills as especially critical to promotion. Once again, there appears to be a mismatch between those skills which education providers can teach and the capacities that are most crucial on the job.
The need for different capacities as individuals are promoted creates certain difficulties, as the above quotation highlights. The problem for educational institutions and for students concentrating on occupational preparation is that the capacities most necessary for higher-level positions may not be visible and the rationales for taking academic subjects that are "never fun" are unclear. Students concentrating on preparation for entry-level positions--the focus of most occupational programs, after all--and educators asking their advisory committees about the requirements of entry-level jobs may miss the importance of skills required for advancement. Then individuals in entry-level positions in sub-baccalaureate labor markets may lack the skills required for mobility into more advanced positions.
This creates a constant need for upgrade training. However, firms vary enormously in how they accomplish upgrade training and whether they place the burden for upgrading on the employee or whether they assume responsibility for directing certain individuals to improve their skills. In some cases, on-the-job training takes care of the problem--for example, when employees are rotated around different machines or procedures. In other cases, firms send selected employees to vendors--that is, suppliers of new machines or of new computer applications--to learn new skills. The use of contract education, often from community colleges or local four-year colleges, is widespread. Finally, some employers encourage their employees to attend formal schooling--very often with firm-paid tuition subsidies--as a way of upgrading their skills and moving up job ladders, particularly in cases where technology is advancing rapidly and requires computer applications. For example, a manufacturer in Cotooli described the firm's promotion policy in these terms:
We do not require a person to take x amount of courses before they progress up the job ladder. But we do foster training in education here at [this firm], meaning that in this type of industry the computer age has hit. It's becoming more and more technical to do this kind of work. As we purchase new equipment, we actually send our people to be trained on this type of equipment, build their skills. We encourage and foster their efforts to go out and get outside education. Now, if that person wants to grow and learn about that piece of equipment or grow into another piece of equipment, then he needs to learn more about that to progress ahead.
This kind of procedure places a greater burden on employees to take the initiative for getting additional training. Furthermore, because promotion is dependent on job openings and the skills of other applicants and is not tied directly to educational qualifications, employees in this situation bear some risk because they may gain additional training and still not be promoted. There is, then, some potential disincentive to invest in upgrade training on the part of employees--though no employer complained about problems in finding qualified individuals to promote, compared to the problems they experience in initial hiring.
Because promotion policies are informal and because promotion depends on what opportunities become available, job ladders in most firms are not clearly defined.[98] That is, when individuals within a firm bid on promotion opportunities, the path that they follow will typically depend on what jobs become available, what range of skills they have acquired, and what competition they have from fellow employees at any specific time--and so paths up through a range of jobs of increasing responsibility and pay vary from person to person. There are a few exceptions in the firms we interviewed--the accounting department in a Cotooli firm with a particularly rigid pattern of progression for accounting clerks and several firms governed by union contracts--but the norm among the employers we interviewed is for job ladders to be much more flexible and loosely defined.
Of course, opportunities for promotion vary: Large firms have more opportunities than do smaller firms; those that have moved to flatter job hierarchies, those that have cross-trained their workforce so that individuals can perform a variety of jobs, and those that have made greater use of temporary employees for entry-level work also have fewer opportunities. For some individuals, mobility can come only by moving among firms once they have accumulated experience within a smaller or less advanced firm, but mobility among firms is difficult because of the tendency for all firms to hire from their existing pool of employees. The consequence is that opportunities for upward mobility and for the growth of earnings that is part of mobility depend in crucial ways on the firm in which an individual gains entry into the sub-baccalaureate labor market.
[95] In terms of the theoretical literature on the relation between schooling and earnings, these results support the existence of some weak signaling--the use of sub-baccalaureate educational credentials as signals of motivation and persistence in initial hiring--but not strong signaling in which educational credentials continue to be used as signals of ability in promotion as well as in hiring decisions; see Psacharopoulos (1979). Again, these findings are consistent with the statistical results in Grubb (forthcoming-a).
[96] In all of the firms we interviewed, the single exception to promotion based on supervisors' assessment of performance was a firm in Cotooli that prepares payrolls. In this firm, promotion from entry-level positions to payroll specialist requires passing a six-hour exam that individuals prepare for by going through a series of "training exercises." However, this firm is part of a national corporation with about eighty branches and a great deal of training at company headquarters, and the promotion exam appears to be part of the company's firm-specific training program.
[97] For a case study of several banks indicating the dominance of skill-based promotion over seniority-based promotion, see White and Althauser (1984).
[98] This is a departure from conventional views of internal labor markets in which job ladders are quite clearly defined (e.g., see Doeringer & Piore, 1971, and the introduction to Abraham & McKersie, 1990). The shift to less precise career ladders with much more flexibility in the content of specific jobs is consistent more with the "salaried model" of internal labor markets than with the older "industrial model" (Osterman & Kochan, 1990).