Economic integration will impose demands on entrepreneurs and managers against which the adoption of more modern management techniques in their existing companies and for their existing markets may look like a minor undertaking. In addition to modern management techniques, without which they will be unable to operate and survive in the new era, they will have to adopt an entirely different philosophy and approach to marketing and sales, to production of scale, and with regard to the mobilization of financial and human resources.
In sum, future knowledge workers will be quite different from their predecessors. They will be better informed, more skeptical, more questioning, more accustomed to dissent and protest, more personally involved, and more inclined to action. How to manage by liberating these drives for self-direction for creative response, for action, and at the same time constructively to use the many conflicts that are bound to occur — that is the challenge. To accommodate the individual needs of employees, there is a trend toward offering flexible benefits plans, also known as cafeteria plans (Katz-Stone, 2001, p. 37).
These plans enable individual employees to choose the benefits that are best suited to their particular needs, and prevent benefits from being wasted on employees who have no need for them. Typically, employees are offered a basic or core benefits package of life and health insurance, sick leave, and vacation. Besides financial rewards that managers use to motivate and retain their employees, workers need career development. Wise managers are attentive to the different needs demonstrated by employees at different career stages.
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Surveys frequently indicate that career development and opportunities for growth are among the most important features that employees consider when choosing to join, or remain with, an employer (Olesen, 1999, 48–52). People progress through a predictable sequence of stages as they move through a career. At each stage, people tend to have a particular developmental need or concern that dominates their attention. If a person spends his or her entire worklife in a single department or organization can offer these employees promotion-based career systems designed to meet the needs of employees moving through the stages.
In a promotion-based career, people move into higher and higher levels of the organization as they progress through the career stages. Organizations establish job ladders that provide a clear sequence of promotions, from the entry level to the highest management levels. As people acquire skills and experience in lower level jobs, they are promoted into positions offering more responsibility (and accompanied by greater organizational rewards). In a promotion-based career system, employee movement tends to be linear and vertical so that employees either move up, or they don’t move at all.
Laurence J. Peter observed the following principle: People in organizations are promoted to their level of incompetence (Peter & Hull, 1996). The Peter Principle is a common problem in promotion-based careers. Promotions are based on a person’s past performance, but performance in one job may not predict performance in the next. The Peter Principle is especially likely to occur during periods when organizations are experiencing rapid growth. In an effort to fill positions quickly, people may be promoted before they have had a chance to grow into their previous positions.
Plateauing is the polar opposite of the Peter Principle. In the Peter Principle, people are promoted into positions for which they are poorly suited. In plateauing, people are unable to be promoted into positions for which they would be well suited (Tremblay, Roger & Toulouse, 1995, pp. 221-237). If employees are not able to meet their needs for growth and development on the job, they are likely to become frustrated and demotivated. Eventually, they may leave the organization.
But the promotion-based career system is no longer the dominant career model operating in today’s organizations. Plateauing has become a serious problem for organizations, and it’s being driven by several factors. First, most organizations are not in a major growth period right now. Second, organizations have made considerable efforts to downsize and reduce organizational levels, which results in fewer managerial positions for people to get promoted into (Miles & Snow, 1996, pp. 97–115).
Finally, organizations are increasingly adopting flexible organizational structures that involve more self-directed teams and a general move away from organizational hierarchies (Colby, 1995, pp. 150–152). As a result of these changes, organizations need to legitimize career paths that offer alternatives to the traditional promotion-or-bust model. If yesterday’s career was best described as “hierarchical,” then today’s career is increasingly described as “boundaryless” (Arthur & Rousseau, 1996, pp. 3–20) and “protean ” (Hall & Moss, 1998, pp. 22-37).